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After settling external liabilities and the partners’ claims at dissolution, to whom is the remaining cash distributed?

Answer and explanation

Correct answer: Partners

On dissolution, external liabilities are paid first, followed by settlement of partners’ loans and capital accounts. Any cash remaining after these payments is distributed among the partners according to their final amounts due. Exam tip: remember the order of settlement—external liabilities, partners’ loans, and partners’ capital.

Related tags

Partnership DissolutionClosing BusinessRealisation AccountSettlement Of AccountsClosing The BusinessDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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