Yasir and Rahool are partners in an accounting firm. Each contributed $10 000 in capital and Yasir has loaned the partnership a further $15 000. The partnership also owes its bank $25 000. Yasir and Rahool want to dissolve the partnership. They plan to pay themselves back $10 000 each first, then distribute $25 000 to the bank, and finally pay back Yasir's loan if there is enough money left. This plan for distribution is consistent with partnership law.

Question

Quizplus · Accepted Answer

In partnership law, external debts such as bank loans must be settled before partners can be repaid their capital contributions or loans.

Yasir and Rahool Are Partners in an Accounting Firm