CMA Intermediate · Financial Accounting · Joint Venture
Mohan and Sohan share profits equally in a joint venture, with each keeping his own books and recording only his own transactions. Mohan incurred ₹70,000 (purchases and expenses) and sold goods for ₹50,000. Sohan incurred ₹30,000 expenses, sold goods for ₹1,10,000, and took over unsold stock worth ₹10,000. Net profit of the venture is:
The net profit is ₹70,000. Total credits are sales of ₹1,60,000 plus stock taken over of ₹10,000, which is ₹1,70,000. Total costs of ₹1,00,000 are deducted. Stock taken over must be counted as realisation, otherwise profit is understated.
- A₹70,000Correct
- B₹60,000
- C₹50,000
- D₹80,000
Explanation
Total receipts = 50,000 + 1,10,000 + stock taken over 10,000 = 1,70,000. Total costs = 70,000 + 30,000 = 1,00,000. Profit = ₹70,000, shared ₹35,000 each. Excluding the stock gives ₹60,000, which is the main mistake.
Did you get it right without looking?
One question tells you little. A timed set on Joint Venture shows your real accuracy, how long you take and where you lose marks.
More Joint Venture questions
- 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…
- In a joint venture with separate books, venturer Nikhil pays Rs 3,000 of venture expenses from his own pocket. How is this recorded in the j…
- Which statement best describes the relationship between co-venturers in a joint venture under the Indian Partnership Act principles applied …
- In accounting for a joint venture, which method requires a separate set of books to be maintained for the venture, with a Joint Venture Acco…
- A and B enter into a joint venture sharing profits and losses equally. A purchases goods worth ₹80,000 and incurs expenses of ₹4,000. B sell…
- Arun and Bhaskar enter into a joint venture to sell a consignment of goods and share profits and losses equally. Arun supplies goods costing…