Which combination of statements is true about dissolution-
(A) Dissolution of a partnership is different from dissolution of a firm.
(B) A partnership is dissolved when there is a death of a partner.
(C) A firm is dissolved when all partners give consent to it.
(D) A firm is compulsorily dissolved when a partner decides to retire.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (C) only
| Statement | True / False | Explanation |
|---|---|---|
| (A) Dissolution of a partnership is different from dissolution of a firm. | True | Dissolution of partnership means a change in the relationship among partners (e.g., retirement, admission, death), but the firm continues. Dissolution of a firm means the closure of business and end of the partnership itself. |
| (B) A partnership is dissolved when there is a death of a partner. | True | Death of a partner ends the existing partnership (reconstitution occurs if the firm continues). |
| (C) A firm is dissolved when all partners give consent to it. | True | As per the Indian Partnership Act, 1932 — a firm may be dissolved by mutual consent of all partners. |
| (D) A firm is compulsorily dissolved when a partner decides to retire. | False | Retirement does not dissolve the firm; it only changes the constitution (reconstitution). |