Which of the following combination of statements are true about dissolution?
(A). A firm is compulsorily dissolved when a partner decide to retire.
(B). Dissolution of a partnership is different from dissolution of a firm.
(C). A partnership is dissolved when there is a death of a partner.
(D). Dissolution of a firm necessarily involves dissolution of partnership.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (B), (C) and (D) only
Dissolution of partnership means the old agreement among the partners ends (on admission, retirement or death), while the firm may go on. Dissolution of the firm means the business itself is closed and its accounts settled.
(A). A firm is compulsorily dissolved when a partner decide to retire. Incorrect. Retirement only reconstitutes the firm; the remaining partners carry on the business.
(B). Dissolution of a partnership is different from dissolution of a firm. Correct. One ends only the agreement; the other ends the business.
(C). A partnership is dissolved when there is a death of a partner. Correct. Death ends the existing agreement among the partners, though the firm may continue.
(D). Dissolution of a firm necessarily involves dissolution of partnership. Correct. When the firm is closed, the relationship among all the partners also ends.
NCERT (2026-27 edition):
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