JKSSB Written 2022
Answer & Explanation
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Correct Answer:
Option A —
equally amongst all partners
In the world of accounting and law, if a partnership firm does not have a formal Partnership Deed, or if the deed is silent regarding how profits and losses should be split, the provisions of the Indian Partnership Act, 1932 (specifically Section 13) apply .Key Rules in the Absence of a Partnership Deed:When there is no written agreement, the following rules must be followed regardless of how much work or money each partner contributes:Profit and Loss Sharing: Profits and losses are shared equally, even if one partner invested $Rs\ 10,00,000$ and another invested only $Rs\ 1,000$.Interest on Capital: No interest is allowed on the capital contributed by partners.Salary/Remuneration: No partner is entitled to any salary, commission, or remuneration for taking part in the business, regardless of their experience (Option C).Interest on Loans: If a partner provides a loan to the firm (beyond their capital), they are entitled to interest at a fixed rate of 6% per annum.Why the other options are incorrect:B) On the basis of capital: This only happens if specifically agreed upon in a written deed. Without a deed, capital contribution is irrelevant to the profit split.C) On the basis of experience: Experience might help a partner negotiate a better deal in a contract, but the law does not recognize "effort" or "seniority" as a default basis for money distribution.D) As the court may decide: Courts generally only intervene to enforce the "equal sharing" rule defined by the Act; they do not arbitrarily decide new ratios.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.