Joint Venture -Practice Problems

FINPREP – Practice Problems Chapter Name Joint Venture Chapter No. 8

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Practice Problems

Subject: Accounting

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Joint Venture

7.2.1. Introduction:

1. Which of the following statement is true:a) A Joint Venture has a definite lifeb) A Joint Venture has an indefinite lifec) A Joint Venture is a partnership under the partnership actd) None of these

2. Which of the following statement is true:a) The Joint Venture can be formed by a single person onlyb) A legal deed should be drafted before forming Joint Venturec) The profit to be shared between the ventures in agreed ratiod) Joint Venture follows going concern concept

3. Which of the following statement is not true:a) Joint Venture is a going concernb) Joint Venture is terminable in naturec) Joint venture does not follow accrual basis of accountingd) The co-venturers shares the profit in agreed ratio

7.2.2. Methods of Accounting:

4. For opening Joint Bank Account, in case of separate sets of booksa) Venture A/c is debited and Venturers A/c is creditedb) Joint Bank A/c is debited and Venturer’s Capital A/c is creditedc) Joint Venture A/c is debited and Joint Bank A/c is creditedd) Joint Bank A/c is debited and Joint Venture A/c is credited

5. For purchase of plant from Joint Bank Account, in case of separate sets of Books:a) Plant A/c is debited and Joint Bank A/c is creditedb) Joint Venture A/c is debited and Joint Bank A/c is creditedc) Plant A/c is debited and Venturer's Capital A/c is creditedd) Joint Venture A/c is debited and Plant A/c is credited

6. For purchase of Goods by a co-venturer in case of separate set of books:a) Goods A/c will be debited and Venturer’s Capital A/c will be creditedb) Joint Venture A/c will be debited and Joint Bank A/c will be credited



c) Venturer’s Capital A/c will be debited and Joint Venture A/c will be creditedd) Joint Venture A/c will be debited and venturer’s capital A/c will be credited

7. For Goods supplied from own stock by a co-venturer in case of separate set of books:a) Goods A/c will be debited and Venturer’s Capital A/c will be creditedb) Joint venture A/c will be debited and Joint Bank A/c will be creditedc) Venturer’s Capital A/c will be debited and Joint Venture A/c will be creditedd) Joint Venture A/c will be debited and venturer’s capital A/c will be credited

8. For Stock of Goods taken over by a co-venturer in case of separate set of books: a) Goods A/c will be debited and Venturer’s Capital A/c will be creditedb) Joint Venture A/c will be debited and Joint Bank A/c will be creditedc) Venturer’s Capital A/c will be debited and Joint Venture A/c will be creditedd) Joint Venture A/c will be debited and venturer’s capital a/c will be credited

9. For Co-venturer’s Capital contribution in a separate set of books: a) Joint Bank A/c is debited and Joint Venture A/c is creditedb) Co-venturer's Capital A/c is debited and Joint Bank A/c is creditedc) Joint Venture A/c is debited and Co-venturer’s Capital A/c is creditedd) Joint Bank A/c is debited and Co-venturer’s Capital A/c is credited

10. If separate sets of book is maintained and suppliers grant discount at the time of making the payment of purchase of goods, such discount received will be credited to:

a) Joint Venture A/cb) Joint Bank A/cc) Co-venturer’s Capital A/cd) Suppliers’ A/c

11. For distribution of profit in a separate set of books:a) Joint Venture A/c is debited and Profit & Loss A/c is creditedb) Profit & Loss A/c is debited and Joint Venture A/c is creditedc) Profit & Loss A/c is debited and Co-venturer's Capital A/c are creditedd) Joint Venture A/c is debited and Co-venturer's Capital A/c are credited

12. Which of the following is not true:a) Bad Debts are not recorded in Joint Venture A/cb) Loss of Uninsured Goods is not recorded in Joint Venture A/cc) Discount charges on discounting a B/R drawn upon a customer are not recorded in Joint

Venture A/cd) Cash Discount received from suppliers of goods is recorded in Joint Venture A/c

13. In Memorandum Joint Venture Account Method, each Co-venturer records -------a) all the joint venture transactions



b) common joint venture transactionsc) only those which are effected by him onlyd) None of these

14. Memorandum Joint Venture Account is prepareda) To find out profit on ventureb) To find out amount due from co-venturerc) When separate sets of books is maintainedd) When a Co-venturer records all Joint Venture transactions in his books

15. For sending cash to another Co-venturer (Y) in case of Memorandum Joint Venture Account Method:

a) No entry is passedb) Memorandum Joint Venture A/c is debited and Cash A/c is creditedc) Y’s A/c is debited and Cash A/c is creditedd) Y’s A/c is debited and Memorandum Joint Venture A/c is credited

16. For Purchase of goods for cash for Joint Venture in case of Memorandum Joint Venture Account Method:

a) Goods A/c is debited and Cash A/c is creditedb) Memorandum Joint Venture A/c is debited and Cash A/c is creditedc) Joint Venture A/c is debited and Cash A/c is creditedd) Another Co-venturers A/c is debited and Cash A/c is credited

