The dissolution of the firm means that separating the business under the name of the said firm. In this case, at the end of all obligations, the property is settled or transferred to a particular business, settling all the accounts in existence with the firm
Any benefit / loss is transferred to the participants in the benefit ratio as per their agreement.
In the former case, the firm terminates its name and therefore can not do business in the future. But in the case of dissolution of any partnership, the existing partnership is dissolved - with consent or on the occurrence of a particular event, but the firm can maintain its existence if the remaining partners enter into a new partnership agreement. There are different ways in which a partnership firm can break.
Disruption on the basis of some incidental incidents
Once some incidents occur, a firm may be required to dissolve:
For a fixed term, the duration of the term will be dissolved once the expiry period of the partnership is over.
Completion of work - Sometimes, a partnership is formed for a particular task or purpose. Once the work is completed, the partnership will be automatically dissolved.
Partner's death- If there are only two partners, and one partner dies, the partnership firm will be automatically dissolved.
If there are more than two partners then the other partner firm can continue running. In such a situation, only the partnership will be dissolved, and the other partners will enter into a new agreement.