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Interest on Partner's Drawings and Capital

Calculation of interest on partner's drawings and capital accounts including various withdrawal patterns and accounting treatment

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Questions

Question 1 Multiple Choice (Single Answer)

How would you close the Partner's Drawing Account?

  1. By transfer to the debit of Capital or Current Account
  2. By transfer to the credit of Capital Account
  3. By transfer to the credit of Current Account
  4. Either b or c
Question 2 Multiple Choice (Single Answer)

Partners are supposed to pay interest on drawing only when provided by the ______________.

  1. Partnership Act
  2. None of these
  3. Agreement
  4. Both a and c
Question 3 Multiple Choice (Single Answer)

Interest on Drawings is:

  1. Debited to P/L A/C
  2. Credited to P/L A/C
  3. Debited to capital A/C
  4. None
Question 4 Multiple Choice (Single Answer)

John, a partner in Modern Tours and Travels withdrew money during the year ending March 31, 2016 from his capital account, for his personal use. Calculate interest on drawings, if rate of interest is 9 per cent per annum.  If an amount of Rs. $3,000$ per month was withdrawn by him at the end of each month.

  1. Rs. $1,580$
  2. Rs. $2,355$
  3. Rs. $1,955$
  4. Rs. $1,485$
Question 5 Multiple Choice (Single Answer)

John, a partner in Modern Tours and Travels withdrew money during the year ending March 31, 2016 from his capital account, for his personal use. Calculate interest in drawings if rate of interest is $9$ per cent per annum and If he withdrew Rs. $3,000$ per month at the beginning of the month.

  1. Rs. $1,485$
  2. Rs. $2,845$
  3. Rs. $1,755$
  4. Rs. $1,580$
Question 6 Multiple Choice (Single Answer)

Interest on drawings is _________.

  1. Expenditure for the business
  2. Expense for the business
  3. Gain for the business
  4. Loss for the business
Question 7 Multiple Choice (Single Answer)

Interest on drawing is ________ for the business.

  1. expenses
  2. gain
  3. neither expenses nor gain
  4. expense or gain depending on the situation
Question 8 Multiple Choice (Single Answer)

The interest on partner's capital accounts is to be credited to_________. 

  1. partner's capital Accounts
  2. profits and loss Accounts
  3. interest account
  4. all of these
Question 9 Multiple Choice (Single Answer)

Where a partner is entitled to interest on capital contributed by him, such interest will be payable: 

  1. Only out of profits
  2. Only out of capital
  3. Either (a) or (b)
  4. None of these
Question 10 Multiple Choice (Single Answer)

N & Z are two partners. During the year N withdraws Rs. $37,000$ on $1-5-2012$ & Z withdraws Rs. $45,000$ on $15-8-2012$. Accounts are closed on $31-12-2012$. Rate of interest on drawings is $10%$ p.a. Interest on drawing for two partner respectively will be.

  1. $2,775$ & $2,063$
  2. $2,063$ & $2,775$
  3. $2,467$ & $1,688$
  4. $1,688$ & $2,467$
Question 11 Multiple Choice (Single Answer)

If a fixed amount is withdrawn on the last day of every month of a calendar year, the interest on the total amount of drawings will be calculated for _________. 

  1. 4.5 months
  2. 5.5 months
  3. 6 months
  4. 6.5 months
Question 12 Multiple Choice (Single Answer)

If a fixed amount is withdrawn on the middle day of every month of a calendar year, the interest on the total amount of drawings will be calculated for ________. 

  1. 4.5 months
  2. 5.5 months
  3. 6 months
  4. 6.5 months
Question 13 Multiple Choice (Single Answer)

If a fixed amount is withdrawn on the first day of every quarter of a calendar year, the interest on total amount of drawings will be calculated for _______. 

  1. 4.5 months
  2. 5.5 months
  3. 6 months
  4. 7.5 months
Question 14 Multiple Choice (Single Answer)

What time would be taken into consideration if equal monthly amount is drawn as drawing at the beginning of each month? 

  1. 7 months
  2. 6 months
  3. 5 months
  4. 6.5 months
Question 15 Multiple Choice (Single Answer)

Partners are supposed to pay interest on drawings only when ______ by the _________. 

