When the partners capital accounts are fixed, then as per the decision in the Garner vs. Murray case, any loss arising due to the capital deficiency in the insolvent partner's capital accounts is to be borne by solvent partners in the ratio of _______.

Profit sharing ratio

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Scarifying ratio

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Gaining ratio

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Last agreed capital ratio

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Solution

The correct option is D Last agreed capital ratio
In case of dissolution of a partnership firm, unless the partnership deed specifies otherwise, the debit balance in the capital account of the insolvent partner as reduced by any amounts received from insolvent partners estates shall be borne by the other solvent partners in their capital ratio.

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Similar questions

Q. When the partners capital accounts are fixed, then as per the decision in the Garner vs. Murray case, any loss arising due to the capital deficiency in the insolvent partners' capital accounts is to be borne by solvent partners in __________ .

Q. When capitals are fixed, the loss arising out of insolvency of a partner will be borne by other solvent partners in the ____________________.

If the value of goodwill is Rs. 3,00,000. The PSR of A, B and C is 1:1:1. A retires and new profit sharing ratio is 1:1. B and C Capital accounts will be debited with what amount?

Q. When all the partners are insolvent, the loss shown by Realisation Account is debited to capital accounts of partners in the ________________.

Q. 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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