Multiple choice

M, a partner, made a payment of 50,000 towards the debts of the firm. On dissolution, he is entitled to be ranked as a creditor.

  1. True

  2. False

  3. Partly true

  4. Cannot say

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a partner pays firm debts from personal funds, they become a creditor of the firm. On dissolution, this partner is entitled to rank as a creditor and be repaid from the firm's assets before any distribution to partners. This is a basic principle of partnership law.