Subject to agreement by partners, state the rules that should be observed by the partners in settling the accounts of the firm after dissolution under the provisions of the Indian Partnership Act, 1932.\nOR\nExplain the rules laid down under the Indian Partnership Act, 1932, for the mode of settlement of partnership accounts after the dissolution of a firm. What is the order in which the assets of the firm are applied?

Mode of Settlement of partnership accounts: As per Section 48 of the Indian Partnership Act, 1932, in settling the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed:-\n(i) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and, lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits; \n(ii) The assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, must be applied in the following manner and order: \n(a) in paying the debts of the firm to third parties;\n(b) in paying to each partner rateably what is due to him from capital; \n(c) in paying to each partner rateably what is due to him on account of capital; and \n(d) the residue, if any, shall be divided among the partners in the proportions in which they were entitled to share profits.