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What happens to the existence of a firm after its dissolution and closure?

Answer and explanation

Correct answer: The firm ceases to exist

On dissolution of a firm, the partnership among all the partners comes to an end. After the firm’s assets are realised and liabilities are settled, the firm itself ceases to exist. Therefore, option A is correct. Option C is incorrect because the firm does not continue its business in the same form after closure. Exam tip: dissolution of a firm ends the entire firm, unlike the retirement of a single partner.

Related tags

Partnership DissolutionFirm ClosureRealisation Of AssetsSettlement Of LiabilitiesClosing The BusinessDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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