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In absence of any agreement, partners are liable to receive interest on loans at the rate of :
- a)12% simple interest
- b)12% Compounded annually
- c)6% simple interest
- d)6% p.a. simple interest
Correct answer is option 'D'. Can you explain this answer?
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In absence of any agreement, partners are liable to receive interest o...
Liability of partners in absence of agreement
In the absence of any agreement, partners are liable to receive interest on loans at the rate of 6% p.a. simple interest. This means that if a partner gives a loan to the partnership firm, he/she will receive an annual interest of 6% on the loan amount.
Explanation
When there is no agreement between the partners regarding the interest rate on loans given to the partnership firm, the default rate of interest is applicable. As per the Indian Partnership Act, 1932, the default rate of interest is 6% p.a. simple interest.
Simple interest is calculated on the principal amount only, whereas compound interest is calculated on the principal amount as well as the accumulated interest. Hence, the correct answer is option 'D' - 6% p.a. simple interest.
Conclusion
In conclusion, partners are liable to receive interest on loans at the rate of 6% p.a. simple interest in the absence of any agreement. It is important for partners to have a written agreement specifying the terms and conditions of the partnership, including the interest rate on loans given to the partnership firm.
In the absence of any agreement, partners are liable to receive interest on loans at the rate of 6% p.a. simple interest. This means that if a partner gives a loan to the partnership firm, he/she will receive an annual interest of 6% on the loan amount.
Explanation
When there is no agreement between the partners regarding the interest rate on loans given to the partnership firm, the default rate of interest is applicable. As per the Indian Partnership Act, 1932, the default rate of interest is 6% p.a. simple interest.
Simple interest is calculated on the principal amount only, whereas compound interest is calculated on the principal amount as well as the accumulated interest. Hence, the correct answer is option 'D' - 6% p.a. simple interest.
Conclusion
In conclusion, partners are liable to receive interest on loans at the rate of 6% p.a. simple interest in the absence of any agreement. It is important for partners to have a written agreement specifying the terms and conditions of the partnership, including the interest rate on loans given to the partnership firm.
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In absence of any agreement, partners are liable to receive interest o...
In the absence of agreement the partners in the partnership firm are not entitled to any interest on capital or drawings but at they are entitled for getting interest on the loan given by them to be firm if if nothing is written in the agreement that is the agreement is silent then when according to Indian Partnership Act 1932 6% per annum interest rate will be be given to him the interest is generally simple interest not compound interest
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In absence of any agreement, partners are liable to receive interest on loans at the rate of :a)12% simple interestb)12% Compounded annuallyc)6% simple interestd)6% p.a. simple interestCorrect answer is option 'D'. Can you explain this answer?
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