(A) In paying each partner rateably what is due to him for advances as distinguished from capital.
(B) In paying to each partner rateably what is due to him on account of capital.
(C) In paying the debts of the firm to third parties.
(D) Dividing among the partners in the proportion in which they were entitled to share profits.
Choose the correct answer form the options given below:
Correct Answer: (a) (C),(A),(B),(D)
Solution:The assets of the partnership firm including any sums contributed by the partners to make up deficiencies of capital at the time of dissolution. Shall be applied in the following manner and order.
• In paying the debts of the firm to third parties.
• (first secured creditors then unsecured creditors)
• In paying each partner rateably what is due to him for advances as distinguished from capital.
• In paying to each partner rateably what is due to him on account of capital.
• dividing among the partners in the proportion in which they were entitled to share profit.
(Residue to be divided among partners in PSR.