Solve Study Textbooks Guides

Use app

Login

>>Class 12
>>Accountancy
>>Accounting for Partnership: Basic Concepts
>>Nature of Partnership
>> $In the absence of an agreement to the co$

Question

In the absence of an agreement to the contrary, the partners are_________.

A

entitled to $6$ % interest on their capitals, only when there are profits

B

entitled to $9$ % interest on their capitals, only when there are profits

C

entitled to interest on capital at the bank rate, only when there are profits

D

not entitled to any interest on their capitals

Medium

Open in App

Updated on : 2022-09-05

Solution

Verified by Toppr

Correct option is D)

Capital is contributed by the partner when starting the business based on which the profit sharing ratio may be decided.
However, in absence of any agreement, partners are not entitled to interest on capital.
And if the agreement allows, there is a limit on the interest on capital as per the Act.

Was this answer helpful?

0

0

Similar questions

Why it is always better to have made a partnership agreement in writing?

If the partnership agreement provides payment of interest on capital of the partners, then interest can be paid only out of ___________.

In which of the following case Garner v. Murray rule is NOT applicable?
1. Only one partner is solvent
2. All partners are insolvent
3. When partnership deed provides a specific method to be followed in case of insolvency of a partner
Select the correct answer from the options giiven below :-

In the absence of specific provision in the partnership deed rate interest on capital of the partners would be allowed ______ .

How do you treat the followings in the absence of partnership deed ?
a) Interest on Capital.
b) Interest on Drawings.
c) Interest on Partner's Loan
d) Distribution of profits losses
e) Salary to partners.

More From Chapter

Accounting for Partnership: Basic Concepts

View chapter >

Revise with Concepts

Partnership and Partnership Deed

ExampleDefinitionsFormulaes

Learn with Videos

Partnership & Partnership Deed

Provisions for Partnership Accounts

Practice more questions

Medium Questions