Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Partnership

Question:

Read the following passage and answer the question.

Rita, Sudha, and Nitu decided to do transport business in partnership. For this purpose, they did not prepare any deed. They introduced their capitals, ₹50,000, ₹60,000 and ₹40,000 respectively and commenced business from 1st April. On the same date, Nitu also provided ₹15,000 as a loan to the firm on the requirement. At the end of the first financial year, the firm earned a net profit of ₹10,000 (excluding interest on loan). Nitu asked for interest on the loan at 10% p.a, while Sudha asked for interest on capital at 5% p.a. But for both terms, Rita did not agree. 

In the absence of partnership deed, which of the following Act is applicable?
Options:
The Limited Liability Partnership Act - 2008
The Companies Act - 1956
The Indian Partnership Act- 1932
None of these
Correct Answer:
The Indian Partnership Act- 1932
Explanation:
Since there is no partnership deed, provisions of the Indian Partnership Act, 1932 will apply.