If the deed is silent what is the correct rule for interest on capital?

Correct answer: It will not be allowed

Interest on a partner’s capital is not an automatic right under the ordinary rules of partnership accounting. It is allowed only when the partnership deed provides for it, or when the partners have a valid agreement to that effect. The deed therefore controls this adjustment. A fixed rate such as 6% is not applied merely because the question involves capital.

When the deed is silent, there is no agreed basis for calculating or recording interest on capital. Consequently, no interest on capital is allowed or credited. The fact that the business may earn a profit does not change this rule. Therefore option A is correct. The bank rate and profit-sharing ratio are not default rules for interest on capital, so options C and D do not follow in the absence of an agreement.