When date of drawing is not mentioned, the interest on drawings are charged for how many months?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 6.
In such a case it is assumed that the amount is withdrawn evenly throughout the year and interest on drawings will be charged for the average period which is to be assumed as 6 months.
Interest on drawings = Total of drawings × Rate/100 × 6/12