Question

In the absence of any agreement, partners are liable to receive interest on their Loans at the rate of __________.

• A. 12% Simple Interest
• B. 12% Compounded Annually
• C. 6% Simple Interest
• D. 6% p.a. Simple Interest

Answer 1

The correct option is D 6% p.a. Simple Interest

In the absence of any agreement interest on advances by a partner is allowed at 6 percent p.a. and is allowed whether there is profit or no. Interest on loan is a charge and will be provided regardless of profits earned.