What is Dissolution of a Partnership Firm?
When the relationship between all the partners of a firm is terminated/dissolved, it is called the dissolution of a firm. It is a formal termination of an organised body(the firm), constituted under Indian Partnership Act,1932. In other words, dissolution of a firm means that the firm ceases to exist. Hence, all the assets held by the firm are sold off and all the liabilities of the firm are settled.
According to Section 39 of the Indian Partnership Act, 1932, “Dissolution of the firm means dissolution of partnership among all the partners in the firm.”
Dissolution of a Partnership Firm: Meaning, Modes of Dissolution & Modes of Settlement (Section 48)
Dissolution of a partnership firm is the end of a business entity where partners have worked together towards shared goals. This process involves various tasks like winding up the affairs of the partnership, settling the debts, distributing the remaining assets belonging to the firm, and legally terminating the partnership agreement.