Dissolution is the process of which of the following?

• A. Incorporation
• B. Dissolution
• C. Merger
• D. Liquidation

Answer: (B)

Dissolution is the act of ending a business’s existence. When a company decides to cease operations, it enters dissolution to wind up its affairs, which includes notifying creditors, settling debts, and distributing any remaining assets. This process may involve liquidating assets to raise cash, but dissolution is the broader process of bringing the company to a formal close.

Incorporation is the act of forming a corporation, and a merger is the combining of two entities into one. Liquidation refers specifically to converting assets to cash to pay creditors and settle obligations, which is part of winding down but not the act of ending the company itself.