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Question

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 _______.

A
Profit sharing ratio
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B
Scarifying ratio
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C
Gaining ratio
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D
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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