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If the deed gives an interest rate on drawings but dates are not given and drawings are unequal, what is the safest exam approach?

Answer and explanation

Correct answer: State the average rule carefully only if the question indicates it

The governing concept is that interest on drawings depends on both the amount withdrawn and the time for which each amount was used. With unequal drawings, the exact dates or a stated timing assumption are needed to calculate a precise amount. If the question gives no dates and does not indicate a convention, the safest examination approach is to state the accepted assumption clearly before applying it; an average-period rule should not be imposed silently. Option A is therefore the best answer. Always assuming six months may be wrong, zero interest ignores the deed, and capital ratio has no necessary connection with the timing of drawings.

Related tags

Interest On DrawingsUnequal DrawingsExam ApproachAssumptionsPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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