Difference between Firm’s Debts and Private Debts
Confused, What is the difference between a Firm’s Debts and Private Debts in Class 12 CBSE, ISC, and State Board.
Don’t Worry, we have explained it in detail.
Firm’s Debts Vs Private Debts (Difference and Comparison)
Let’s have a look
| Basis | Firm’s Debts | Private Debts |
| Meaning | A firm’s Debt means the debt owed by the firm to outsiders | Private Debt means debt owed by a partner as an individual to any other person, i.e., other than for business. |
| Liability | All the partners are liable jointly and severally for the firm’s debts. | The concerned partner is personally liable for his private debts. |
| Application of Firm’s Property | The firm’s property is applied first for payment of the firm’s debts. | Share of the concerned partner in excess of the firm’s property over the firm’s debts can be applied for payment of private debts. |
| Application of Private Property | Excess of a partner’s private property over his private debts can be applied to the payment of the firm’s debts. | Private property is applied first for payment of private debts and then towards firm liability. |
