There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A): Dissolution of a firm means the discontinuation of the firm.
Reason (R): Economic relationship between the partners comes to an end.

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

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. This brings an end to the existence of firm, and no business is transacted after dissolution except the activities related to closing of the firm as the affairs of the firm are to be wound up by selling firm’s assets and paying its liabilities and discharging the claims of the partners.