Interest on the partner's capital is provided on which of the following?

The opening balance of the partners

The correct answer is option 1- The opening balance of the partners.

Interest on the partner's capital is provided on the opening balance of the partners.

When there are both addition and withdrawal of capital by the partners during a financial year, the interest on capital is calculated as follows:
(i) On the opening balance of the capital accounts of partners, interest is calculated for the whole year;
(ii) On the additional capital brought in by any partner during the year, interest is calculated from the date of introduction of additional capital to the last day of the financial year.
(iii) In case of withdrawal of capital, interest on capital will be calculated as: On opening capital from the beginning of the year till date of capital withdrawn and then on the reduced capital for the remaining time period. Alternatively, it can be calculated with respect of amount remained in business for the relevant period.