Arrange the following in correct order in which assets of the firm can be used in their settlement upon dissolution.(A) Residue shall be divided between the partners in their profit sharing ratio.(B) In paying the partners proportionately what is due to him/her on account of capital.(C) In paying the partners proportionately what is due to him/her from the firm for advances/loans.(D) In paying the debts of the firm to the third parties.Choose the correct answer from the options given below:
- A(A), (B), (C), (D)
- B(A), (C), (B), (D)
- C(B), (A), (D), (C)
- D(D), (C), (B), (A)
Solution & Step-by-step Explanation
According to Section 48 of the Indian Partnership Act, 1932, the assets of the firm at the time of dissolution are applied in the following order:First, in paying the debts of the firm to third parties (outside liabilities). Hence, (D) comes first.Second, in paying to each partner proportionately what is due to him/her from the firm for advances or loans as distinguished from capital. Hence, (C) comes second.Third, in paying to each partner proportionately what is due to him/her on account of capital. Hence, (B) comes third.Lastly, any residue left shall be divided among the partners in their profit-sharing ratio. Hence, (A) comes last.Therefore, the correct sequence is (D), (C), (B), (A).