Question

The amount of interest on drawings of Nisha would be:

• A. ₹ 2,000
• B. ₹ 1,000
• C. ₹ 4,000
• D. ₹ 4,800

Hint:

Always calculate interest on drawings based on the timing and amount of withdrawals, using the average period if specified.

Answer 1

The Correct Option is A

The formula for calculating interest on drawings is: \[ \text{Interest on Drawings} = \text{Amount Withdrawn} \times \text{Rate of Interest} \times \text{Average Period}. \] With consistent withdrawals throughout the year, the applicable rate, and the average period, the calculated interest amounts to ₹ 2,000. Therefore, option (A) is the correct answer.