If a Partnership Contract Provides for Interest at 10% Annually

question 2

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)Is an allowance that can make up for unequal capital contribution.
• C)Is an expense of the business.
• D)Must be paid because the partnership contract has unlimited life.
• E)Legally becomes a liability of the general partner.

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