Question

According to Section 39 of the Partnership Act, 1932, dissolution of partnership between all the partners of a firm is called:

• A. Admission of partner
• B. Reconstitution of firm
• C. Dissolution of firm
• D. Settlement of accounts

Hint:

According to Section 39 of the Indian Partnership Act, 1932: \[ \text{Dissolution of partnership among all partners} = \text{Dissolution of firm} \]

Answer 1

The Correct Option is C

Concept: The Indian Partnership Act, 1932 defines various aspects related to partnership firms, including formation, rights, duties, and dissolution. According to Section 39 of the Partnership Act: \[ \textit{“The dissolution of partnership between all the partners of a firm is called the dissolution of the firm.”} \] This means that when the relationship among all partners comes to an end and the business is completely closed, it is known as dissolution of the firm.

Step 1: Understand the meaning of dissolution of firm.
Dissolution of a firm occurs when:
• Partnership among all partners ends.
• Business activities are discontinued.
• Assets and liabilities are settled. Thus, complete termination of partnership is called: \[ \boxed{\text{Dissolution of firm}} \]

Step 2: Analyze the remaining options.
Admission of partner
Admission means a new partner joins the existing partnership. \[ \Rightarrow \text{Not correct} \] Reconstitution of firm
Reconstitution occurs when partners change but the firm continues. \[ \Rightarrow \text{Not correct} \] Settlement of accounts
Settlement of accounts is only a process carried out after dissolution. \[ \Rightarrow \text{Not correct} \]

Step 3: Identify the correct option.
The option matching the definition under Section 39 is: \[ \boxed{\text{Dissolution of firm}} \] Hence, the correct answer is: \[ \boxed{(C)} \]