agreen annually on each partner's investment, The interest: Is ignored when earnings are not sufficient to pay the interest. Can make up for unequal capital contributions in dividing income or loss. O Is an expense of the partnership. OMust be paid because the partnership has a limited life.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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6

If a partnership agreement provides for an interest allowance at 10% annually on
each
partner's investment, The interest:
Is ignored when earnings are not sufficient to pay the interest.
Can make up for unequal capital contributions in dividing income or loss.
) Is an expense of the partnership.
Must be paid because the partnership has a limited life.
Legally becomes a liability of the general partner.
Transcribed Image Text:If a partnership agreement provides for an interest allowance at 10% annually on each partner's investment, The interest: Is ignored when earnings are not sufficient to pay the interest. Can make up for unequal capital contributions in dividing income or loss. ) Is an expense of the partnership. Must be paid because the partnership has a limited life. Legally becomes a liability of the general partner.
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