In the absence of a partnership agreement, a loan given to the partnership by a partner attracts interest of

JAMB Accounting 2023 47 views

In the absence of a partnership agreement, a loan given to the partnership by a partner attracts interest of

  1. 15%
  2. 10%
  3. 7 1/2 %
  4. 5% ✓

Explanation

According to Partnership Act, when partners lend money to the partnership beyond their capital, they receive 5% interest per year by default. This applies only when the partnership agreement doesn’t specify a different rate.

The 5% rate is a legal default to be fair to lending partners. It prevents disputes when no agreement exists.

Remember: No agreement = Partnership Act rules apply = 5% interest on partner loans.

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