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Meaning of Retirement

Amount realiz...

Question

Amount realization from the sale of private estate of partners is used first to pay off ___________________.

A

Debts of the firm

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B

Private debts of the partner

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C

Wife's loan

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D

Bank loan of the firm

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Solution

The correct option is A Debts of the firm
Assets of the firm and the capital contributed by the partners to set-off losses of the firm will be applied in the following order–
Third party debts will be paid first
Next, loan amount taken by firm from any partner will be repaid to that partner
Capital contributed by each partner will be repaid to him in the capital contribution ratio
Balance amount will be shared among the partners in their profit sharing ratios.

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