Which of the following is correct?
The important provision affecting partnership accounting, in the absence of a partnership deed is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Interest on Drawings: No interest is to be charged on the drawings made by the partners, if there is no mention in the Deed.
Where the partnership deed is silent, the Partnership Act fills the gap. Its default rules are kept simple: equal sharing, no interest on capital or drawings, and a small fixed interest on loans.
Why the other options are incorrect
Option (1) Profit Sharing Ratio: If the partnership deed is silent about the profit sharing ratio, the profits and losses of the firm are to be shared by partners in their capital ratio. — Incorrect. If the deed is silent, profits and losses are shared equally, whatever the capital contributed, not in the capital ratio.
Option (2) Interest on Capital: Partner is entitled to claim higher interest on the amount of capital contributed by him in the firm as a matter of right. — Incorrect. No partner can claim interest on capital as a matter of right; it is allowed only when agreed.
Option (4) Interest on Loan: If any partner has advanced loan to the firm for the purpose of business, he/she shall be entitled to get an interest on the loan amount at the rate of 16 per cent per annum. — Incorrect. Interest on a partner’s loan is allowed at 6 per cent per annum, not 16 per cent.
NCERT (2026-27 edition):
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