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:
Answer & explanation
Correct answer: option 1
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When equal amounts are withdrawn at the end of every month throughout the year.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