Question

Partnership is compulsorily dissolved when the partners of the firm become ______

Options

• Solvent

• Insolvent

• Creditor

• None of these

Answer 1

Partnership is compulsorily dissolved when the partners of the firm become Insolvent.

Explanation:

When the firm's partners become insolvent, the partnership is forced to dissolve. When a firm's partners become insolvent, it means the firm's assets have fallen in relation to its liabilities. Furthermore, the partners lack the funds to pay their creditors; as a result, the partnership is forced to dissolve by a court of justice.