CMA Intermediate · Financial Accounting · Joint Venture
Under the memorandum joint venture account method, the memorandum account is prepared mainly to:
The memorandum joint venture account is prepared to ascertain the overall profit or loss of the venture and each co-venturer's share so that final settlement can be made. It is only a memorandum record and does not replace the venturers' personal accounts or hold cash.
- AFind the total profit or loss of the venture, and each venturer's share, for settlementCorrect
- BRecord the cash balance of the venture
- CReplace each venturer's personal account
- DRecord the capital contributed by each venturer in a separate bank
Explanation
The memorandum account collects all venture revenues and expenses from every venturer's records to find the overall profit or loss and apportion it. It does not replace personal accounts nor hold cash, since no separate books are kept.
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