Question

A) Discuss the difference between dissolution of a partnership and liquidation of a partnership.

B) List the order of distribution when a partnership is dissolved.

C) Define - Share Authorized, Share Issued, and Shares Outstanding.

Answer 1

Answer(A): Difference between dissolution of a partnership and liquidation of a partnership- Points are as following:

1. Dissolution is a state when company is completely wound up and comes to at end. Liquidation is a process of selling company's assets and giving the proceedings to creditors and leftover to the shareholders.
2. Liquidation is the part of dissolution. Dissolution is a overall process. Liquidation does not require the proper dissolution.

Answer(B): List the order of distribution when a partnership is dissolved- Partnership is dissolved because partners get retired or business is not profitable or some other reason. When partnership is dissolved, this process takes place:

1. Business is stopped
2. Selling the partnership assets
3. Paying the proceeds to the creditors and other obligation
4. Distributing the remaining amount among partners.

Firstly payment is made to the creditors and then to the partners.

Answer(C): Share Authorized- It is the maximum number of shares that a company can issue in its life.

Share Issued- Shares that are actually issued to the shareholders, are called issued shares.

Shares Outstanding- Outstanding shares are the shares, held by shareholders and that are available for trading in the stock market.