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:

Let me evaluate each statement about dissolution:

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

This is incorrect. Retirement of a partner leads to reconstitution of the partnership, not dissolution of the firm. The remaining partners can continue the business. The firm dissolves only if the partnership deed specifically provides for it or if the partners mutually decide to close the business.

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

This is correct.

• Dissolution of Partnership → Change in relationship between partners (due to admission, retirement, death) but business continues
• Dissolution of Firm → Complete closure of business; firm ceases to exist

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

This is correct. Death of a partner dissolves the existing partnership because the original agreement between all partners comes to an end. However, the firm may continue if remaining partners decide to reconstitute it. The key point is that the partnership (relationship) is dissolved, even though the firm may continue.

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Statement (D): Dissolution of a firm necessarily involves dissolution of partnership.

This is correct. When the firm itself is dissolved (complete closure), the partnership automatically dissolves as well. You cannot have a partnership without a firm. Dissolution of firm is the broader concept that includes dissolution of partnership.

The true statements are (B), (C) and (D) only.

Correct Option: 3