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Introduction to Banking

Interest on c...

Question

Interest on capital subscribed by a partner may be provided for in the partnership deed is _____________.

A

@ 6% per annum, provided it is payable only out of profits

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B

@ 8% per annum, provided it is payable only out of profits

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C

@ 8.5% per annum, provided it is payable only out of profits

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D

at any rate, provided it is payable only out of profits

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Solution

The correct option is D at any rate, provided it is payable only out of profits
Interest on capital subscribed by a partner may be provided for in the partnership deed is any rate, provided its payable out of profits. Interest at any rate is allowed which is mentioned in the deed or agreed among the partners. Interest can only be paid out of profit as its an appropriation and not a charge.

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