In the absence of a partnership deed; the act stipulates that ________?

A. An amount should be fixed as salaries for partners
B. Profits and losses should not be shared equally
C. Interest on partner’s loan should be 25%
D. Interest should not be allowed on partners drawings

Correct Answer:

Option D – Interest should not be allowed on partners drawings

Explanation

Under the Partnership Act, the following rules will be applied in the absence of an agreement among partners:

i. Profit or losses of the firm will be shared equally by the partners

ii. Interest on capital will not be allowed to any partner.

iii. No interest will be charged on drawings

iv. Interest on loan will be 6% on the loan

v. No salary or remuneration will be allowed to any of the partners

vi. Every partner must take part in the management of the partnership business

vii. The partnership books are kept at the place of business of the partnership and every partner may have access to and inspect and copy any of them.