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CMA Foundation · Fundamentals of Financial and Cost Accounting · Four Frameworks of Accounting and Forms of Organization

Ravi, Sunil and Tara are partners in a firm with no partnership deed provision on interest or salary. The firm earns a profit of ₹90,000 for the year. Under the Indian Partnership Act, 1932, how much does each partner receive?

Each partner receives ₹30,000. When there is no agreement on profit sharing, the Indian Partnership Act provides that partners share profits equally. Dividing the profit of ₹90,000 among three partners gives ₹30,000 each, with no interest or salary allowed by default.

  1. A₹30,000 eachCorrect
  2. B₹45,000 to Ravi, ₹27,000 to Sunil and ₹18,000 to Tara
  3. C₹90,000 to Ravi alone
  4. D₹30,000 to Ravi and ₹30,000 to Sunil, with ₹30,000 retained by the firm

Explanation

When the deed is silent, partners share profits equally. ₹90,000 divided by 3 equals ₹30,000 each. Unequal splits would need a contrary agreement or capital-based sharing, which the Act does not provide for by default.

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