Question

(a) Describe the steps that the liabilities of a partnership are paid on dissolution in accordance to the partnership act. (5 marks) (b) Explain the term "Loan From Partner' under the Partnership Act 1961. (5 marks)

Answer 1

Answer to a. paid on Dissolution Steps of Liabilities of the Partnership are Dissolution of the Partnership may take in any of the Following Ways 1.Change in the Existing Profit sharing Ratio 2.Admission of the New Partner 3.Retirement of the Existing Partner 4.Death of the Existing Partner 5.Insolvency of any Partner 6.Expiry of the Partnership Firm. On Dissolution: 1. Firm first prepares the Realisation account. 2. Balance in the Realisation account may be Profit / Loss 3. The profit or the Loss will be transferred to theCapital accounts of the Patners in their profit sharing Ratio 4.Next Outside Liabilities will be paid 5.Next Partners Loan will be paid after paying the Outside Liabilities 6.Partners Loan will be paid before the payment of the Capital Account. 7.Next Capital Accounts will be paid to the Partners.

Answer to b. Loan From Partner:- 1. Loan from the Partner is the Loan taken by the Partnership Firm From its parners 2. Interest on Loan will be paid to the Partner depending on the Agrreed Ratio. 3. At the time of the Dissolution , Loan will be paid to the Respective Partner After paying all the Outside Liabilities. 4.Partners Loan will be paid before the payment of the Capital Account. 5. Loan taken from other Banks or Persons is different From the Loan taken from the Partners.