Question

At the time of dissolution of firm, Loan given by partner to the firm is paid out of the amount realised on sale of assets ______.

विकल्प

• after payment of outside liabilities but before repayment of capital.

• after payment of capital of partners.

• after payment of outside liabilities and capital.

• before payment of outside liabilities.

Answer 1

At the time of dissolution of firm, Loan given by partner to the firm is paid out of the amount realised on sale of assets after payment of outside liabilities but before repayment of capital.

Explanation:

When a firm dissolves, the cash received from selling assets follows a strict legal order. First, all outside liabilities (like bank loans and creditors) must be paid completely. After that, any remaining money is used to pay back the loan given by a partner to the firm. Only after this partner’s loan is fully cleared can the remaining cash be distributed to partners for their capital accounts. Therefore, a partner’s loan is settled after third-party debts but before capital repayment.