Identify the correct sequence or order of application of assets including any sum contributed by the partners, in case of dissolution of partnership firm to make up deficiencies of capital. A. In paying each partner proportionately what is due to him from the firm for advances distinguished from capitalB. In paying to each partner proportionately what is due to him on account of capitalC. In paying the debts of the firm to the third partiesD. The residue, if any, shall be divided among the partners in their profit sharing ratio Choose the correct answer from the options given below:
- AA, B, C, D
- BC, A, B, D
- CB, C, A, D
- DD, A, C, B
Solution & Step-by-step Explanation
According to Section 48 of the Indian Partnership Act, 1932, at the time of dissolution, the assets are applied in the following order: First, in paying the debts of the firm to third parties (C).Second, in paying to each partner rateably what is due to him from the firm for advances as distinguished from capital (A).Third, in paying to each partner rateably what is due to him on account of capital (B).Fourth, the residue, if any, shall be divided among partners in their profit-sharing ratio (D).Therefore, the correct sequence is C, A, B, D.