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JAMB Principles of Accounts 2007 Question 5

Question 5

Partnership Accounts

I. Profits and losses will be shared unequally.
II. Interest is not allowed on capital.
III. Salaries are not allowed.
IV. Interest is charged on drawings.
From the above, which of the following would apply where there is no agreement during partnership formation?

  1. A.I only
  2. B.I, II and III
  3. C.I, II and IV
  4. D.II and III.
Show the answer and explanation

Answer: D (II and III.)

Explanation

With no agreement the Partnership Act applies: profits are shared equally, no interest on capital, no salaries and no interest on drawings. So only II and III are correct.