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:

(A), (B) and (C) only

The correct answer is option 2- (A), (B) and (C) only.

(A). Dissolution of a partnership is different from dissolution of a firm.  THIS IS TRUE.
According to Section 39 of the partnership Act 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm. That means the Act recognises the difference in the breaking of relationship between all the partners of a firm and between some of the partners; and it is the breaking or discontinuance of relationship between all the partners which is termed as the dissolution of partnership firm.

(B). A partnership is dissolved when there is a death of a partner. THIS IS TRUE.
Dissolution of partnership changes the existing relationship between partners but the firm may continue its business as before. The dissolution of partnership may take place in any of the following ways:
(1) Change in existing profit sharing ratio among partners;
(2) Admission of a new partner;
(3) Retirement of a partner;
(4) Death of a partner;
(5) Insolvency of a partner;
(6) Completion of the venture, if partnership is formed for that; and
(7) Expiry of the period of partnership, if partnership is for a specific period of time

(C). A firm is dissolved when all partners give consent to it. This is correct. This is case of dissolution of firm by agreement between partners.
Dissolution by Agreement: A firm is dissolved : (a) with the consent of all the partners or (b) in accordance with a contract between the partners.

(D). A firm is compulsorily dissolved when a partner decides to retire.  This is incorrect as the firm is not dissolved on the retirement of a partner. It is reconstituted.
Compulsory Dissolution: A firm is dissolved compulsorily in the following cases:
(a) when all the partners or all but one partner, become insolvent, rendering them incompetent to sign a contract;
(b) when the business of the firm becomes illegal; or
(c) when some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership, e.g., when a partner who is a citizen of a country becomes an alien enemy because of the declaration of war with his country and India.