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SSC Financial and Cost Accounting P-1 QUESTION #6085
Question 1

In the absence of a formal partnership agreement, which of the following rules apply under standard partnership law?

  1. Partners receive 10% interest per annum on loans to the business.
  2. Partners receive 5% interest per annum on their capital.
  3. No interest is charged on partners' drawings.
  4. Partners are not entitled to a salary.
  • 1 and 3
  • 1 and 4
  • 2 and 3
  • 3 and 4✔️
Correct Answer Explanation

Under the UK Partnership Act 1890 (often used as the basis for these exams), if no agreement exists: no interest on capital, no salaries, no interest on drawings, and interest on partner loans is usually 5% (not 10%). Thus, only 3 and 4 are correct.