Dissolution of a firm necessarily involves dissolution of partnership.
True. Dissolution of a firm implies the discontinuance of partnership business and termination of economic relations between the partners. As per the context, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm. Therefore, dissolution of a firm necessarily involves dissolution of partnership.
Explanation
The textbook context clarifies the distinction between the two concepts. While 'Dissolution of Partnership' (reconstitution) does not necessarily dissolve the firm, 'Dissolution of Partnership Firm' involves the complete closure of business and termination of relations between all partners. Section 39 of the Partnership Act 1932, mentioned in the text, explicitly states that the dissolution of partnership between all partners is termed as the dissolution of the firm. Hence, the dissolution of the firm inherently involves the dissolution of the partnership.