48.
Mode of settlement of accounts between partners.-
In settling the accounts of a firm after dissolution,
the following rules shall, subject to agreement
by the partners, be observed :
(a) Losses, including deficiencies
of capital, shall be paid first out of profits,
next out of capital, and, lastly, if necessary,
by the partners individually in the proportions
in which they were entitled to share profits;
(b) the assets of the firm,
including any sums contributed by the partners
to make up deficiencies of capital, shall be
applied in the following manner and order :
(i) in paying the debts of
the firm to third parties;
(ii) in paying to each partner
rateably what is due to him from the firm for
advances as distinguished from capital;
(iii) in paying to each partner
rateably what is due to him on account of capital;
and
(iv) the residue, if any,
shall be divided among the partners in the proportions
in which they were entitled to share profits.
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