CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
In the all-transactions method, when the venture is completed, the balance of Joint Venture account in a venturer's books after charging all costs and crediting all sales represents:
The balance is the total profit or loss of the whole venture. It is divided in the agreed ratio, with the venturer's share going to his Profit and Loss account and the co-venturers' shares being credited or debited to their personal accounts.
- ACash balance with the venturer
- BTotal profit or loss of the venture, which is shared and transferred to Profit and Loss account and co-venturer accounts as per ratioCorrect
- CThe venturer's own share of profit only
- DCommission payable to the manager
Explanation
Because every transaction is recorded, the balance on the Joint Venture account is the whole venture's profit or loss. The venturer's share goes to his Profit and Loss account and the co-venturers' shares to their personal accounts. Option 3 is the result only under the method where each records only his own transactions.
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