distinguish between 'dissolution of partnership' and 'dissolution of partnership firm' on the basis of settlement of Assets and liabilities
Answers
v Dissolution: Dissolution of the firm is different from Dissolution of Partnership.
v Realisation account : It is prepared to realize the various assets and pay off the liabilities.
v Closure of the Books of Accounts : When the firm is dissolved, finally all the books of accounts are closed through Bank Account.
1. Distinguish between Dissolution of Partnership and Dissolution of Partnership firm
Dissolution of Partnership
Dissolution of partnership firm
a)The Partnership is dissolved but thebusiness continues. The Business is not terminated
a)The firm winds up the business.
b) Assets and liabilities are revalued throughrevaluation account and the Balance sheet is prepared
b)Assetsare sold and the liabilities are paid off through Realisation account.
c) The Books of accounts are not closed as the business is not terminated.
d) The Books of accounts are closed.
Answer:
Dissolution of Partnership Firm means the firm closes down its operations and comes to an end. On the dissolution of the firm, the assets of the firm are sold and liabilities are paid off. The balance, if any, is paid to the partners in settlement of their accounts.