If a Partnership Contract Provides for Interest at 10% Annually

question 1

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)Allowance 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