Question

On dissolution, is the partnership terminated or does it continue until the winding up of partnership affairs is completed?

1) The partnership is terminated on dissolution
2) The partnership continues until the winding up of partnership affairs is completed
3) The partnership is terminated immediately after dissolution
4) The partnership continues indefinitely after dissolution

Answer 1

On dissolution, the partnership continues until the winding up of partnership affairs is completed.

Step-by-step explanation:

On dissolution, the partnership is not immediately terminated. Instead, the partnership continues until the winding up of partnership affairs is completed.

This means that even though the partnership may no longer be actively conducting business, it still exists until all the remaining debts, obligations, and assets of the partnership are settled. Only after this process is completed will the partnership be terminated.

The correct option is:

The partnership continues until the winding up of partnership affairs is completed

When a partnership undergoes dissolution, it means that the formal relationship between the partners is coming to an end. However, the partnership continues until the winding up of partnership affairs is completed.

During this winding-up period, the remaining assets are collected, debts are paid off, and any remaining surplus is distributed among the partners. Only after these steps are completed does the partnership officially terminate.