Joint Venture Accounting Questions and Answers
Joint Venture Accounting Questions and Answers:
Learning Objectives:
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Answers of some important joint venture questions.
Theoretical Questions:
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Define a “joint venture”. What are the different methods of recording transactions relating to joint venture?
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Differentiate between “joint venture” and “consignment”.
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What is memorandum joint venture account? How is it prepared?
Objective:
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State whether each of the following statements is true or false:
(i) Joint venture and partnership are synonymous terms.
(ii) Joint venture has very long life.
(iii) Parties of joint venture are known as co-venturers
(iv) Co-venturers work for commission.
(v) Principle of mutual agency is applicable to joint venture.
(iv) Co-ventures and co-partners are interchangeable terms.
(iiv) Joint venture must have a permanent and distinct name to be a legal form of organization.Answers: [i. False ii. False iii. True iv. False v. True vi. False vii. False]
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Select the most appropriate answer:
(i) Joint venture account is: (a) a nominal account; (b) a personal account; (c) a real account
(ii) Joint bank account is opened: (a) when no separate books for the venture are maintained; (b) when separate books for the venture are maintained (c) under no circumstances
(iii) When goods are purchased for the joint venture, the amount is debited to: (a) Purchase account; (b) Joint venture account; (c) Venturer’s capital account.
(iv) In case of memorandum method when there are three co-venturers, each co-venturer opens in its books for the venture: (a) one account; (b) two accounts; (c) three accounts.
(v) When a venturer recording the transactions brings goods to the joint venture from his own stock, the amount is credited to: (a) joint venture account; (b) purchases account; (c) capital account.Answers: [i. a ii. b iii. b iv. a v. b]
Short Answer Questions:
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(i) A has spent $20,000 on account of a joint venture. What journal entry will you pass?
(a). When separate set of books are kept.
(b). When records are kept by A only.
(c). When records are kept by B (a co-venturer) only, and
(d). when records are kept by all parties(ii) Is it necessary to pass a journal entry for the above transaction in the books of B when memorandum method is adopted? [Answer: No]
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B, a co-venturer, took away goods worth $9,000 at the end of a venture. What entries will you make when:
(a). There is a separate set of books.
(b). Records are kept by B only
(c). Records are kept by A only.
(d) There is a memorandum, method of recording transactions
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A and B completed a venture and earned $30,000. They shared profits in the ratio of 2:1. What journal entry will be passed when:
(a). There is a separate set of books.
(b). Records are kept by A only
(c). Records are kept by B only.
(d) There is a memorandum, method of recording transactions.
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A purchases goods worth $20,000 for the joint venture and spend $2,000 on packing, insurance, freight, etc. He sends it to B, who receives goods and spends $1800.
What journal entry will be passed when memorandum joint venture method is adopted?
You may also be interested in other articles from “accounting for joint venture” chapter:
- Definition and Explanation of Joint Venture
- Difference Between Joint Venture and Consignment
- Advantages and Disadvantages of Joint Venture
- Joint Venture Accounting – Journal Entries
- Memorandum Joint Venture Account
- General Questions and Answers About Joint Venture Accounting
- Joint Venture Accounting Exercises and Problems
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A and B completed a venture and earned $30,000. They shared profits in the ratio of 2:1. What journal entry will be passed when:
(a). There is a separate set of books.
(b). Records are kept by A only
(c). Records are kept by B only.
(d) There is a memorandum, method of recording transactions.
Records are kept by A only
hello, can I ask some more examples please 🙂