Final answer:
Partnership dissolution is the end of a partnership agreement, while liquidation is the winding up process of the partnership's affairs following dissolution. They are not synonymous as dissolution does not always lead to liquidation, and partnerships can continue with changes in its composition.
Step-by-step explanation:
Partnership dissolution and partnership liquidation are not synonymous. Dissolution refers to the ending of a partnership agreement, which occurs when any one of the partners ceases to be associated in the carrying on of the business. Dissolution may lead to liquidation, which is the process of winding up the partnership's affairs, settling debts, and distributing the remaining assets to the partners. However, dissolution does not always result in liquidation; in some cases, the partnership may continue with the remaining partners or with new ones.
The principal characteristic of a partnership is the mutual agency and the joint liability of partners for the partnership's obligations. A key disadvantage of a partnership is that each partner is liable for the actions of the other partners. In a partnership, the company may change with the addition or removal of partners, affecting its continuity and potentially its name.Partnership dissolution is not synonymous with partnership liquidation. While both terms refer to the end of a partnership, dissolution refers to the process of ending the partnership and settling its affairs, while liquidation specifically refers to the process of converting the partnership's assets into cash to pay off its debts.