In case a partnership firm incurs................, no interest on capital, salary, or remuneration is to be allowed to partners.

Loss

If the firm incurs a loss, partners are not entitled to receive any interest on capital, salary, or remuneration. These are allowed only when the firm has earned profit during the accounting year and if in a year, the profit of the firm is less than the amount due to the partners as interest on capital, salary etc then the payment will be restricted to the amount of profits. In that case, the profit will be effectively distributed in the ratio of appropriation of each partner.