The assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be utilized in which sequence? Arrange the following in proper sequence:(A) In paying the debts of the firm to the third parties
(B) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner's loan)
(C) In paying to each partner proportionately what is due to him on account of capital
(D) The residue, if any, shall be divided among the partners in their profit sharing ratioChoose the correct answer from the options given below:
- A(C), (B), (D), (A)
- B(A), (B), (D), (C)
- C(B), (A), (D), (C)
- D(A), (B), (C), (D)
Solution & Step-by-step Explanation
According to Section 48 of the Indian Partnership Act, 1932, upon the dissolution of a firm, the assets are applied in the following order:First, in paying outside debts/liabilities to third parties (A).Second, in paying each partner rateably what is due to him/her for advances or loans separate from capital (B).Third, in returning the capital balances due to each partner proportionately (C).Fourth, any remaining residue is distributed among the partners in their profit-sharing ratio (D).Thus, the correct sequence is (A), (B), (C), (D).