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Question

Where a partner is entitled to interest on capital subscribed by him, such interest will be payable ___________.

A
only out of profit
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B
only out of capital
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C
out of profits or out of capital
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D
none of these
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Solution

The correct option is A only out of profit
Where a partner is entitled to interest on capital subscribed by him, such interest will be payable only out of profit. Interest on capital is an appropriation and hence will be provided only out of profits.

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