Match List – I with List – II.

Choose the correct answer from the options given below :

(A)-(II), (B)-(IV), (C)-(I), (D)-(III)

The correct answer is option 4- (A)-(II), (B)-(IV), (C)-(I), (D)-(III).

(A) Meaning of Dissolution-(II) Section 39,of the partnership Act 1932.
According to section 39 of the Partnership Act, 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm. The reconstitution of a partnership firm takes place on account of admission, retirement or death of a partner. In such a situation while the existing partnership is dissolved, the firm may continue under the same name if the partners so decide. In other words, it results in the dissolution of a partnership but not that of the firm. According to Section 39 of the partnership Act 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm. That means the Act recognises the difference in the breaking of relationship between all the partners of a firm and between some of the partners; and it is the breaking or discontinuance of relationship between all the partners which is termed as the dissolution of partnership firm. This brings an end to the existence of firm, and no business is transacted after dissolution except the activities related to closing of the firm as the affairs of the firm are to be wound up by selling firm’s assets and paying its liabilities and discharging the claims of the partners.

(B) Application of Assets-(IV) Section 48,of the partnership Act 1932.
In case of dissolution of a firm, the firm ceases to conduct business and has to settle its accounts. For this purpose, it disposes off all its assets for satisfying all the claims against it. In this context it should be noted that, subject to agreement among the partners, the following rules as provided in Section 48 of the Partnership Act 1932 shall apply.
(a) Treatment of Losses- 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

(C) Private Debts Vs Firm's Debts-(1) Section 49,of the partnership Act 1932. 
Where both the debts of the firm and private debts of a partner co-exist, the following rules, as stated in Section 49 of the Act, shall apply.
(a) The property of the firm shall be applied first in the payment of debts of the firm and then the surplus, if any, shall be divided among the partners as per their claims, which can be utilised for payment of their private liabilities.(b) The private property of any partner shall be applied first in payment of his private debts and the surplus, if any, may be utilised for payment of the firm’s debts, in case the firm’s liabilities exceed the firm’s assets. It may be noted that the private property of the partner does not include the personal properties of his wife and children. Thus, if the assets of the firm are not adequate enough to pay off firm’s liabilities, the partners have to contribute out of their net private assets (private assets minus private liabilities).

(D) Nature of Partnership- (III) Section 4,of the partnership Act 1932.
When two or more persons join hands to set up a business and share its profits and losses, they are said to be in partnership. Section 4 of the Indian Partnership Act 1932 defines partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all’.