Question

In the event of dissolution of a partnership firm, the order of payment of losses, including deficiencies of capital shall be:

विकल्प

• (i) First out of profits, (ii) Next by the partners individually in their profit-sharing ratio, (iii) Lastly, if necessary, out of capital of partners.

• (i) First out of capital of partners, (ii) Next out of profits, (iii) Lastly, if necessary, by the partners individually in their profit-sharing ratio.

• (i) First by the partners individually in their profit-sharing ratio, (ii) Next out of profits, (iii) Lastly, if necessary, out of capital of partners.

• (i) First out of profits, (ii) Next out of capital of partners, (iii) Lastly; if necessary, by the partners individually in their profit-sharing ratio.

Answer 1

(i) First out of profits, (ii) Next out of capital of partners, (iii) Lastly; if necessary, by the partners individually in their profit-sharing ratio.

Explanation:

Under Section 48(a) of the Indian Partnership Act, 1932, business losses and capital deficiencies must be paid off in a strict order [a]. First, the firm uses its accumulated profits to cover the loss. If the profits run out, the remaining loss is deducted next from the partners’ capital accounts. Finally, if a deficiency still exists, the partners must bring in personal cash individually from their private property in their profit-sharing ratio to settle the final debts.