{"id":1608,"date":"2019-06-28T15:51:45","date_gmt":"2019-06-28T15:51:45","guid":{"rendered":"https:\/\/commerceiets.com\/?p=1608"},"modified":"2019-06-28T15:51:45","modified_gmt":"2019-06-28T15:51:45","slug":"difference-between-dissolution-of-firm-and-dissolution-of-partnership","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/difference-between-dissolution-of-firm-and-dissolution-of-partnership\/","title":{"rendered":"DIFFERENCE BETWEEN DISSOLUTION OF FIRM AND DISSOLUTION OF PARTNERSHIP"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_72 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/difference-between-dissolution-of-firm-and-dissolution-of-partnership\/#DISSOLUTION_OF_PARTNERSHIP_FIRM\" title=\"DISSOLUTION OF PARTNERSHIP FIRM\">DISSOLUTION OF PARTNERSHIP FIRM<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/difference-between-dissolution-of-firm-and-dissolution-of-partnership\/#DISSOLUTION_OF_PARTNERSHIP\" title=\"DISSOLUTION OF PARTNERSHIP\">DISSOLUTION OF PARTNERSHIP<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/difference-between-dissolution-of-firm-and-dissolution-of-partnership\/#CIRCUMSTANCES_IN_WHICH_THE_PARTNERSHIP_IS_DISSOLVED\" title=\"CIRCUMSTANCES\nIN WHICH THE PARTNERSHIP IS DISSOLVED&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\">CIRCUMSTANCES\nIN WHICH THE PARTNERSHIP IS DISSOLVED&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DISSOLUTION_OF_PARTNERSHIP_FIRM\"><\/span>DISSOLUTION OF PARTNERSHIP FIRM<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Dissolution of <a aria-label=\"Partnership (opens in a new tab)\" href=\"https:\/\/commerceiets.com\/partnership-business\/\" target=\"_blank\" rel=\"noreferrer noopener\">Partnership<\/a> Firm means the firm closes down its operations and comes to an end. On the dissolution of the firm, the assets of the firm are sold and liabilities are paid off. The balance, if any, is paid to the partners in settlement of their accounts. If there is shortfall in meeting outside liabilities, it is met by the partners from their private assets.<\/p>\n\n\n\n<p class=\"has-background has-medium-font-size has-luminous-vivid-amber-background-color\"><strong>ACCORDING TO SECTION 39 OF INDIAN PARTNERSHIP ACT, 1932<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">\u201cDissolution of partnership among\nall the partners of the firm is known as Dissolution of Partnership Firm.\u201d<\/p>\n\n\n\n<p class=\"has-medium-font-size\">In other words, it means the breakdown or discontinuance or severance of the relation of partnership between all the partners. Thus, when all and every one of the members of a firm stops to carry on the business of the firm, the firm is said to be dissolved.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DISSOLUTION_OF_PARTNERSHIP\"><\/span>DISSOLUTION OF PARTNERSHIP<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">The word \u2018Dissolution\u2019 implies\nthe undoing or breaking of a bond or tie. In other words, the dissolution\nimplies that the existing state of arrangements is done away with.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Dissolution of partnership\nimplies a change in the existing relationship of partners through\nreconstitution of the firm without affecting the entity of the firm. In other\nwords, the firm continues to function as ever before but only the economic\nbasis of relationship of the partners is reconstituted. So the dissolution of\npartnership does not involve the complete breakdown of relationship among the\npartners but it merely means a change in the economic relationship. <\/p>\n\n\n\n<p class=\"has-medium-font-size\">The change in the economic\nrelationship is caused by change in Profit sharing ratio, admission of a new\npartner, retirement of partner and death of a partner. These events lead to\nreconstitution of existing firm.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">In short, the existing\npartnership dissolves, wherever a firm is reconstituted through change in the\nprofit sharing ratio, admission, retirement or death of a partner etc. Such\nreconstitution takes place by pursuance of express or implied contract. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CIRCUMSTANCES_IN_WHICH_THE_PARTNERSHIP_IS_DISSOLVED\"><\/span>CIRCUMSTANCES\nIN WHICH THE PARTNERSHIP IS DISSOLVED&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">The partnership is deemed to have\nbeen dissolved in any of the following cases:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>If there is change in profit-sharing ratio of the existing partners.<\/li><li>In case of Admission of Partner.<\/li><li>If a partner retires from the firm, where at least two persons remain as partners.