Match the following for the application of assets at the time of dissolution of partnership firm:
| List 1 | List 2 |
| a) Residue divided among partners in their profit-sharing ratio |
1) Ist no |
| b) Pay each partner proportionately what is due to him on account of capital |
2) 2nd no |
| c) Debts of the firm to the third parties | 3) 3rd no |
| d) Partner’s loan | 4) 4th no |
Answer & explanation
Correct answer: option 4
| List 1 | List 2 |
| a) Residue divided among partners in their profit-sharing ratio | 4th no |
| b) Pay each partner proportionately what is due to him on account of capital | 3rd no |
| c) Debts of the firm to the third parties | 1st no |
| d) Partner’s loan | 2nd no |
The assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:
(i) In paying the debts of the firm to the third parties;
(ii) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner’ loan);
(iii) In paying to each partner proportionately what is due to him on account of capital; and
(iv) the residue, if any, shall be divided among the partners in their profit sharing ratio.