Question : Assertion (A): Dissolution of the firm means the dissolution of the partnership between all the partners of the firm.

Reason (R): Dissolution of the firm means the closure of business and therefore means dissolution of partnership also.
Option 1: Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)
Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
Option 3: Only Assertion (A) is correct.
Option 4: Both Assertion (A) and Reason (R) are not correct

Question

Question : Assertion (A): Dissolution of the firm means the dissolution of the partnership between all the partners of the firm.

Reason (R): Dissolution of the firm means the closure of business and therefore means dissolution of partnership also.

Option 1: Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A)

Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Option 3: Only Assertion (A) is correct.

Option 4: Both Assertion (A) and Reason (R) are not correct

Team Careers360 · Accepted Answer

Correct Answer: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Solution : The firm's business ends upon dissolution because all of its affairs are settled through the sale of its assets, payment of its debts, and satisfaction of the partners' claims. The term "firm dissolution" refers to the end of a partnership between all partners of a company.

Hence the correct answer is option 2.

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Related Questions

Question : Assertion (A): The partner’s Private Property can be applied to pay the firm’s debt. Reason (R): In a partnership firm, partners have unlimited liability.

Question : Assertion (A): Dissolution of Partnership may or may not result into closing down of the business. Reason (R): Dissolution of Partnership firm means close down of business and comes to an end.

Question : Assertion (A): Dissolution of Partnership results in no change in the economic relationship. Reason (R): Dissolution of Partnership firm results in the ending of the economic relationship.

Question : Assertion (A): A partnership firm does not exist as a separate legal entity apart from the partners who comprise it. Reason (R): The Central Government has established a limit of 100 partners in a firm.

Question : Assertion (A): A loan from a relative of a partner is an external liability. Reason (R): It is not transferred to the Realisation Account.

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Question : Assertion (A): The partner’s Private Property can be applied to pay the firm’s debt.

Reason (R): In a partnership firm, partners have unlimited liability.

Question : Assertion (A): Dissolution of Partnership may or may not result into closing down of the business.
Reason (R): Dissolution of Partnership firm means close down of business and comes to an end.

Question : Assertion (A): Dissolution of Partnership results in no change in the economic relationship.
Reason (R): Dissolution of Partnership firm results in the ending of the economic relationship.

Question : Assertion (A): A partnership firm does not exist as a separate legal entity apart from the partners who comprise it.

Reason (R): The Central Government has established a limit of 100 partners in a firm.

Question : Assertion (A): A loan from a relative of a partner is an external liability.

Reason (R): It is not transferred to the Realisation Account.