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WAEC Financial Accounting 2023 Question 36

Question 36

Partnership Accounts

Which of the following rules is applicable in the absence of a partnership agreement? Interest is payable

  1. A.on drawings at the rate of 5% per annum.
  2. B.on agreed capital contributed at 5% per annum.
  3. C.on any contribution in excess of agreed capital at 5% per annum.
  4. D.at 5% per annum on current account balances.
Show the answer and explanation

Answer: C (on any contribution in excess of agreed capital at 5% per annum.)

Explanation

Without an agreement, only advances beyond agreed capital earn 5% interest.