Accountancy Part ADissolution of Partnership Firm

Select the correct sequence of payment of the following from the amou…

Select the correct sequence of payment of the following from the amount realised by the sale of assets on the dissolution of a partnership firm.

(A) Partners' capital

(B) Residue (if any)

(D) Outside liabilities of the firm

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → D, C, A, B

(D) Outside liabilities of the firm

(C) Partner’s loan

(A) Partners’ capital

(B) Residue (if any)

NCERT (2026-27 edition):
Settlement of Accounts – “… (b) Application of Assets 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.”