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CMA Intermediate · Financial Accounting · Joint Venture

In the books of a venturer who keeps a Joint Venture with a co-venturer account (no separate books for the venture), the venturer buys goods for the venture for ₹50,000 paid in cash. Which entry is correct?

The correct entry debits the Joint Venture with Q account and credits Cash. Under the method with no separate books, the venturer records his own venture outlays in a single joint venture account, not in his regular purchases account, so that venture profit can be found separately.

  1. ADebit Joint Venture with Q account, Credit Cash accountCorrect
  2. BDebit Purchases account, Credit Cash account
  3. CDebit Q's personal account, Credit Cash account
  4. DDebit Cash account, Credit Joint Venture with Q account

Explanation

Under this method the venturer opens one account for the venture with the co-venturer, which is debited for the venturer's own purchases and expenses paid. Cash is credited as it goes out. Debiting Purchases would mix venture goods with the venturer's own trading.

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