Question

Arrange the following in the sequence of payment at dissolution of a firm: (A) The debts of the firm to the third parties.
(B) Partner's loan to the firm.
(C) Partner's capital.
(D) Remaining balance divided among partners in profit sharing ratio.

• A. (A), (B), (C), (D)
• B. (B), (C), (D), (A)
• C. (A), (D), (C), (B)
• D. (D), (B), (C), (A)

Hint:

Always follow the settlement order: Outside liabilities → Partner's loans → Partner's capitals → Balance in profit ratio.

Answer 1

The Correct Option is A

Step 1: Legal order of payments at dissolution – Section 48 of Partnership Act. 1. Pay outside debts (creditors/third parties). 2. Pay partner's loans to the firm. 3. Pay back partner's capitals. 4. Balance, if any, distributed among partners in profit-sharing ratio. Step 2: Apply to question. (A) → first, (B) → second, (C) → third, (D) → last. Final Answer: \[ \boxed{(A), (B), (C), (D)} \]