Question

Consider the following statements

Statement 1: "The firm is dissolved automatically, on the retirement all partners." 

Statement 2: A firm dissolves on the retirement of a partner.

पर्याय

• Only statement 1 is correct.

• Only statement 2 is correct.

• Both the statements are incorrect.

• None of the above

Answer 1

Only statement 1 is correct.

Explanation:

The dissolution of a partnership is caused by a change in profit sharing ratio among the existing partners, the admission of a new partner, the retirement or death of a partner. The previous partnership deed is dissolved and replaced by a new partnership deed in such cases. The partnership firm, on the other hand, continues to operate. In the case of a partnership firm's breakup, however, the entire firm is terminated (along with the partnership deed). As a result, saying that a firm dissolves when a partner retires is wrong.