CAF-4 · Chapter 12 · Question 4 of 10
What is the general legal rule regarding a partner's entitlement to receive interest on the capital they have invested in the firm?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) No partner is allowed to receive any interest on capital unless it is specifically agreed upon.
Explanation
As a general rule, a partner is not a creditor of the firm regarding their capital contribution. Therefore, no interest on capital is allowed unless there is an express agreement to the contrary.
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