Arrange the following in correct sequence in the event of dissolution of a partnership firm. 1. If surplus, it is distributed among the partners. 2. The assets of the firm are realised. 3. Amount realised is applied towards repayment of liabilities to outsiders and loan taken from partners. 4. Capital contributed by partners is repaid. Select the correct answer:

The correct answer is C.

The correct sequence of events in the event of dissolution of a partnership firm is as follows:

1. The assets of the firm are realized.
2. The amount realized is applied towards repayment of liabilities to outsiders and loan taken from partners.
3. Capital contributed by partners is repaid.
4. If surplus, it is distributed among the partners.

The first step is to realize the assets of the firm. This means selling the assets and converting them into cash. The second step is to apply the amount realized towards repayment of liabilities to outsiders and loan taken from partners. This means paying off any debts that the firm owes to creditors. The third step is to repay the capital contributed by partners. This means returning the money that each partner invested in the firm. The fourth and final step is to distribute any surplus among the partners. This means dividing any money that is left over after the first three steps have been completed.

It is important to note that the order of these steps may vary depending on the specific circumstances of the dissolution. For example, if there are no liabilities to outsiders, then the second step may be skipped. Additionally, if there is no surplus, then the fourth step will not be necessary.