What are the rules in the absence of a partnership deed?

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Are you looking for the rules and provisions in the absence of partnership as given in class 12 Accountancy CBSE Board. I have summed up all rules if there is only verbal agreement among partners.

Provisions applicable in the absence of Partnership Deed

In the absence of partnership Deed or if partnership Deed is silent on certain point. following Provisions of Indian Partnership Act 1932 would apply.

1. Profit Sharing Ratio:- Profits and Losses are to be shared equally irrespective of their capital contribution.

2. Interest on Capital:- No interest on capital is allowed to the partners.

3. Interest on Drawings:- No Interest is to be charged on drawings.

4. Remuneration to a Partner:- No partner is entitled to any salary and commission for taking active part in day to day business affairs.

5. Interest on Loan of Partner:- On any loan given by partner to the firm. Interest @6% p.a. would be allowed even if there are losses to the firm.

6. Admission of a partner:- To admit a new partner all existing partners consent is mandatory.

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Anurag Pathak
Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.
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