GA20203 - FINANCIAL ACCOUNTING

MISS RATNA MOONAJAWA

KAMARUL AHMAT KAMARUDIN

BG10110163
HE19
Title:
Discuss the differences between dissolution of partnership and
dissolution of partnership firm.
Terms
1. Termination of business

Dissolution of Partnership
No termination of business

Dissolution of Firm
Have termination process
means the business firm need to
be closed

2. Settlement of assets and

liabilities

Assets and liabilities are

Assets are sold and realized and

revalued and new balance

liabilities are paid off.

sheet is drawn.
3. Courts Intervention

Court does not intervene

A firm can be dissolved by the

because partnership is

courts order.

dissolved by mutual
agreement and through the
process of reconstitution.
4. Economic Relationship

5. Books Closure

Economic relationship may

Economic relationship between

remain and changes.

the partners comes to an end.

Not required because does

All books of accounts are

not have termination of

closed.

business
Source: Key points on difference between dissolution of partnership and dissolution of firm
Dissolution of partnership is different from the dissolution of firm. Partnership can be dissolved by
mutual consent, because of the expiration of the prescribed time, the death of the one partner, the insane,
the bankruptcy of either partner, or by the courts for any good reason, such as dishonesty of one partner

GA20203 - FINANCIAL ACCOUNTING

MISS RATNA MOONAJAWA

against the rest, or disability caused by convicted of any crime, only involves a change in relationship
partner but did not end up in the firm. Partner may withdraw at any time if there is no time to continue
the partnership agreement, but must give proper notice of intention to the other partners. If the time for
the continuation of the partnership is called, however, a partner may withdraw at any time, but is
responsible to the firm for damages caused by breach of promise. If a partner dies the surviving partner
only has a right to settle the business. To heirs and representatives of the law, only need to submit a
business account.
The term dissolution means come to the end or termination. Dissolution of partnership among all
partners of a firm called dissolution of the firm. The dissolution of the firm means that the firm closes its
business and comes to an end. Dissolution of partnership firm reflects the full details on partnerships
among all partners. At the dissolution of the firm, business firms ceased to exist since its affairs will be
increased by selling assets and to pay the liabilities and fulfill the demands partners.
After the admission, retirement and death of the existing partnership ended, but the business firm
continue under the new agreement. When the firm decided to wind up business operations under any
conditions specified, it stands dissolved. Dissolution of joint partnership the remaining partners may
agree to conduct business under new agreement. On dissolution of the firm the books of account are
closed. All assets and liabilities are transferred to an account is called realization account. This account
records the realization of assets and the payment of liabilities. When the partners decide to discontinues
the business of the firm, it becomes necessary to settle its accounts. For this purpose, it disposes off all
its assets except cash and bank balances for satisfying all the claims against it.