If a Partnership Contract Provides for Interest at 10% Annually

question 44

Multiple Choice

If a partnership contract provides for interest at 10% annually on each partner's investment,the interest

• A)Is ignored when earnings are not sufficient to pay interest
• B)Provides for the sharing of a portion of the partnership earnings in the capital ratio
• C)Is an expense of the business
• D)Must be paid in cash
• E)Legally becomes a liability of the partnership

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Definitions:

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to standardize and simplify the legal rules around sales, leases, negotiable instruments, and secured transactions among states.

Writing

The act or medium of expressing thoughts, ideas, or information through the use of written symbols or characters.

Statute of Frauds

A legal principle that requires certain types of contracts to be executed in writing and signed by the party to be charged, to be enforceable.

Document Signing

The act of officially endorsing a document through a handwritten or digital signature, signifying agreement or approval.