absence of a Partnership Agreement, which of the following principles apply? A. Interest on drawings is 5%. B. Profits and losses are shared equally C. Interest on capital is 5% D. Profits and losses are shared in proportion to their capital.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
In the absence of a Partnership Agreement, which of the following principles apply?
A. Interest on drawings is 5%.
B.
C. Interest on capital is 5%
D. Profits and losses are shared in proportion to their capital.
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