Interested on capital

(1) The following elements must be there before a partner can be entitled to interest on moneys brought by him in the partnership business: (i) an express agreement to that effect, or practice of the particular partnership or (ii) any trade custom to that effect; or (iii) a statutory provision which entitles him to such interest. (2) Interest on Drawings is calculated on Drawings Out of Profit. Interest on Drawings is income to the firm and an expense to the partners. If Partnership Deed Provides :- Interest on drawings is charged from partners. If Partnership Deed is Silent :- Interest on drawings is not charged from partners.

ruchi lahoti

CA Inter

★ 27K+

15-May-21 12:11

Thanks mam I came to know about interest on drawings but I am not abale to understand these sentences meaning (1) any trade custom to that effect (2)any statutory provision which entitles him to such interest

Thread Starter

Shreesha .T.u

CA Foundation

★ 2K+

15-May-21 13:06

It means if there is any provision which allows him interest with respect to any rule under trade or if there is any statutory provision which requires to give him interest on drawings

ruchi lahoti

CA Inter

★ 27K+

17-May-21 10:27