The following are the features of the Dissolution of Partnership (and not of the Dissolution of Firm):
(A) Assets and liabilities are revalued, and a new balance sheet is drawn.
(B) Economic relationships between partners continue, though in a changed form.
(C) The business is not terminated.
(D) The books of account are closed.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (C) only
In a dissolution of partnership only the relationship among the partners changes (on admission, retirement, death, change in ratio), and the firm goes on. In a dissolution of the firm, the business itself is closed, assets are sold and liabilities paid.
(A) Assets and liabilities are revalued, and a new balance sheet is drawn. Correct. On a change in partnership, assets and liabilities are revalued and the firm continues with a new balance sheet.
(B) Economic relationships between partners continue, though in a changed form. Correct. The partners still do business together on new terms.
(C) The business is not terminated. Correct. The firm keeps working as before.
(D) The books of account are closed. Incorrect. Books are closed only when the firm is dissolved; in a dissolution of partnership there is no need, because the business is not terminated.
Note: NTA dropped this question. For the benefit of students and to give them additional practice, the question has been suitably modified so that it has one clear answer.
NCERT (2026-27 edition):
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