FA - MAY 2015 - L1 - SA - Q17 - Partnership Accounts

FA – MAY 2015 – L1 – SA – Q17 – Partnership Accounts

Identify the interest rate applied to excess capital contributions in the absence of a partnership agreement.

Question

Where there is no partnership agreement, any capital contribution in excess of the agreed amount attracts:
A. No interest
B. Interest at the rate of 2 1/2% per annum
C. Interest at the rate of 5% per annum
D. Interest at the rate of 10% per annum
E. Interest at the rate of 20% per annum

Answer

Answer: C
Explanation:
In the absence of a partnership agreement, excess capital contributions typically attract an interest rate of 5% per annum, as per standard partnership accounting principles.

Tags: Capital, Interest, Partnership
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2015

Uploader: Kwame Aikins