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Question
In the absence of a partnership deed, ______.
Options
Interest will not be charged on partner’s drawings
Interest will be charged @ 5% p.a. on partner’s drawings
Interest will be charged @ 6% p.a. on partner’s drawings
Interest will be charged @ 12% p.a. on partner’s drawings
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Solution
In the absence of a partnership deed, interest will not be charged on partner’s drawings.
Explanation:
According to the Indian Partnership Act, 1932, in the absence of a partnership deed, certain default rules apply. These include profits and losses are shared equally, no interest is allowed on capital, no salary/commission is given to partners, interest on a partner’s loan is allowed @ 6% p.a., and no interest being charged on drawings. Hence, the correct answer is that interest will not be charged on the partner’s drawings.
