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Numerical Example of Assets Realisation

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Question

Select the most appropriate alternative from those given below :

Deficiency of Insolvent partner will be suffered by solvent partners in their ___________ ratio.
a) capital ratio
b) profit-sharing ratio
c) sale ratio
d) liquidity ratio

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Solution

Deficiency of Insolvent partner will be suffered by solvent partners in their profit-sharing ratio.

Explanation: If deficiency of insolvent partner (i.e. the debit balance in the insolvent partner’s capital account) is treated as an ordinary loss, then this loss is to be borne by the other solvent partners in their profit-sharing ratio.

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Numerical Example of Assets Realisation

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