Question

In the absence of an agreement, partners are entitled to:

1. Profit share in capital ratio. 
2. Commission for making an additional sale.
3. Interest on loans and advances by them to the firm.
4. Salary for working extra hours.
5. Interest on capital.

Options

• Only (i), (iv) and (v)

• Only (ii) and (iii)

• Only (iii)

• Only (i) and (iii)

Answer 1

Only (iii)

Explanation:

In the absence of a partnership agreement, the Indian Partnership Act, 1932, applies. As per its rules, partners are not entitled to profit share in capital ratio, commission, salary, or interest on capital. However, if a partner provides a loan or advance to the firm, he is entitled to interest at 6% per annum. Hence, only option (iii), interest on loans and advances, is correct.