In the course of settling the accounts of a firm after dissolution, the following norms shall, subject to an agreement between partners and Section 32, be followed;
(a) To convert the estate of a firm in to monetary value,
(b) Losses including deficiencies of capital shall be paid firstly out of profits secondly out of capital if it is not sufficient and lastly out of the individual assets of every partner.
(c) The assets of the firm including to make up deficiencies of capital shall be applied in the following manner and order;
(1) In paying the debts of the firm to the third parties;
(2) In paying to each partner proportionately (Damasahi) what is due to him/her from the firm for the debt as distinguished from capital;
(3) In paying to each partner proportionately (Damasahi) what is due to him/her on account of capital; and
(4) The residue, if any, shall be divided among the partners in the proportion which they were entitled to share profits.