In a situation where the opening capitals of partners are not given, how are the opening capitals determined before calculating interest on capital?

The opening capitals are calculated based on the partners' closing capitals, considering necessary adjustments for additions, withdrawals, drawings, and share of profit or loss shown in the capital accounts.

The correct answer is option 2- The opening capitals are calculated based on the partners' closing capitals, considering necessary adjustments for additions, withdrawals, drawings, and share of profit or loss shown in the capital accounts.

No interest is allowed on partners’ capitals unless it is expressly agreed among the partners. When the Deed specifically provides for it, interest on capital is credited to the partners at the agreed rate with reference to the time period for which the capital remained in business during a financial year. Sometimes opening capitals of partners may not be given. In such a situation before calculation of interest on capital the opening capitals will have to be worked out with the help of partners’ closing capitals by marking necessary adjustments for the additions and withdrawal of capital, drawings, share of profit or loss, if already shown in the capital accounts the partners.