CMA Intermediate · Financial Accounting · Joint Venture
Which of the following is a distinguishing feature of a joint venture as treated in Financial Accounting at the CMA Intermediate level?
A joint venture is formed for a specific project or transaction and comes to an end once that venture is completed. It is a temporary association, not a permanent business, and need not be registered as a separate legal entity.
- AIt is formed for a specific venture or project and ends when that venture is completedCorrect
- BIt continues indefinitely until the co-venturers decide to wind up
- CIt requires co-venturers to share profits in the ratio of their capital contributions only
- DIt must be registered as a separate legal entity before starting business
Explanation
A joint venture is a temporary association of persons formed to carry out a particular project or transaction. It is dissolved when the objective is achieved. It has no perpetual existence, and registration as a separate entity is not required.
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