Question

At the time of dissolution of firm, balances of Partners’ Capital Accounts are paid ______.

पर्याय

• After Payment of Outsiders’ Liabilities.

• Before payment of loan by partner.

• After payment of Outsiders’ Liabilities and Partner’s Loan.

• Before payment of Outside Liabilities.

Answer 1

At the time of dissolution of firm, balances of Partners’ Capital Accounts are paid after payment of Outsiders’ Liabilities and Partner’s Loan.

Explanation:

When a firm closes down, the money collected from selling assets follows a strict legal order of payment under Section 48 of the Indian Partnership Act. First, the firm must pay off all outside liabilities (like creditors and bank loans). Second, any remaining money is used to clear loans given by partners to the firm. Finally, if there is still cash left over, it is used to pay back the partners’ capital accounts. Since partners are the owners, they stand last in line and get paid only after both third-party debts and partner loans are fully cleared.