As per section 48 of the Partnership Act, what is the correct sequence to be followed at the time of dissolution of a partnership firm?
A) Payment for partner's loan
B) Payment for partner's capital dues
C) Payment of outsider's liabilities
D) Surplus, if any distributed amongst partners
Choose the correct answer from the options given below-
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → C, A, B, D
Section 48 of the Indian Partnership Act, 1932 fixes the order in which the firm’s assets are applied: outsiders first, then partners’ loans, then capital, then the surplus.
(C) Payment of outsiders’ liabilities (debts to third parties)
(A) Payment of partners’ loans (advances distinguished from capital)
(B) Payment of partners’ capital dues
(D) Surplus, if any, distributed among partners in the profit sharing ratio
NCERT (2026-27 edition):
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