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What happens to the firm's normal business activities when a partnership firm is dissolved?

Answer and explanation

Correct answer: They cease

On dissolution, the firm's normal business activities cease. The firm then completes the winding-up process by realising assets, paying liabilities and settling the partners' accounts. Therefore, option A is correct. Option D is incorrect because the firm's ordinary business does not continue as before. Exam tip: Dissolution of the firm involves ending the firm's business and winding it up, not merely changing the relationship among partners.

Related tags

Partnership DissolutionClosing BusinessWinding UpFirm AccountsClosing The BusinessDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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