State the order of settlement of accounts on dissolution.

Explanation

In case of dissolution of a firm, the firm ceases to conduct business and has got to settle its accounts. For this purpose, it disposes off all its assets for satisfying all the claims against it. during this context, it ought to be noted that subject to agreement among the partners, the subsequent rules as provided in Section forty eight of the Partnership Act, 1932 shall apply. As per those rules the subsequent order of settlement are going to be followed.



(i) Treatment of Losses:

Losses, as well as deficiencies of capital, shall be paid)


(a) 1st out of profits


(b) Next out of capital of partners, and
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