CA Foundation Methods of Capital Accounts — practice questions

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Methods of Capital Accounts questions and exercises with answers

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Partner's drawings made evenly throughout the year — average period for interest isRead the answer and worked solution →

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Partner's drawings made evenly throughout the year — average period for interest is

3 months
5.5 months
6 months
12 months

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Correct answer: C. 6 months

1. For drawings made evenly across 12 months, average outstanding period equals (12+1)/2 = 6.5 months at start basis or 6 months at mid basis. 2. Textbooks typically use 6 months as the average period for evenly distributed monthly drawings. 3. If drawings are at the beginning of each month, use 6.5 months; end of month, 5.5 months. 4. Hence the standard answer is 6 months. _Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 1 "Introduction to Partnership and Partnership Final Accounts", §1.4 ¶§1.4_

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