GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The business becomes illegal
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All the partners become insolvent
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All the partners except one become is insolvent
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All of the above
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Detailed explanation-1: -A firm is compulsorily dissolved when all partners or when all except one partner become involvent.
Detailed explanation-2: -Two conditions under which a Partnership Firm is Dissolved are : When All or All but One Partner of the Firm becomes Insolvent . When Business of the Firm becomes Unlawful .
Detailed explanation-3: -(1) All partners are adjudicated insolvent. (2) The firm has been continuously suffering losses. (3) Partnership has various adventures & one such adventure becomes illegal.
Detailed explanation-4: -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) Dissolution by notice of partnership at will (Section 43).
Detailed explanation-5: -In this type of compulsory dissolution, the bankruptcy court appoints a liquidator to sell all the assets in the company and pay all the company’s debts. When everything has been made up and the liquidation proceedings and the company’s debts have been paid, the proceeds are distributed among the company’s owners.