Question

In the absence of partnership deed, specify the rules relating to the following: (i) Sharing of profits and losses. (ii) Interest on partner’s capital. (iii) Interest on Partner’s drawings. (iv) Interest on Partner’s loan. (v) Salary to a partner.

Answer 1

Answer:

Explanation:

i) In the absence of partnership deed, sharing of profits and losses will be divided equally amongst the partners.

ii) In the absence of partnership deed, interest on partner’s capital will be disallowed to the partners. However if agreed the interest may be allowed only to the extent of the available profit. No interest will be allowed in case of loss.

(iii) In the absence of partnership deed, interest on partner’s drawings under section 13 states that no interest will be charged unless agreed upon.

(iv) In the absence of partnership deed, interest on partner’s loan provided by a partner to the firm apart from his capital, will be allowed a interest rate of 6 percentage on such loan.

(v) In the absence of partnership deed, salary to a partner will not be allowed  to any of them. In case the partner or partners salary is due it would be as per appropriation of profit( but only the business makes a profit).

Hope this helps.