On dissolution of a firm, out of the proceeds received from the sale of
the assets will be paid first of all to :-

Question

On dissolution of a firm, out of the proceeds received from the sale of the assets will be paid first of all to :-

YESPYQ · Accepted Answer

Correct answer: d) Outside creditors. Correct Answer: (D) Outside Creditors Why Correct? At the time of dissolution, the first priority is given to payment of outside liabilities. Therefore, the amount realised from sale of assets is first used to pay outside creditors, and only after that partners’ loans and capital are settled. Why Others Are Incorrect? (A) Partners’ Capitals — Wrong Partners’ capital is paid only after all outside liabilities and partners’ loans are settled. (B) Partners’ Additional Capital — Wrong Additional capital is part of partners’ capital and is settled at the last stage. (C) Partners’ Loan to Firm — Wrong Partners’ loans are paid after outside creditors but before capital, not first.

On dissolution of a firm, out of the proceeds received from the sale of the assets will be paid first of all to :-

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