Question

In case of dissolution of a Partnership Firm, assets of the firm shall be applied in the following order:
(A) Paying unsecured debts of the firm
(B) Paying secured debts of the firm
(C) Paying partner’s loan
(D) Paying partners’ capital
Choose the correct answer from the options given below:

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

Answer 1

The Correct Option is C

In the dissolution of a partnership firm, the order of applying the assets is critical to ensure that all debts and obligations are settled appropriately. The correct order is as follows:- (B) First, pay the secured debts of the firm, as these creditors have a claim on specific assets. (A) Next, settle the unsecured debts of the firm.- (C) After all debts are paid, any loans from partners should be addressed.- (D) Finally, the remaining assets can be distributed to the partners in the form of their capital contributions.