In the event of a firm's dissolution, which of the following statements regarding the disposal of assets is true, according to Section 48 of the Partnership Act 1932?
Answer & explanation
Correct answer: option 2
A partnership firm settles its accounts first because at the time of dissolution, a partnership firm stops conducting its business. After paying off all liabilities if any residue is left with the firm then it is distributed between partners in their profit-sharing ratio.