Get Started
Start Free Mocks
CUETMOCK

Ace Your

CUET Preparation Today

Start Free Mocks
Home Questions PMTY4KEUFJ
Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Dissolution of Partnership Firm

Question:

Which of the following statements about the dissolution of a partnership firm is incorrect?

Options:

Dissolution of a partnership is different from dissolution of a firm

The firm may be dissolved if any one of the partners gives a notice in writing to the other partners, signifying his intention of seeking dissolution of the firm.

A firm can be dissolved when all partners mutually agree to it

A firm is compulsorily dissolved when a partner decides to retire

Correct Answer:

A firm is compulsorily dissolved when a partner decides to retire

Explanation:

The correct answer is option 4- A firm is compulsorily dissolved when a partner decides to retire.

A 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.

CUET Questions