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WAEC Financial Accounting 1994 Question 11

Question 11

Partnership Accounts

Where there is no partnership agreement, any contribution in excess of the agreed capital attracts

  1. A.no interest at all.
  2. B.Interest at the rate of 2½% per annum.
  3. C.interest at the rate of 5% per annum.
  4. D.Interest at the rate of 7½% per annum.
  5. E.interest at the rate of 10% per annum.
Show the answer and explanation

Answer: C (interest at the rate of 5% per annum.)

Explanation

Under the Partnership Act, a partner's loan or advance beyond agreed capital earns 5% interest.