CBSE 2015, Set 1

Question

In the absence of Partnership Deed, interest on loan of a partner is allowed :
(i) at 8% per annum.
(ii) at 6% per annum.
(iii) no interest is allowed.
(iv) at 12% per annum. A). at 8% per annum B). at 6% per annum C). no interest is allowed D). at 12% per annum

Edvaya · Accepted Answer

The correct answer is at 6% per annum. In the absence of a Partnership Deed, the provisions of the **Indian Partnership Act, 1932** apply. Section 13(b) of the Act states that a partner is entitled to interest on any loan advanced to the firm at the rate of **6% per annum**. Key distinctions: - **Interest on capital:** No interest is allowed in the absence of a Partnership Deed. - **Interest on loan:** 6% per annum is allowed even without a Partnership Deed. - The 6% rate applies irrespective of what the partner may charge or expect. > **Tip:** This is a frequently tested statutory provision. The 6% is fixed by law for loans; for capital, the Partnership Act gives nothing unless agreed.

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Accountancy > Accounting For Partnership Firms > Fundamentals Of Partnership

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