The Total solution for NCERT class 6-12
Basis of Comparison
Firm’s Debts
Partner’s Private Debts
Meaning
Debts that are owed by a firm to the outsiders
Debts that are owed by a partner to any other person outside the firm.
Liability
Liability of firm’s debt lies with all the partners jointly as well as individually.
The liability of repaying debt rest only with the partner who has taken the debt.
Debt Settlement by private assets
Whenever debts of firm exceeds the assets of firm, the partner’s private assets may be utilized in order to pay firms debt, only on the condition that the partner’s asset is more than his debts
The debts that are private will be settled by private assets of the partner. If any surplus happens it will be used in paying for firms debts
Debt settlement by firm’s assets
Debts of firms’ are settles using assets’ of firm. If any asset remains after clearing the debt, it gets distributed between the partners.
Partner can utilize their share of surplus assets obtained after clearing all debts from firm for personal use.