In the absence of partnership deed, the partner will be allowed interest on the amount advanced to the firm at the rate of ______p.a.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 6%.
In the absence of any agreement interest on advances by a partner is allowed at 6 percent p.a. and is allowed whether there is profit or not. Interest on loan is a charge and will be provided regardless of profits earned.