Out of the following statements, which are correct?(A) In the absence…

Out of the following statements, which are correct?

(A) In the absence of partnership deed, no partner is entitled to get salary or other remuneration.

(B) If a partner withdraws fixed amount at the end of each month, then interest on drawings will be calculated for an average period of 5.5 months.

(D) If a partner is admitted into a firm with a guarantee of certain profit, then the deficiency of profit (if any) shall be borne by the old partners in their capital ratio.

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (A), (B) and (C) only

Each statement is a rule of partnership accounts; only the last one changes the rule.

(A) In the absence of partnership deed, no partner is entitled to get salary or other remuneration. Correct. Under the Indian Partnership Act, 1932, a partner gets no salary or remuneration unless the deed provides for it, so with no deed there is none.

(B) If a partner withdraws fixed amount at the end of each month, then interest on drawings will be calculated for an average period of 5.5 months. Correct. The twelve withdrawals stay with the partner for 11, 10, ... 0 months. The average is (11 + 0)/2 = 5.5 months.

(C) If the partnership deed provides for interest on capital but the firm does not have sufficient profit, then the interest will be paid to the extent of available profit in the ratio of interest on capital. Correct. Interest on capital is an appropriation, so it is limited to the profit available, and that profit is divided in the ratio of the interest due to each partner.

(D) If a partner is admitted into a firm with a guarantee of certain profit, then the deficiency of profit (if any) shall be borne by the old partners in their capital ratio. Incorrect. The deficiency is shared in whatever ratio the partners agreed when they gave the guarantee, or borne entirely by the one partner who gave it. The capital ratio does not come into it.

NCERT (2026-27 edition):
Provisions of Partnership Act Relevant for Accounting – “… (e) Remuneration for Firm’s Work: No partner is entitled to get salary or other remuneration for taking part in the conduct of the business of the firm unless there is a provision for the same in the Partnership Deed.”

NCERT (2026-27 edition):
Interest on Drawings

Extract from the NCERT textbook

NCERT (2026-27 edition):
Interest on Capital – “… (d) As the profit for the year is Rs. 14,000, which is less than the amount of interest on capital due to partners, i.e. Rs. 28,000 (Rs. 12,000 for Anupam and Rs. 16,000 for Abhishek), interest will be paid to the extent of available profit i.e., Rs. 14,000. Anupam and Abhishek will be credited with Rs. 6,000 and Rs. 8,000, respectively. Effectively this amounts to sharing the firm’s profit in the ratio of interest on capital, i.e., 3:4.”

NCERT (2026-27 edition):
Guarantee of Profit to a Partner – “Sometimes a partner is admitted into the firm with a guarantee of certain minimum amount by way of his share of profits of the firm. Such assurance may be given by all the old partners in a certain ratio or by any of the old partners, individually to the new partner.”

NCERT (2026-27 edition):
Summary – “6. Treatment of guarantee of minimum profit to a partner: Sometimes, a partner may be guaranteed a minimum amount by way of his share in profits. If, in any year, the share of profits as calculated according to his profit sharing ratio is less than the guaranteed amount, the deficiency is made good by the guaranteeing partners’ in the agreed ratio which usually is the profit sharing ratio. If, however, such guarantee has been given by any of them, he or they alone shall bear the amount of deficiency.”