The following are the features of the Dissolution of Partnership only not 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:

(A), (B) and (C) only

The correct answer is option 2- (A), (B) and (C) only.

Except (D) The books of account are closed, all others are features of dissolution of partnership.

(A) Assets and liabilities are revalued, and a new balance sheet is drawn- This feature describes reconstitution or dissolution of a partnership, not dissolution of partnership firm. Reconstitution is a change in the existing partnership agreement, such as when a new partner is admitted, or an old one retires. The business continues, but the terms change. To reflect the new partnership structure and ensure fairness, the firm's assets and liabilities are revalued to determine their current market worth. A new balance sheet is then prepared with these updated values and the new partnership's capital structure.

(B) Economic relationships between partners continue, though in a changed form- This also describes reconstitution or dissolution of a partnership, not dissolution of partnership firm. In events like the admission of a new partner or a change in the profit-sharing ratio, the fundamental business relationship between partners persists. The old partnership deed is dissolved, but a new one is formed, and the firm's operations continue. The economic relationship is altered (e.g., a new partner shares profits or losses), but the partnership as a business entity remains.

(C) The business is not terminated- This is a key characteristic of reconstitution or dissolution of a partnership, not dissolution of partnership firm. Unlike dissolution of firm, where the business completely ceases to exist, reconstitution involves a change in the partners' agreements. The business continues its operations as a "going concern." The only difference is the change in the legal and economic relationship among the partners.

(D) The books of account are closed- This is the not primary feature of dissolution of partnership but it is the feature of dissolution of a partnership firm. Dissolution of firm means the complete winding up of the firm's business. All assets are sold, all liabilities are paid off, and any remaining balance is distributed to the partners. To formalize this termination, the firm's books of account must be closed to finalize all financial transactions and close out all accounts. This marks the end of the firm's existence.

****