Dissolution of parnarship
Study Session 12 : Dissolution Of Partnership
Introduction
In the previous study session, you have learnt about the reconstitution of a partnership firm which takes place on account of admission, retirement or death of a partner. In such a situation while the existing partnership is dissolved, the firm may continue under the same agreement if the partners so decide.
This brings an end to the existence of firm, and no business is transacted after dissolution except the activities related to closing of the firm as the affairs of the firm are to be wound up by selling firm’s assets and paying its liabilities and discharging the claims of the partners.
Learning Outcomes for Study Session 12
When you have studied this session, you should be able to:
12.1 Explain the meaning of dissolution of partnership.
12.2 Differentiate between dissolution of partnership and dissolution of firm.
12.3 Explain the rules relating to the settlement of claims among all partners;
12.5 Record journal entries and prepare the necessary ledger accounts to close the books of the firm and settlement of partner’s claim.
12.1 Dissolution of Partnership.
Dissolution of partnership is the breaking or discontinuance of relationship between all the partners which is termed as the dissolution of partnership firm. This brings an end to the existence of firm, and no business is transacted after dissolution except the activities related to closing of the firm as the affairs of the firm are to be wound up by selling firm’s assets and paying its liabilities and discharging the claims of the partners. As stated earlier dissolution of partnership changes the existing relationship between partners but the firm may continue its business as before. The dissolution of partnership may take place in any of the following ways:
Box 12.1: Dissolution Of Partnership
Change in existing Partnership.
Admission of a new Partner.
Retirement of a partner.
Death of a partner.
Insolvency of
Introduction
In the previous study session, you have learnt about the reconstitution of a partnership firm which takes place on account of admission, retirement or death of a partner. In such a situation while the existing partnership is dissolved, the firm may continue under the same agreement if the partners so decide.
This brings an end to the existence of firm, and no business is transacted after dissolution except the activities related to closing of the firm as the affairs of the firm are to be wound up by selling firm’s assets and paying its liabilities and discharging the claims of the partners.
Learning Outcomes for Study Session 12
When you have studied this session, you should be able to:
12.1 Explain the meaning of dissolution of partnership.
12.2 Differentiate between dissolution of partnership and dissolution of firm.
12.3 Explain the rules relating to the settlement of claims among all partners;
12.5 Record journal entries and prepare the necessary ledger accounts to close the books of the firm and settlement of partner’s claim.
12.1 Dissolution of Partnership.
Dissolution of partnership is the breaking or discontinuance of relationship between all the partners which is termed as the dissolution of partnership firm. This brings an end to the existence of firm, and no business is transacted after dissolution except the activities related to closing of the firm as the affairs of the firm are to be wound up by selling firm’s assets and paying its liabilities and discharging the claims of the partners. As stated earlier dissolution of partnership changes the existing relationship between partners but the firm may continue its business as before. The dissolution of partnership may take place in any of the following ways:
Box 12.1: Dissolution Of Partnership
Change in existing Partnership.
Admission of a new Partner.
Retirement of a partner.
Death of a partner.
Insolvency of