A Level Accounting (9706)•9706/11/M/J/22
Explanation
Default Partnership Rules Under Law
Steps:
- Identify governing law: In absence of agreement, Partnership Act 1890 (UK) or equivalent applies as default rules.
- Review Section 24: Covers profit sharing, interest on capital/loans, and partner remuneration.
- Analyze options: Match each to Act's provisions on entitlements and charges.
- Select matching rule: Option B aligns with no statutory charge on drawings.
Why B is correct:
- Section 24 of Partnership Act 1890 does not impose interest on partners' drawings, so none is charged without agreement.
Why the others are wrong:
- A: Section 24(1) explicitly denies interest on contributed capital.
- C: Section 24(6) provides no entitlement to salaries for partners.
- D: Section 24(3) grants 5% interest on loans or advances to the firm.
Final answer: B
Topic: Types of business entity
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