<\/li><li>In case of Expulsion of Partner.<\/li><li>If a partner dies, where at least two persons remain as partners.<\/li><li>If there is insolvency of any one of the partners.<\/li><li>In case of expiry of the period of partnership if the partnership is formed for fixed period.<\/li><li>Completion of venture, if the partnership is formed for that venture.<\/li><li>Merger of one partnership firm into another.<\/li><\/ul>\n\n\n\n<table class=\"wp-block-table has-subtle-light-gray-background-color has-fixed-layout has-background\"><tbody><tr><td>  <strong> BASIS OF DIFFERENCE   <\/strong><\/td><td>   <strong>DISSOLUTION OF PARTNERSHIP   <\/strong><\/td><td>   <strong>DISSOLUTION OF FIRM   <\/strong><\/td><\/tr><tr><td><strong>   MEANING   <\/strong><\/td><td>\n  It refers to a change in the existing agreement\n  between the partners.\n  <\/td><td>\n  It refers to the dissolution of partnership\n  between all the partners of the firm.\n  <\/td><\/tr><tr><td><strong>   COURT\u2019S INTERVENTION   <\/strong><\/td><td>\n  Not required.\n  <\/td><td>\n  Required in some cases.\n  <\/td><\/tr><tr><td><strong>   BUSINESS CONTINUATION   <\/strong><\/td><td>\n  Business of the firm continues.\n  <\/td><td>\n  Business of the firm comes to an end.\n  <\/td><\/tr><tr><td><strong>   CLOSURE OF BOOKS OF ACCOUNTS   <\/strong><\/td><td>\n  Books of accounts of the firm need not to be\n  closed.\n  <\/td><td>\n  Books of accounts of firm are closed.\n  <\/td><\/tr><tr><td><strong>   ASSETS AND LIABILITIES   <\/strong><\/td><td>\n  Assets of the firm are revalued and liabilities\n  of the firm are reassessed. The gain or loss due to it, is distributed among\n  the partners in their old- profit sharing ratio.\n  <\/td><td>\n  Assets of the firm are realized and liabilities\n  of the firm are settled. The balance amount, if any, is distributed among all\n  e partners\n  <\/td><\/tr><tr><td><strong>   ECONOMIC RELATIONSHIP   <\/strong><\/td><td>\n  Economic relationship among the partners changes.\n  <\/td><td>\n  Economic relationship among the partners comes to\n  an end.\n  <\/td><\/tr><tr><td><strong>   EFFECT   <\/strong><\/td><td>\n  Dissolution of partnership does not necessarily\n  mean the dissolution of firm.\n  <\/td><td>\n  Dissolution of firm necessarily means the\n  dissolution of partnership.\n  <\/td><\/tr><tr><td>   <strong>NATURE   <\/strong><\/td><td>\n  It is voluntary.\n  <\/td><td>\n  It may be both voluntary and compulsory.\n  <\/td><\/tr><tr><td>\n  MODES OF DISSOLUTION\n  <\/td><td>\n  Dissolution of partnership occurs on the mutual\n  agreement among the existing partners.\n  <\/td><td>\n  Dissolution of the firm occurs either at the\n  expiry of specific term or mutual agreement of the partners or by the order\n  of the court.\n  <\/td><\/tr><tr><td><strong>   SCOPE   <\/strong><\/td><td>\n  Its scope is narrower than dissolution of firm,\n  because it involves the reconstitution of relationship without effecting the\n  continuation of the firm.\n  <\/td><td>\n  Its scope is wider than dissolution of\n  partnership because it involves complete breakdown of relationship of\n  partners and leads to discontinuance.\n  <\/td><\/tr><\/tbody><\/table>\n","protected":false},"excerpt":{"rendered":"<p>DISSOLUTION OF PARTNERSHIP FIRM Dissolution of Partnership Firm means the firm closes down its operations and comes to an end. On the dissolution of the firm, the assets of the firm are sold and liabilities are paid off. The balance, if any, is paid to the partners in settlement of their accounts. If there is&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/difference-between-dissolution-of-firm-and-dissolution-of-partnership\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;DIFFERENCE BETWEEN DISSOLUTION OF FIRM AND DISSOLUTION OF PARTNERSHIP&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":1613,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,56,21],"tags":[54,55],"class_list":["post-1608","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-12-accountancy","category-difference-between","category-partnership-accounts","tag-dissolution-of-partnership","tag-dissolution-of-partnership-firm"],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/1608","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=1608"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/1608\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/1613"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=1608"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=1608"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=1608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}