Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

From where the losses are covered at the time of dissolution of firm,if profits are not enough to cover the losses?

Options:

Capital of partners

Current A/c Balance

Public asset

Private asset

Correct Answer:

Capital of partners

Explanation:

 Losses, including deficiencies of capital, shall be paid :
(i) first out of profits,
(ii) next out of capital of partners, and
(iii) lastly, if necessary, by the partners individually in their profit sharing ratio.