Question

Which of the following is not the mode of dissolution of the firm?

Options

• By Mutual Agreement.

• On happening of an event.

• Dissolution by court.

• Retirement of a partner.

Answer 1

Retirement of a partner.

Explanation:

The retirement of a partner leads to the reconstitution of the firm, not its dissolution. When a partner retires, the old partnership agreement ends, but the remaining partners continue the business under a new agreement. On the other hand, the dissolution of the firm means the entire business closes down completely. In a dissolution, all business relations among all partners end, assets are sold, liabilities are paid off, and the firm stops existing. Therefore, retirement changes the partners, but it does not close the firm.