Question

If a partner withdraws equal amount in the middle of each quarter, then ______ are to be considered for interest on total drawings.

• A. \(5.5\) months
• B. \(6\) months
• C. \(4.5\) months
• D. \(7.5\) months

Hint:

Standard average periods used in partnership accounts:
• Beginning of every month \(\rightarrow 6.5\) months
• Middle of every month \(\rightarrow 6\) months
• End of every month \(\rightarrow 5.5\) months
• Beginning of every quarter \(\rightarrow 7.5\) months
• Middle of every quarter \(\rightarrow 6\) months
• End of every quarter \(\rightarrow 4.5\) months Memorizing these standard periods helps solve accounting MCQs quickly and accurately during examinations.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This uses the Average Period method for drawings made in the middle of each quarter.
Key Formula or Approach:
\[ \text{Average Period} = \frac{\text{Months left after first drawing} + \text{Months left after last drawing}}{2} \]
Step 2: Detailed Explanation:
1. First drawing is in the middle of the first quarter (e.g., May 15th). Months left = 10.5.
2. Last drawing is in the middle of the last quarter (e.g., February 15th). Months left = 1.5.
Applying the formula:
\[ \text{Average Period} = \frac{10.5 + 1.5}{2} = \frac{12}{2} = 6 \text{ months} \]
Step 3: Final Answer:
Interest is calculated for 6 months.