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Standard XII
Fundamentals of Accounting and Auditing
Question

On the dissolution of a firm, loan from the wife of a partner is treated as ____________.

  1. Loan from the partner
  2. Outside liability
  3. Preferential liability
  4. Liability payable after all other debts have been paid

A
Loan from the partner
B
Outside liability
C
Preferential liability
D
Liability payable after all other debts have been paid
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Solution
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Loan from a partners’ wife is to be treated as a normal creditor.
The basic aim of providing a loan in the name of partner’s wife is to by-pass the legal restrictions on the loan from a partner to the firm.

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