Question : On dissolution of a firm, out of the proceeds received from the sale of assets will be paid first of all to :
Option 1: Partner’s Capital
Option 2: Partner’s additional capital
Option 3: Outside Creditors
Option 4: Partner’s Loan to Firm
Answer (1)
11th Jan, 2024
Correct Answer: Outside Creditors
Solution : The external liabilities, such as the creditors, bank loans, bank overdrafts, bills payable, etc., are initially paid off using the proceeds from the sale of assets and the partners' contributions at the time of the firm's dissolution.
Hence the Correct answer is option 3
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