In the absence of partnership deed, identify the rate of interest that should be charged on the
drawings of a partner.
(
This question was previously asked in
Shift 30/05/2023 8:30 AM - 10:30 AM
A
6%
B
6% p.a.
C
As decided by the partner, who had withdrawn money as drawing
D
No interest is to be charged
Correct Answer
No interest is to be charged
Detailed Explanation
In the absence of a partnership deed specifying the rate of interest on drawings, the provisions of the Indian Partnership Act, 1932, come into play. According to the Act:
(4) No interest is to be charged
If there is no agreement in the partnership deed regarding the rate of interest on drawings, the Act implies that no interest is to be charged on partner's drawings.
So, the correct answer is:
(4) No interest is to be charged
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