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:

Let's evaluate each statement about dissolution:

Statement (A): Dissolution of a partnership is different from dissolution of a firm.

TRUE - Dissolution of partnership occurs when there is a change in the existing relationship between partners (admission, retirement, death). The firm continues with reconstituted partnership. Dissolution of firm means complete closure of business and termination of all relationships.

Statement (B): A partnership is dissolved when there is a death of a partner.

TRUE - Death of a partner dissolves the existing partnership as the relationship between the partners changes. However, the firm may continue with the remaining partners forming a new partnership.

Statement (C): A firm is dissolved when all partners give consent to it.

TRUE - Dissolution by mutual consent is a valid mode of dissolution of firm. When all partners agree to dissolve the firm, it can be dissolved under Section 40 of the Partnership Act.

Statement (D): A firm is compulsorily dissolved when a partner decides to retire.

FALSE - Retirement of a partner leads to dissolution of partnership only, not compulsory dissolution of firm. The firm can continue with the remaining partners. Compulsory dissolution occurs only in specific situations like business becoming illegal, all partners except one becoming insolvent, etc.

Statements (A), (B) and (C) are true.

Correct Answer: Option 2