NCERT Book Class 12 Accountancy (Part 1) Chapter 4 Dissolution of Partnership Firm

Dissolution of Partnership Firm 4

Y ou 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 name if the
partners so decide. In other words, it results in the
dissolution of a partnership but not that of the firm.
LEARNING OBJECTIVES According to Section 39 of the partnership Act 1932,
After studying this chapter the dissolution of partnership between all the partners
you will be able to : of a firm is called the dissolution of the firm. That
• State the meaning of means the Act recognises the difference in the
dissolution of
breaking of relationship between all the partners of a
partnership firm;
firm and between some of the partners; and it is the
• Differentiate between
dissolution of partner- breaking or discontinuance of relationship between
ship and dissolution of all the partners which is termed as the dissolution of
a partnership firm; partnership firm. This brings an end to the existence
• Describe the various of firm, and no business is transacted after
modes of dissolution of dissolution except the activities related to closing of
the partnership firm; the firm as the affairs of the firm are to be wound up
• Explain the rules by selling firm’s assets and paying its liabilities and
relating to the discharging the claims of the partners.
settlement of claims
among all partners;
4.1 Dissolution of Partnership
• Prepare Realisation
Account; 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:
(1) Change in existing profit sharing ratio among
partners;
(2) Admission of a new partner;