The correct answer is option 1- Partner's capital A/c.
Partner's capital A/c is settled in last at the time of dissolution of partnership firm.
At the time of dissolution of a partnership firm, the settlement of accounts follows a specific order. The correct sequence for settling accounts during dissolution is:
- Partner's Wife Loan A/c: If a loan is provided by a partner's wife or any other external party, it is treated as a creditor of the firm. So, it is paid firstly.
- Partner's Loan A/c: Loans provided by partners to the firm are settled before the partners' capital accounts. These are considered as liabilities of the firm and are settled first.
- Partner's Current A/c: This account reflects transactions between the partners and the firm, such as interest on capital, drawings, salary etc. It is settled and the debit or credit balance, whatever remains transferred to partners capital account.
- Partner's Capital A/c: After settling all account, at last the capital accounts are prepared which reflect the equity each partner has in the firm, and they are settled after paying off all liabilities. It may be noted that the aggregate amount finally payable to the partners must equal to the amount available in bank and cash accounts. Thus, all accounts of a firm are closed in case of dissolution.
|
