In case of dissolution of a firm, in which order the following creditors should be paid? 1. Creditors having floating charge on the assets of the firm 2. Remuneration of liquidator 3. Provident fund money payable to employees 4. Bank overdraft

The correct answer is D. 2, 3, 1, 4.

In case of dissolution of a firm, the following creditors should be paid in the following order:

1. Creditors having a fixed charge on the assets of the firm.
2. Creditors having a floating charge on the assets of the firm.
3. Preferential creditors, such as employees, employees’ provident fund, income tax, sales tax, etc.
4. Ordinary creditors.

The remuneration of the liquidator is paid out of the assets of the firm after all the creditors have been paid.

Here is a brief explanation of each option:

Option 1: 1, 2, 3, 4

This option is incorrect because it does not follow the order of priority of payment of creditors in case of dissolution of a firm. The correct order is as follows:

1. Creditors having a fixed charge on the assets of the firm.
2. Creditors having a floating charge on the assets of the firm.
3. Preferential creditors, such as employees, employees’ provident fund, income tax, sales tax, etc.
4. Ordinary creditors.

Option 2: 1, 3, 4, 2

This option is incorrect because it does not follow the order of priority of payment of creditors in case of dissolution of a firm. The correct order is as follows:

1. Creditors having a fixed charge on the assets of the firm.
2. Creditors having a floating charge on the assets of the firm.
3. Preferential creditors, such as employees, employees’ provident fund, income tax, sales tax, etc.
4. Ordinary creditors.

Option 3: 2, 3, 4, 1

This option is incorrect because it does not follow the order of priority of payment of creditors in case of dissolution of a firm. The correct order is as follows:

1. Creditors having a fixed charge on the assets of the firm.
2. Creditors having a floating charge on the assets of the firm.
3. Preferential creditors, such as employees, employees’ provident fund, income tax, sales tax, etc.
4. Ordinary creditors.

Option 4: 2, 3, 1, 4

This option is correct because it follows the order of priority of payment of creditors in case of dissolution of a firm. The correct order is as follows:

1. Creditors having a fixed charge on the assets of the firm.
2. Creditors having a floating charge on the assets of the firm.
3. Preferential creditors, such as employees, employees’ provident fund, income tax, sales tax, etc.
4. Ordinary creditors.