CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
Which feature distinguishes a joint venture from a regular partnership firm?
The distinguishing feature is that a joint venture is confined to a specific venture and terminates once it is completed, whereas a partnership usually continues as a going concern. Profit sharing, contributions and liability are common to both.
- AProfits are shared between the parties
- BParties contribute capital or services
- CIt is limited to a specific venture and dissolves on its completion, with no continuing firm nameCorrect
- DParties can be held liable for the venture's obligations
Explanation
Sharing profit, contributing resources and liability exist in both a joint venture and a partnership. The distinguishing feature is that a joint venture is limited to a particular venture and ends with it, whereas a partnership is generally continuing.
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