Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

At the time of firm's dissolution, the bank balance was Rs 80,000, after paying off all the other liabilities except the followings-
Shikha' s Loan to the firm- 60,000
Shikha 's Capital - 50,000
Diksha's Capital - 50,000.
Diksha asked to pay her capital first.
To whom, the firm will pay first?

Options:

₹50,000 to Shikha

₹50,000 to Diksha

₹60,000 to Shikha

₹80,000 to Shikha

Correct Answer:

₹60,000 to Shikha

Explanation:

According to Partnership Act 1932 the expenses will be paid off in the following order at the time of dissolution-
1) Outsider's Liabilities
2) Partner's Loan
3) Partner's Capital Loan