State the provisions of the Indian Partnership Act., 1932, regarding charging of interest on drawings from a partner when: (a) The firm has a partnership deed; (b) The firm does not have a partnership deed.

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SOLUTION

(a) When the firm has a partnership deed, interest on drawings will be charged only if it is provided in the partnership deed.
(b) When the firm does not have a partnership deed, interest on drawings will not be charged.

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Karim, Rehman and Navel are partners sharing profits and losses in the ratio of 5: 3: 2. Their Balance Sheet as at 31st March, 2022 stood as follows:

Revenue from Operations, i.e., Net Sales Rs. 8,20,000; Return Rs. 10,000; Cost of Revenue from Operations (Cost of Goods Sold) Rs. 5,20,000; Operating Expenses Rs. 2,09,000; Interest on Debentures Rs. 40,500; Gain (Profit) on Sale of a Fixed Asset Rs. 81,000. Calculate Net Profit Ratio.

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