Question

In the liquidation of a partnership all liquidation expenses and gains and losses from the selling of partnership assets must be allocated to:

	a.	Limited partners first
	b.	Unsecured creditors first
	c.	Secured creditors first
	d.	General partners first

Answer 1

In the liquidation of a partnership all liquidation expenses and gains and losses from the selling of partnership assets must be allocated to:

The correct answer is OPTION D i.e General partners first.

Explanation

It is according to the partnership act that in the liquidation of a partnership all liquidation expenses and gains and losses from the selling of partnership assets must be allocated to general partners first.

Furthermore after all the payment for liquidation expenses, now the assets remaining or amount for distribution goes in an order as Secured creditors first > Unsecured creditors > Limited partners.