At the time of dissolution of the firm, loss including deficiencies of capital is paid firstly out of:
Answer & explanation
Correct answer: option 1
The correct answer is option 1- Profits.
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.