When it is alive we sing, when it is dead we clap our hands. What is it?

“A birthday cake”

While a birthday cake is often associated with singing and clapping, it is not the object that is alive or dead; the riddle specifically refers to something that 'is alive' when lit (the flames of the candles) and 'dead' when extinguished.

“A firework”

Fireworks do create a celebratory atmosphere with singing and clapping, but they are not something that is 'alive' in the same sense as a candle's flame. The riddle focuses on the transition from alive to dead, which doesn't apply to fireworks.

“A song”

A song can be sung, but it doesn't have a physical state of being alive or dead. The riddle specifically refers to a physical object (birthday candles) that has a flame that represents being alive.