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Grouping of Items in Statement of Profit and Loss

If there is n...

Question

If there is no partnership deed then interest on capital will be charged at ______p.a.

A

6%

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B

8%

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C

9%

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D

NIL

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Solution

The correct option is D NIL
When there is no partnership deed then interest on capital will not be charged. There will be no interest provided on the capital.

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Similar questions

A

B

R s . 4, 00, 000

R s . 2, 00, 000

respectively as capital on which they agree to pay interest @

6 %

p.a. Their respective share of profit is

2 : 3

and the profit (before interest) for the year is

R s . 30, 000

. Show the relevant account to allocate interest on capitals:
(i) if the Partnership Deed is silent about the treatment of interest on capital, and
(ii) if interest is a charge as per the Partnership Deed.

X

Y

are partners sharing profits and losses in the ratio of

2 : 3

with capitals of

R s . 2, 00, 000

R s . 1, 00, 000

respectively. Pass the necessary Journal entry or entries for distribution of profit/loss for the year ended 31st March, 2018 in each of the alternative cases:
Case 1. If Partnership Deed is silent as to the interest on capital and the profit for the year is

R s . 20, 000

.
Case 2. If Partnership Deed provides for interest on capital @

6 %

p.a. and loss for the year is

R s . 15, 000

.
Case 3. If Partnership Deed provides for-interest on capital @

6 %

p.a. and the profit for the year is

R s . 21, 000

.
Case 4. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 20, 000

.
Case 5. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 2, 000

.
Case 6. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 18, 000

Q. A Partnership Deed provides for the payment of interest on capital but there was a loss instead of profit during the year 2010-11. At what rate will the interest on capital be allowed?

Q. A and B share profits in the ratio of 3 : 2 with capitals of ₹20,000 and ₹10,000 respectively. What shall be the amount of interest on capital for Mr. A, if profit for the year is ₹1,500 and the partnership deed provides for interest on capital at 6% p.a.?

[0.88 marks]

Q. State the provisions of Indian Partnership Act,1932 regarding interest on partner's capital and interest on partner's loan when there is no Partnership Deed.

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