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If there is no partnership deed, are partners entitled to salary?

Answer and explanation

Correct answer: No

The governing concept is the default rule applied when the partnership agreement does not provide for remuneration. A partner is not automatically entitled to salary merely because the partner works in or manages the firm. Salary or commission becomes payable only when the partnership deed, or another valid agreement among the partners, expressly allows it. Therefore, if there is no partnership deed and no separate agreement, the answer is No, option A. The amount of capital contributed does not by itself create a salary right. A loss-making year also does not establish such entitlement. Thus options B, C and D confuse contractual remuneration with unrelated conditions.

Related tags

Partnership DeedPartner SalaryDefault RulePartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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