Question

How do you treat the followings in the absence of Partnership Deed?
a) Profit Sharing Ratio
b) Interest on Capital
c) Interest on Drawing
d) Interest on Advances from Partners
e Partner Salary.​

Answer 1

Explanation:

(a) Interest on capital – Nil (b) Interest on drawing – Nil (c) Interest on loan – 6%P.a (d) Distribution of Profit or losses – Equally (e) Salary to partner

Answer 2

Answer:

In absence of partnership deed, the particulars given above would be treated as:

1. PSR- Profits or losses would be divided in equal ratio

2.Interest on capital- No interest on capital would be allowed according to Indian Partnership Act,1932.

Same would be followed for interest on drawings,

interest on advances from partners.