Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

Will the deceased partner get any interest on his capital up to his death when the final account is made to know the balance to be paid to him?

Options:

Yes

Yes, but rate of interest should be 6% p.a.

Yes, if only partnership deed allowed

Yes, but rate of interest should be less than 10% p.a.

Correct Answer:

Yes, if only partnership deed allowed

Explanation:

The correct answer is option 3- Yes, if only partnership deed allowed.

Interest on Capital: No partner is entitled to claim any interest on the amount of capital contributed by him in the firm as a matter of right. However, interest can be allowed when it is expressly agreed to by the partners. Thus, no interest on capital is payable if the partnership deed is silent on the issue. A partnership deed is followed for any clause related to the settlement of account of any partner. If nothing is mentioned then the provision of the Indian Partnership Act,1932 followed.

Thus, the deceased partner will get any interest on his capital up to his death, only if partnership deed allowed.