Interest on capital and drawings: Class 12 practice
Interest on capital = capital × rate × time. Read the method, follow the three worked examples, then try the six questions.
What you should know first
- Percentages
The idea behind interest on capital and drawings
Interest on capital = capital × rate × time. For drawings made evenly, interest is charged for an average period: 6 months when drawn evenly through the year, 6.5 at the start of each month, 5.5 at the end of each month.
Step-by-step method
- Interest on capital = capital × rate (× months/12).
- Total drawings × rate × average period/12.
- Average period: start of month 6.5, middle 6, end 5.5 months.
Worked example 1 (Basic)
A partner's capital is ₹3,60,000. Interest is allowed at 6% p.a. Find interest for 6 months.
- ₹3,60,000 × 6% × 6/12
- = ₹10,800
- Answer: ₹10,800
Worked example 2 (Standard)
A partner withdraws ₹1,000 at the beginning of every month. Interest on drawings is 5% p.a. Find the interest.
- Total drawings = ₹12,000
- Average period = 6.5 months
- Interest = ₹12,000 × 5% × 6.5/12 = 325
- Answer: ₹325
Worked example 3 (Challenge)
A partner withdraws ₹1,000 at the middle of every month. Interest on drawings is 10% p.a. Find the interest.
- Total drawings = ₹12,000
- Average period = 6 months
- Interest = ₹12,000 × 10% × 6/12 = 600
- Answer: ₹600
Common mistakes and misconceptions
- Charging a full year on drawings
- Using the wrong average period
Practice questions
- (Basic) A partner's capital is ₹1,30,000. Interest is allowed at 5% p.a. Find interest for 12 months.
- (Basic) A partner's capital is ₹4,70,000. Interest is allowed at 6% p.a. Find interest for 12 months.
- (Standard) A partner withdraws ₹1,000 at the middle of every month. Interest on drawings is 8% p.a. Find the interest.
- (Standard) A partner withdraws ₹2,000 at the beginning of every month. Interest on drawings is 5% p.a. Find the interest.
- (Challenge) A partner withdraws ₹5,000 at the beginning of every month. Interest on drawings is 10% p.a. Find the interest.
- (Challenge) A partner withdraws ₹4,000 at the beginning of every month. Interest on drawings is 6% p.a. Find the interest.
Answer key with full working
- Q1: ₹1,30,000 × 5% × 12/12 → = ₹6,500 → Answer: ₹6,500
- Q2: ₹4,70,000 × 6% × 12/12 → = ₹28,200 → Answer: ₹28,200
- Q3: Total drawings = ₹12,000 → Average period = 6 months → Interest = ₹12,000 × 8% × 6/12 = 480 → Answer: ₹480
- Q4: Total drawings = ₹24,000 → Average period = 6.5 months → Interest = ₹24,000 × 5% × 6.5/12 = 650 → Answer: ₹650
- Q5: Total drawings = ₹60,000 → Average period = 6.5 months → Interest = ₹60,000 × 10% × 6.5/12 = 3250 → Answer: ₹3250
- Q6: Total drawings = ₹48,000 → Average period = 6.5 months → Interest = ₹48,000 × 6% × 6.5/12 = 1560 → Answer: ₹1560
Syllabus note
This skill is listed under "Accounting for Partnership: Basic Concepts" for Class 12 in the NCERT/CBSE books. ICSE, IGCSE, IB and state boards may teach it in a different chapter or year.
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.
Related practice and notes
Frequently asked questions
Which chapter is interest on capital and drawings in?
"Accounting for Partnership: Basic Concepts", Class 12 Accountancy (NCERT/CBSE). Other boards may place it differently.
How were the answers checked?
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.