In case of dissolution of a firm, assets of the firm shall be applied in following purposes and order(sequence).A. Paying to each partner portionately what is due to him on account of capitalB. In paying the debts of the firm to the third partyC. In transferring amount to General ReservesD. Residue if any to be divided among the partnerandrsquo;s in their profit sharing ratioE. In paying each partner proportionately what is due to him from the firm for advances (Partnerandrsquo;s Loan)Choose the most appropriate answer from the options given below:a)B, A, D, E, Cb)C, D, B, D, Ec)B, E, A, Dd)E, A, D, CCorrect answer is option 'C'. Can you explain this answer?

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In case of dissolution of a firm, assets of the firm shall be applied in following purposes and order
(sequence).

A. Paying to each partner portionately what is due to him on account of capital
B. In paying the debts of the firm to the third party
C. In transferring amount to General Reserves
D. Residue if any to be divided among the partner’s in their profit sharing ratio
E. In paying each partner proportionately what is due to him from the firm for advances (Partner’s Loan)

Choose the most appropriate answer from the options given below:

a)
B, A, D, E, C
b)
C, D, B, D, E
c)
B, E, A, D
d)
E, A, D, C

Correct answer is option 'C'. Can you explain this answer?

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In case of dissolution of a firm, assets of the firm shall be applied ...

The correct answer is C:
In case of dissolution of a firm, assets of the firm shall be applied in the following order:

B. Paying the debts to third parties:

Before anything else, the firm needs to clear its outstanding debts to third parties. This ensures that the firm has no pending liabilities.

E. Paying each partner proportionately for advances:

After clearing external debts, the firm should pay back any advances or loans made by the partners. These advances are usually given priority over capital and profit distribution.

A. Paying each partner proportionately for capital:

Once the advances are settled, the firm should pay each partner their due share of capital. This represents the initial investment made by the partners, and it is essential to return these funds before distributing profits.

D. Dividing the residue among partners based on their profit-sharing ratio:

After settling all debts, advances, and capital, any remaining residue should be divided among the partners based on their agreed-upon profit-sharing ratio. This ensures that each partner receives their fair share of the profits generated by the firm.

C. Transferring amount to General Reserves:

This option is not applicable in the case of dissolution of a firm. General Reserves are created during the normal course of business operations, and such reserves are not relevant during the dissolution process.

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In case of dissolution of a firm, assets of the firm shall be applied in following purposes and order(sequence).A. Paying to each partner portionately what is due to him on account of capitalB. In paying the debts of the firm to the third partyC. In transferring amount to General ReservesD. Residue if any to be divided among the partner’s in their profit sharing ratioE. In paying each partner proportionately what is due to him from the firm for advances (Partner’s Loan)Choose the most appropriate answer from the options given below:a)B, A, D, E, Cb)C, D, B, D, Ec)B, E, A, Dd)E, A, D, CCorrect answer is option 'C'. Can you explain this answer?

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