CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
Which of the following is NOT a feature of a joint venture?
Continuing indefinitely with perpetual succession is not a feature of a joint venture. A joint venture is temporary, formed for a specific project, shares profit or loss in an agreed ratio, and terminates when the project is completed.
- AIt is formed for a specific purpose or project
- BProfit or loss is shared in an agreed ratio among the co-venturers
- CIt is automatically terminated when the project is completed
- DIt continues indefinitely and has a perpetual successionCorrect
Explanation
A joint venture is temporary and ends with the completion of the project, so perpetual succession is not its feature. The other three options are standard features: a specific purpose, agreed sharing of profit or loss, and termination on completion.
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