Varun and Arun are partners in a firm sharing profits and losses equally. On the date of dissolution of the partnership firm, Varun's wife's loan was Rs. 45,000, whereas Arun's loan was Rs. 65,000. Which loan will be paid first and why? (CBSE 2019)

Varun and Arun are partners in a firm sharing profits and losses equally. On the date of dissolution of the partnership firm, Varun’s wife’s loan was Rs. 45,000, whereas Arun’s loan was Rs. 65,000. Which loan will be paid first and why? (CBSE 2019)

SOLUTION

Varun’s wife’s loan will be paid first as it’s an outside liability (third party liability’).