Accountancy Part ADissolution of Partnership Firm

According to Section 48 of Indian Partnership Act, amount realized fr…

According to Section 48 of Indian Partnership Act, amount realized from assets, along with contributions from partners, if required, to make up deficiencies of capital shall be utilized in a particular order:

A. To pay off unsecured loan.
B. In settlement of capital account balances.
C. To pay off secured loan.
D. The surplus, if any, is divided among partners in their profit-sharing ratio.

Choose correct answer from options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → C, A, B, D

(C) To pay off secured loan.

(A) To pay off unsecured loan.

(B) In settlement of capital account balances.

(D) The surplus, if any, is divided among partners in their profit-sharing ratio.

NCERT (2026-27 edition):
Settlement of Accounts – “In case of dissolution of a firm, the firm ceases to conduct business and has to settle its accounts. For this purpose, it disposes off all its assets for satisfying all the claims against it. In this context it should be noted that, subject to agreement among the partners, the following rules as provided in Section 48 of the Partnership Act 1932 shall apply.”

Extract from the NCERT textbook