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CA Foundation · Business Laws · The Indian Partnership Act, 1932

Manoj and Naina are partners sharing profits equally, with no clause on losses. The firm's accounts show a loss of Rs 60,000 for the year, and Manoj contributed capital of Rs 4,00,000 while Naina contributed Rs 1,00,000. How is the loss shared between them?

The loss is shared equally, Rs 30,000 each. When the agreement is silent, partners share profits equally and losses in the same proportion as profits. The unequal capital of Rs 4,00,000 and Rs 1,00,000 has no effect on the default sharing ratio.

  1. AManoj Rs 48,000 and Naina Rs 12,000, in proportion to capital
  2. BManoj Rs 30,000 and Naina Rs 30,000, equallyCorrect
  3. CManoj Rs 60,000 and Naina nil, as he invested more
  4. DNaina Rs 60,000 and Manoj nil, as she invested less

Explanation

Where the contract is silent, partners share profits equally, and losses are shared in the same ratio as profits. Capital contributions do not affect the sharing ratio by default. So the Rs 60,000 loss is split Rs 30,000 each. Option A wrongly uses the capital ratio of 4:1.

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