Which one of the following statements is True' in partnership?

Question

Question

This question was previously asked in

UGC Paper 2: Commerce_17th Oct 2020 Shift 1

In the absence of any provision in the partnership deed, only a working partner is entitled to remuneration.
Any firm which earns normal profit has no goodwill.
The business of the firm must be carried on by all the partners.
Interest on loan given by a partner to the firm shall be paid if there are profits.

Answer 1

Any firm which earns normal profit has no goodwill is true in the case of Partnership.

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Goodwill is the value of the reputation of a firm built over time with respect to the expected future profits over and above the normal profits.
A well-established firm earns a good name in the market, builds trust with the customers, and also has more business connections as compared to a newly set up business. Thus, the monetary value of this advantage that a buyer is ready to pay is termed as Goodwill.
The buyer who pays expects that he will be able to earn super profits as compared to the profits earned by the other firms. Thus, it can be said that goodwill exists only in the case of firms making super profits and not in the case of firms earning normal profits or losses. It is an intangible real asset that cannot be seen or felt but exists in reality and can be bought and sold.

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In absence of a partnership deed, no partner is entitled to remuneration.
Business of the firm may be carried on by one or more partners.
Interest on loan given by a partner to the firm shall be paid irrespective of profit or losses.