  1. Provided, agreement
  2. Permitted, Investors
  3. Agreed, partners
  4. A & C above 
Question 16 Multiple Choice (Single Answer)

If a fixed amount is withdrawn on the middle day of every quarter of a calendar year, the interest on total amount of drawings will be calculated for ________. 

  1. 4.5 months
  2. 5.5 months
  3. 6 months
  4. 6.5 months
Question 17 Multiple Choice (Single Answer)

If a fixed amount is withdrawn on the last day of every quarter of a calendar year, the interest on the total amount of drawings will be calculated for __________.

  1. 4.5 months
  2. 5.5 months
  3. 6 months
  4. 6.5 months
Question 18 Multiple Choice (Single Answer)

A Drawn Rs.1000 per month on the last day of every month. If the rate of interest is 5% p.a. then the total interest or drawings will be:

  1. Rs. 325
  2. Rs. 275
  3. Rs. 300
  4. Rs. 350
Question 19 Multiple Choice (Single Answer)

Where will you record interest on drawings? 

  1. Debit side of Profit & Loss Appropriation Account. 
  2. Credit side of Profit & Loss Appropriation Account. 
  3. Credit side of Profit & Loss Account. 
  4. Debit side of Capital/Current Account only. 
Question 20 Multiple Choice (Single Answer)

Kamal and Vimal are partners in a firm. They share profits equally. Their monthly drawings are Rs 2,000 each. Interest on drawings is to be charged at 10% p.a. Calculate interest on Kamal and Vimal's drawings for the year 2016, assuming that amount is withdrawn in the beginning of every month.

  1. Rs 1,300 and Rs 1,100
  2. Rs 1,200 and Rs 1,200
  3. Rs 1,100 and Rs 1,100
  4. Rs 1,300 and Rs 1,300
Question 21 Multiple Choice (Single Answer)

Ajay and Vijay are partners in a firm. They share profits in the ratio of 3:2. As per their partnership agreement, interest on drawings is to be charged @ 10% p.a. Their drawings during 2017 were Rs 24,000 and Rs 16,000, respectively. Calculate interest on drawings based on the assumption that the amounts were withdrawn evenly, throughout the year.

  1. Rs 1,200 and Rs 800
  2. Rs 1,500 and Rs 900
  3. Rs 1,800 and Rs 1,200
  4. Rs 1,000 and Rs 600
Question 22 Multiple Choice (Single Answer)

Calculate the interest on drawings of Ram @ 10% p.a. for the year ended 31st March 2017, If he withdrew Rs 3,000 at the end of every month. Assuming that drawings were made evenly throughout the year.

  1. Rs 1,850
  2. Rs 1,650
  3. Rs 1.250
  4. Rs 1,350
Question 23 Multiple Choice (Single Answer)

Harish is a partner in a firm. He withdrew the following amounts during the year 2017:
May 1 -                      4,000
August 1 -                10,000
September 30 -         4,000
January 31 -            12,000
March 31 -                 4,000

Interest on drawings is to be charged @ 7.5% p.a. Calculate the amount of interest to be charged on Harish's drawing for the year ending March 31, 2018.  

  1. Rs. 1,100
  2. Rs. 1,125
  3. Rs. 1,075
  4. Rs. 1,200
Question 24 Multiple Choice (Single Answer)

Ram and Mohan, are partners. They Draw for private use Rs. 6,000 and Rs. 4000 respectively. Interest is chargeable @ 6% per annum on drawings. What is the interest?

  1. Ram Rs. 180 and Mohan Rs. 120
  2. Ram Rs. 360 and Mohan Rs. 240
  3. Ram Rs. 30 and Mohan Rs. 20
  4. None
Question 25 Multiple Choice (Single Answer)

Kiran, a partner in a firm, withdrew money from his capital account during the year ended 31, March 2017. If the amounts withdrawn were: Rs. $12,000$ on June 01, 2015, Rs. $8,000$; on August 31, 2015, Rs. $3,000$; on September 30, 2015, Rs. $7,000$, on November 30, 2015, and Rs. $6,000$ on January 31, 2016. Calculate interest in drawings, if rate of interest is $9$ per cent per annum.

  1. Rs. $1,800$
  2. Rs. $2,400$
  3. Rs. $1,755$
  4. Rs. $1,585$
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