Which of the following is correct?The important provision affecting partnership accounting, in the absence of a partnership deed is:

mediumMCQCUET Accountancy 2025 15 May Shift 12026CUET Accountancy

1 mark

Which of the following is correct?The important provision affecting partnership accounting, in the absence of a partnership deed is:

A $Profit Sharing Ratio: If the partnership deed is silent about the profit sharing ratio, the profits and losses of the firm are to be shared by partners in their capital ratio.$
B $Interest on Capital: Partner is entitled to claim higher interest on the amount of capital contributed by him in the firm as a matter of right.$
C $Interest on Drawings: No interest is to be charged on the drawings made by the partners, if there is no mention in the Deed.$
D $Interest on Loan: If any partner has advanced loan to the firm for the purpose of business, he/she shall be entitled to get an interest on the loan amount at the rate of 16 per cent per annum.$

Solution & Step-by-step Explanation

According to the provisions of the Indian Partnership Act, 1932, when a formal written Partnership Deed is completely absent or silent on specific terms:Profits and losses must be distributed equally among partners, not in their capital ratio.No interest on capital is allowed or paid to any partner.No interest on drawings is to be charged to partners. Thus, option 3 is correct.Interest on any loan advanced by a partner to the firm is fixed at a mandatory standard rate of 6% per annum, not 16% .

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Which of the following is correct?The important provision affecting partnership accounting, in the absence of a partnership deed is:

Profit Sharing Ratio: If the partnership deed is silent about the profit sharing ratio, the profits and losses of the firm are to be shared by partners in their capital ratio.

Interest on Capital: Partner is entitled to claim higher interest on the amount of capital contributed by him in the firm as a matter of right.

Interest on Drawings: No interest is to be charged on the drawings made by the partners, if there is no mention in the Deed.

Interest on Loan: If any partner has advanced loan to the firm for the purpose of business, he/she shall be entitled to get an interest on the loan amount at the rate of 16 per cent per annum.

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