If the partnership deed is silent about interest on capital, how will interest on capital be treated in the distribution of profits?

Correct answer: It will not be allowed

Interest on capital is payable only if expressly provided in the partnership deed or agreed by all partners. When the deed is silent, no interest on capital is allowed; the net profit (after any agreed appropriations) is distributed according to the profit-sharing ratio. Distractors: option C is a common misconception — equal sharing does not apply to interest unless the deed specifies; option D is incorrect because interest on capital is not automatically deducted from drawings without an agreement; option B is wrong since there is no automatic 6% rule. Exam tip: always read the partnership deed first — if it is silent on an item, do not assume an entitlement; apply the profit-sharing ratio to residual profit.