Question

Mention the order in which the proceeds from the sale of assets are utilised at the time of dissolution of partnership firm.

Answer 1

1. The firm’s external liabilities are settled first.
2. Next, any loans provided by the partners to the firm are repaid.
3. After that, the remaining balance is used to return the partner’s capital contributions.
4. If any surplus still remains, it is distributed among the partners according to their profit-sharing ratio.