All dilute acids react with bleaching powder liberating
A. Chlorine gas
B. Hydrogen gas
C. Nitrogen gas
D. $HCl$ gas

Hint: Bleaching powder is calcium oxychloride. The common name for bleaching powder is chloride of lime. The chemical formula of bleaching powder is $CaOC{l_2}$. It is white powder soluble in water and has a strong smell like chlorine gas.

Complete answer:
> Bleaching powder is also known as calcium oxychloride with the formula $CaOC{l_2}$ .
> Bleaching powder is manufactured by using slaked lime and chlorine gas. Slaked lime is the common name for calcium hydroxide. The reaction is as follows-
$2Ca{(OH)_2} + 2C{l_2} \to CaC{l_2} + CaOC{l_2} + {H_2}O$
> When bleaching powder is treated with excess of dilute acid, chlorine gas is liberated.
> For example, when bleaching powder is treated with dilute sulphuric acid, calcium sulphate and water is formed and chlorine gas is liberated. The reaction is as follows-
$CaOC{l_2} + {H_2}S{O_4} \to CaS{O_4} + C{l_2} + {H_2}O$
> Chlorine gas produced by the action of dilute acid on bleaching powder acts as a bleaching agent.

So, the correct option is A.

Additional information:
> Bleaching powder is used for bleaching in the textile industry, for bleaching pulpwood in paper factories and for washed clothes in industry.
> It is also used as an oxidizing agent in chemical industries and used to make drinking water free of germs. It is commonly used to disinfect water in swimming pools.
> It is also used to manufacture chloroform.

Note: Bleaching powder is made with moist slaked lime. It is basic in character. It also releases chlorine gas when it reacts with carbon-dioxide. Bleaching powder can undergo auto-oxidation into calcium chlorate and calcium chloride if left unused for a long period of time. It has oxidizing character due to the presence of nascent oxygen.