Accounting WAEC

Upon the dissolution of partnership business, the party to be settled first out of the proceeds realized is?

A. unsecured creditors
B. partner’s loan and advances
C. secured creditors
D. partners’ capital

Correct Answer: Option C

C. secured creditors

Explanation

A secured creditor is generally a bank or other asset-based lender that holds a fixed or floating charge over a business asset or assets. When a business becomes insolvent, sale of the specific asset over which security is held provides repayment for this category of a creditor.

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