What activities are carried out after the dissolution of a partnership firm?

No business transactions take place, and the firm’s affairs are closed by realising assets, settling liabilities and claims, and distributing the remaining balance among the partners.

The correct answer is option 4- No business transactions take place, and the firm’s affairs are closed by realising assets, settling liabilities and claims, and distributing the remaining balance among the partners.

After the dissolution of a partnership firm, the primary focus is on winding up the affairs of the firm. This involves several activities like:

Collecting and realizing assets: The partners must gather the firm's assets, which may include inventory, property, or any other valuable items. These assets are then liquidated or sold to generate funds for settling liabilities. 

Settling liabilities and claims: The partners need to settle any outstanding debts, loans, or obligations of the firm. This includes paying off creditors, suppliers, and any other parties with legitimate claims against the firm.

Closing the firm's accounts: The firm's financial accounts are closed at last by making the bank account or cash account which shows zero balance.

Option 1: The firm’s assets are sold, and the proceeds are directly distributed among the partners without settling external liabilities. This is clearly wrong because, in dissolution, external liabilities must be paid first before any distribution is made to partners.

Option (2) is incorrect because continuing business means the firm is not dissolved.
Option (3) is incorrect because admission of new partners happens in reconstitution, not dissolution.