G, K, and B decided to dissolve their partnership due to continuous losses after 10 years of operation.
They agreed to end the business together, which is known as Dissolution by Agreement. This means all partners consented to dissolve the firm voluntarily.
In this case, they faced losses, had liabilities, and decided to settle everything, which shows they worked together to close the business properly.
Thus, the correct answer is option 1: Dissolution by Agreement.