Multiple choice

Interest on capital is payable out of profit

  1. True

  2. False

  3. Partly true

  4. Cannot say
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under partnership law, interest on capital is only payable out of profits. If the firm incurs losses, no interest can be claimed on capital. This is a standard provision to ensure partners share both profits and losses fairly.

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