The correct answer is: A. Capital ratio
The Garner v Murray rule is a common law rule that governs how losses should be distributed among partners in a partnership when one of the partners becomes insolvent. The rule states that the remaining partners should share the loss in the same proportion as their capital contributions to the partnership.
This rule is based on the principle that each partner is liable for the debts of the partnership up to the amount of their capital contribution. When one partner becomes insolvent, the remaining partners are left to bear the burden of the partnership’s debts. The Garner v Murray rule ensures that the remaining partners share the loss in a fair and equitable manner.
The other options are incorrect because they do not reflect the Garner v Murray rule. Option B, profit and loss ratio, is the way in which profits are distributed among partners in a partnership. Option C, average ratio, is not a recognized method of distributing losses among partners. Option D, none of the above, is also incorrect because the Garner v Murray rule is a well-established common law rule.
In conclusion, the correct answer to the question “According to Garner Vs Murray rule, loss on account of a partner becoming insolvent should be distributed to remaining partners in” is A. Capital ratio.