On dissolution of a firm, to whom is the final cash balance paid after settling outside liabilities and other amounts due?

Correct answer: Partners

On dissolution, outside liabilities, realisation expenses and amounts due to partners are settled first. Any cash remaining after these payments is paid to the partners according to the balances due in their final capital accounts. Suppliers are paid while settling liabilities, so they do not receive the residual cash balance. Exam tip: Treat the cash left after all settlements as the partners’ final payment.