Q.2: What is the procedure for the settlement of accounts for the dissolution of the firm?
Ans: SETTLEMENT OF ACCOUNTS
In setting the accounts of a firm after the dissolution the following rules shall, subject to agreement by the partners, be observation [Section 48, 49 & 55]
(a) PAYMENT OF LOSSES [Section 48(a)]
Losses including deficiencies of capital, shall be paid first out of profit next of capital and lastly, if necessary by the partners individually in the proportions in which they were entitled to share profit.
(b) USE OF ASSETS [Section 48(b)]
The assets of the firm, including any sums contributed by the partners to make deficiencies of capital, shall be applied in the following manner and order.
(i) PAYMENT OF DEBTS [Section 49]
In payment the debt of the firm to third parties.
(ii) PA YMENT OF PARTNERS
In paying to each partner ratably what is due to him from the firm for advantages as distinguished from capital.
(iii) PAYMENT OF CAPITAL
In payment to each retable what is due to him on account of capital.
(iv) DIVISION AMONG PARTNERS
The residue, if any shall be divided among the partners in the proportions in which.-they entitled to share profits.
DISSOLUTION OF PARTNERSHIP Next Post:
Describe the rights and liabilities of a partner on dissolution.