Dissolution of Partnership Firm — Practice Quiz

Change in existing profit sharing ratio among partners, Admission of a new partner, Retirement of a partner, Death of a partner

All these situations cause dissolution of partnership as they change the existing relationship between partners, but the firm may continue its business. Only when all partners consent to dissolve the firm does it lead to dissolution of the firm itself.

True

According to the Partnership Act, a firm is compulsorily dissolved when all the partners or all but one partner become insolvent, as they become incompetent to sign a contract.

When a partner becomes insane, When a partner becomes permanently incapable of performing duties, When a partner is guilty of misconduct affecting business, When business cannot be carried on except at a loss

All listed options except the last one are valid grounds for court-ordered dissolution. When all partners agree to dissolve, it's dissolution by agreement, not by court order.

None of the above - it remains separate

Partner's loan account is not transferred to any other account. It remains separate and is paid after external liabilities but before capital settlement.