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What is the process of permanently closing a partnership firm and ending its existence called?

Answer and explanation

Correct answer: Dissolution

When a partnership firm permanently closes its business, settles its liabilities and disposes of its assets, the process is called dissolution of the firm. Amalgamation means combining two or more firms, expansion means increasing the scale of business, and incorporation means forming a company. Exam tip: dissolution of a firm ends the firm’s existence, whereas dissolution of partnership may allow the firm to continue with a changed agreement.

Related tags

Partnership FirmDissolutionClosing BusinessFirm LiquidationAccountancyClosing The BusinessDissolution Of A Partnership FirmClass 12 Mcq

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