Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

Which of the following is a case of dissolution of a partnership firm on happening of certain contingencies?

Options:

When the firm is dissolved by agreement

When a partner dies

When a partner becomes permanently incapable of performing his duties

When the business of the firm becomes illegal

Correct Answer:

When a partner dies

Explanation:

When a partner dies, it necessarily brings about the dissolution of the partnership firm. This is because a partnership is fundamentally based on the mutual agency and association of the partners. The death of a partner affects the ability of the partnership to continue its operations and conduct business.
*When the firm is dissolved by agreement- This is case of dissolution by agreement.
*When a partner becomes permanently incapable of performing his duties- This is case of dissolution by court.
* When the business of the firm becomes illegal- This is case of compulsory dissolution.