CMA Intermediate · Financial Accounting · Joint Venture
Which statement best describes the relationship between co-venturers in a joint venture under the Indian Partnership Act principles applied to JV accounting?
A joint venture resembles a partnership for a particular venture. The co-venturers share profits and losses in the agreed ratio, or equally if no ratio is agreed. They are not employees or shareholders of a company.
- AA joint venture is similar to a particular partnership, with co-venturers sharing profit and loss as agreedCorrect
- BCo-venturers are employees of the joint venture
- CA joint venture is a company and the co-venturers are shareholders
- DOnly one co-venturer bears the loss and the others share profit
Explanation
A joint venture is akin to a partnership limited to a particular venture, so the Partnership Act principles apply in general. Profits and losses are shared in the agreed ratio; if no ratio is agreed, equally.
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