Which of the following event take place in the case of dissolution of a partnership firm?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Economic relations between the partners comes to an end
Dissolution of a partnership firm means the business itself is closed: assets are sold, liabilities paid and the partners’ accounts settled. Once that is done, nothing ties the partners to one another in business any more.
Why the other options are incorrect
Option (1) Court does not intervene — Incorrect. A firm can be dissolved by order of the court too, for example when a partner becomes insane or the business can be run only at a loss.
Option (2) Business is not terminated — Incorrect. That describes dissolution of the partnership, where the firm carries on; dissolution of the firm closes the business.
Option (4) Assets and Liabilities are revalued — Incorrect. Revaluation belongs to reconstitution (admission, retirement, death); on dissolution assets are realised through the Realisation Account.
NCERT (2026-27 edition): |