Question

State Whether the following Statement is True or False:

The partners are entitled to 6% p.a. interest on capital.

Answer 1

The statement is false.

Explanation:

Under the Indian Partnership Act, 1932, partners are not automatically entitled to interest on capital. Interest on capital is payable only if it is provided for in the partnership agreement.

The 6% per annum rule applies to interest on advances (loans) made by a partner to the firm, not to capital.