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.|