BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The business of the partnership can only be carried on at a loss
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A partner is shown to be of unsound mind
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A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business
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A partner is civilly interdicted
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Detailed explanation-1: -The court may dissolve a firm at the suit of any partners on any of the following grounds namely : Insanity of a Partner : that a partner has become of unsound mind. The insanity of a partner does not ipso facto dissolve the firm and the next friend or continuing partners has to file suit foe dissolution.
Detailed explanation-2: -Dissolution by mutual consent of all partners (Section 40) Compulsory dissolution due to any unlawful business activities (Section 41) Dissolution due to contingent events like the death of a partner or adjudication of a partner as insolvent (Section 42)
Detailed explanation-3: -Compulsory Dissolution: Compulsory dissolution involves two main reasons. The first reason shall be when all or one of its members become insolvent and are now incapable of any agreement. The other reason is when the firm becomes unlawful due to any reason.