Question

Arrange the following in a sequence in which amount realised from Assets will be utilized to pay: 
A. Partner's Loan 
B. Partner's Capital 
C. Secured debts of the firm 
D. Unsecured debts of the firm 
E. Residue to partners 
Choose the correct answer from the options given below:

• A. C, D, E, A, B
• B. C, D, E, B, A
• C. C, D, A, B, E
• D. C, D, A, E, B

Hint:

In liquidation, secured creditors paid first, then unsecured, then partners' loans and capital, residue to partners.

Answer 1

The Correct Option is C

Step 1: Order of payment 
First, secured debts are paid (C) as they have a priority claim on assets. 
Then unsecured debts are paid (D). 
Then partner's loans (A) which are outside capital account but have priority over capital. 
Then partner's capital (B).
Finally, any residue is distributed among partners (E).
Step 2: Conclusion 
The correct order is: C, D, A, B, E.