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Question : In the absence of a partnership deed, Interest on capital

Option 1: is allowed @ 6% p.a.

Option 2: is allowed @ 10% p.a.

Option 3: is allowed at the borrowing rate.

Option 4: is not allowed


Team Careers360 21st Jan, 2024
Answer (1)
Team Careers360 23rd Jan, 2024

Correct Answer: is not allowed


Solution : Answer = is not allowed.
In the absence of a partnership deed, no interest is allowed to partners on capital. In the absence of a partnership deed specifying otherwise, interest on capital cannot be allowed because there is no agreed-upon provision for such compensation. Without a partnership agreement outlining terms, partners lack the framework to determine and allocate interest on capital.
Hence, the correct option is 4.

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