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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


Solution

(i) Sharing of Profits and Losses: In the absence of partnership deed profit sharing ratio among the partners will be equal.

(ii) Interest on Partner's Capital: In the absence of partnership deed interest on partner's capital will not be given.

(iii) Interest on Partner's Drawings: In the absence of partnership deed no interest will be charged on partner's drawings.

(iv) Interest on Partner's Loan: In the absence of partnership deed if partner gives any loan to the firm he/she will be entitled to get a fixed percentage of interest on  such loan @ 6% per annum

(v) Salary to a Partner: In the absence of partnership deed no partner will be entitled for getting any salary for his work even if the other is non-working.

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