Dissolution of Partnership Firm · Class 12 · CBSE · Commerce Accountancy
In the settlement of accounts on dissolution, which sequence correctly states the order in which the firm’s liabilities and partners’ claims are paid?
Practice question from Dissolution of Partnership Firm (Class 12 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
hard · MCQ · Q-584CF2
In the settlement of accounts on dissolution, which sequence correctly states the order in which the firm’s liabilities and partners’ claims are paid?
- A.Partners’ capitals, partners’ loans, external liabilities
- B.External liabilities, partners’ loans, partners’ capitalsCorrect answer
- C.Partners’ loans, external liabilities, partners’ capitals
- D.External liabilities, partners’ capitals, partners’ loans
Solution
Under the usual order of settlement, the firm first pays external liabilities, then loans advanced by partners, and finally returns partners’ capitals. Any surplus is distributed among the partners in their profit-sharing ratio.
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