Question

State the order of payment of the following on dissolution of partnership firm:

1. To each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e., Partner’s Loan);
2. To each partner proportionately what is due to him on account of capital; and
3. For the debts of the firm to the outside parties.

Options

• (i), (iii), (ii)

• (ii), (iii), (i)

• (i), (ii), (iii)

• (iii), (i), (ii)

Answer 1

(iii), (i), (ii)

Explanation:

iii. For the debts of the firm to the outside parties.

i. To each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e., partner’s loan);

ii. To each partner proportionately what is due to him on account of capital.