Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Accounting for Partnership

Question:

When drawings are made at the beginning of every month for the full year, interest on drawings is calculated for...........

Options:

One Year

6.5 months

6 months

5.5 months

Correct Answer:

6.5 months

Explanation:

The correct answer is option 2- 6.5 months.

When drawings are made at the beginning of every month for the full year, interest on drawings is calculated for 6.5 months.

When the amount is withdrawn at the beginning of each month. 
Ist drawing = 1st April, so months left after it are 12.
Last drawing = 1st March, so months left after it are 1.
Average Period = (No. of months left after 1 drawings + No. of months left after last drawings)/2
                      = (12+1)/ 2
                      = 6.5 months