Difference between Firm’s Debts and Private Debts

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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

BasisFirm’s DebtsPrivate Debts
MeaningA firm’s Debt means the debt owed by the firm to outsidersPrivate Debt means debt owed by a partner as an individual to any other person, i.e., other than for business.
LiabilityAll 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 PropertyThe 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 PropertyExcess 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.
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Anurag Pathak
Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

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