When drawings are made at the end of each month. Interest on drawings is calculate for

5 months
6 months
5.5 months
6.5 months

The correct answer is C. 5.5 months.

When drawings are made at the end of each month, interest is calculated on the drawings for the full month in which they are made, plus the following month. This is because the drawings are available for use for the full month in which they are made, and for part of the following month.

For example, if a business makes a drawing of $1000 on 31 January, interest will be calculated on $1000 for the month of January, and on $1000 for the month of February. This is a total of 5.5 months, as January has 31 days and February has 28 days.

Option A is incorrect because it only takes into account the month in which the drawings are made. Option B is incorrect because it only takes into account the following month. Option D is incorrect because it takes into account more than the full 6 months.

Exit mobile version