Question

As per Garner Vs Murray Rule, the loss resulting from a partner's insolvency is borne by other partners in ___________.

• A. Equal Ratio
• B. their Capital Ratio
• C. their Profit Sharing Ratio
• D. 3 : 1

Answer 1

Answer: (B)

their Capital Ratio

According to the Garner Vs Murray rule, the loss arising on insolvency of a partner is a capital loss which should be borne by the solvent partners in their capital ratio. Once a partner is insolvent, the loss arising from him to be borne by the other partners in their capital ratio.