In a partnership firm A and B are 2 partners. C is the manager of the firm and firm suffers loss this year. No interest on capital, salary to be allowed to any partner by firm's manager. even it is mentioned in the partnership deed. A demands salary because he did extra work and B demands interest on capital because his share of capital is more than A. But C denies to both partners. Who is right and wrong in this situation?

A is wrong, B is wrong, C is right

The correct answer is option 1- A is wrong, B is wrong, C is right.

No interest on capital or salary is allowed to any partner (A & B) because firm suffers loss. So, both partners are wrong and manager is right.

In case firm suffers a loss, no interest on capital, salary, remuneration is to be allowed to partner. It is allowed only if there is profit in the firm. If there is insufficient profit, that is, the net profit is less than the total amount of all appropriation of partners, then appropriation is made.