Select the necessary conditions required for computing interest on drawings using the Average Period Method:A. Equal amount of drawingsB. Fixed intervals between drawingsC. Varying amounts of drawingsD. Different intervals between drawingsE. Presence of an agreed Rate of InterestChoose the correct answer from the options given below:
- AA, D and E only
- BA, C and B only
- CA, C and D only
- DA, B and E only
Solution & Step-by-step Explanation
The Average Period Method is an optimized calculation rule applied to determine interest on partner drawings only when two uniform criteria are met:\begin{enumerate}\item The amount withdrawn must be uniform and equal across cycles (\textbf{Condition A}).\item The intervals/time gaps between consecutive drawings must be constant (\textbf{Condition B}).\item Naturally, a specified interest rate percentage must be provided (\textbf{Condition E}).\end{enumerate}Thus, conditions A, B, and E are the correct requirements.