If a partner carries on a competing business, what should they do with the profit made in that business?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Account for and pay the profit to the firm.
If a partner carries on a competing business, according to the Indian Partnership Act, they are required to account for and pay the profit made in that business to the firm. This provision ensures that any profit generated from a competing business is shared with the partnership rather than being retained or used individually by the partner. It helps maintain transparency and prevents partners from benefiting unfairly from activities that may compete with the firm's interests.