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What is the process called when a partnership firm’s business is completely closed and the firm ceases to exist?

Answer and explanation

Correct answer: Dissolution

Complete closure of the business, along with the end of the firm’s existence, is called dissolution of the firm. In reconstitution, the partnership arrangement changes but the firm’s business continues. Exam tip: when the relationship among all partners ends and the business is closed, the correct term is dissolution of the firm.

Related tags

Dissolution Of Partnership FirmClosing The BusinessPartnership AccountingReconstitutionAccountancy Class 12Dissolution Of A Partnership FirmAccountancyClass 12 Mcq

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