Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Partnership

Question:

If drawings are made regularly by the partner at the end of each month from the partnership firm, the average period for calculating the interest on drawings is:

Options:

5 and a half month

6 and a half month

12 months

6 months

Correct Answer:

5 and a half month

Explanation:

The correct answer is option 1- 5 and a half month.

When equal amounts are withdrawn at the end of every month throughout the year.
Average Period = (No. of months left after first drawings+ No. of months left after last drawings)/2
Ist drawings = 30th April, so months left are 11.
Last drawings = 31st March, so months left are 0.
So, average period = (11+0)/2
                               = 5.5 months