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Under Section 48, in settling accounts after dissolution, losses (including capital deficiencies) are paid first:
AOut of capital only
BBy the partners equally
COut of profits, then out of capital, and lastly by the partners in their profit-sharing ratio
DBy the partner at fault
Answer & Solution
Correct answer: C. Out of profits, then out of capital, and lastly by the partners in their profit-sharing ratio
Section 48 directs that losses be met first from profits, then from capital, and finally by the partners individually in their profit-sharing proportion.
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