Final answer:
The statement that a partnership dissolution will always lead to a partnership liquidation is false. Dissolution refers to ending the partnership’s legal existence, while liquidation is the process of settling the partnership’s affairs and liabilities. A partnership may continue in some form after dissolution based on the agreements in place.
Step-by-step explanation:
A partnership dissolution does not always lead to a partnership liquidation. This is a false statement. Dissolution is the process of ending the legal existence of a partnership, but it does not necessarily result in the immediate liquidation of the partnership's assets and business. Liquidation refers to the actual process of selling off assets, paying creditors, and distributing any remaining assets to the partners. Depending on the circumstances, a dissolved partnership might continue existing for a period to wind up its affairs, or it may be taken over by one or more existing partners under a different legal structure.
The disadvantages of a partnership as a business entity include what is known as 'joint and several' liability, where partners are individually and collectively responsible for the actions of each other as well as the firm's liabilities. If a partner acts improperly or the partnership incurs debts, the other partners may be held liable. Additionally, the longevity of a partnership is bounded by its members, meaning that the departure, death, or bankruptcy of a partner can lead to the end of the partnership unless there are stipulations within the partnership agreement to manage such events.