17. For payment of Joint Venture Expenses in case of Memorandum Joint Venture Account Method:a) Goods A/c is debited and Cash A/c is creditedb) Memorandum Joint Venture A/c and Cash A/c is creditedc) Memorandum Joint Venture A/c is debited and Cash A/c is creditedd) Another Co-venturer’s A/c and Cash A/c is credited

18. For sale of goods for cash in case of Memorandum Joint Venture A/c Method:a) Cash A/c is debited and Goods A/c is creditedb) Cash A/c is debited and another Co-venturer’s A/c is creditedc) Cash A/c is debited and Joint Venture A/c is creditedd) Another Co-venturer’s A/c is debited and Memorandum Joint Venture Account is credited

19. A and B enter into a joint venture to underwrite the shares of X Ltd. To the extent of 80%. X Ltd. Make an equity issue of 1,00,000 equity shares of Rs.10 each. 80% of the issues are subscribed by the public. The profit sharing ratio between A and B is 3:2. The balance shares not subscribed



by the public are purchased by A and B in profit sharing ratio. How many shares to be purchased by the co-venturers.

a) 38,400 sharesb) 16,000 sharesc) 12,000 sharesd) 9,600 shares

20. A and B entered into a joint venture to underwrite the shares of X Ltd. To the extent of 80%. X Ltd. make an equity issue of 1,00,000 equity shares of Rs.10 each. 80% of the issues are subscribed by the public. The profit sharing ratio between A and B was 3:2. The balance shares not subscribed by the public are purchased by A and B in profit sharing ratio. How many shares to be purchased by A.

a) 38,400 sharesb) 16,000 sharesc) 12,000 sharesd) 9,600 shares

21. A and B purchased a piece of land for Rs.20,000 and sold it for Rs.60,000. Originally A had contributed Rs.12,000 and B Rs. 8,000. What will be A’s share of profit on venture?

a) Rs. 20,000b) Rs.24,000c) Rs.30,000d) None

22. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. A’s share of profit on venture will be:

a) Rs.21,300b) Rs.27,300c) Rs.24,900d) None

23. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. What will be the final remittance?

a) B will remit Rs.2,19,300 to Ab) B will remit Rs.2,23,300 to Ac) B will remit Rs.2,10,200 to Ad) B will remit Rs.2,22,700 to A

24. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on



purchase and B is entitled to get 5% commission on sales. Remaining goods are taken over by B at 95% of Cost. A’s share of profit will be:

a) Rs.21,000b) Rs.27,000c) Rs.24,600d) None

25. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. Remaining goods are taken over by B at 95% of Cost. What will be the final remittance?


26. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. Remaining goods are stolen. A’s share of profit on venture will be:

a) Rs.15,300b) Rs.21,300c) Rs.18,900d) None

27. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. Remaining goods are stolen. What will be the final remittance?

a) B will remit Rs.2,15,300 to Ab) B will remit Rs.2,23,300 to Ac) B will remit Rs. 2,06,200 to Ad) B will remit Rs.2,18,700 to A

28. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. Remaining goods are stolen. A is entitled to get interest on Capital @ 5% irrespective of utilization period. A’s share of profit will be:



a) Rs.15,300b) Rs. 21,300c) Rs. 18,900d) None

29. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. Remaining goods are stolen. A is entitled to get interest on Capital @5% irrespective of utilization period. What will be the final remittance?


30. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. A drew a bill on B for an amount equivalent to 80% of original cost of goods. A got it discounted at Rs. 1,50,000. A’s share of profit will be:a) Rs. 15,300b) Rs.21,300c) Rs.18,900d) None

31. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A Purchased goods costing Rs.2,00,000. B sold 95% goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. A drew a bill on B for an amount equivalent to 80% of original cost of goods. What will be the final remittance?a) B will remit Rs.55,300 to Ab) B will remit Rs.67,300 to Ac) B will remit Rs.46,200 to Ad) B will remit Rs.58,700 to A

32. A purchased goods costing Rs.4,00,000. B sold 4/5th of the goods for Rs. 5,00,000. Balance goods were taken over by B at cost less 20%. If same sets of books are maintained, find out profit on venture?



a) Rs.1,64,000b) Rs. 1,80,000c) Rs.1,00,000d) None

33. A purchased goods costing Rs.4,00,000. B sold the goods for Rs.5,60,000. Unused material costing Rs.20,000 taken over by A at Rs.16,000. A is entitled to get 1% commission on purchase. B is entitled to get 2% commission on sales. Profit sharing ratio equal. A’s share of profit on venture will be:a) Rs.80,400b) Rs.80,800c) Rs.81,200d) None

Answers

1. A

2. C

3. A

4. B

5. B

6. D

7. D

8. C

9. D

10. A

11. D

12. C

13. C

14. A

15. C

16. D

17. D

18. B

19. B

20. D

21. A

22. B

23. B

24. B

25. B

26. B

27. B



28. A

29. B

30. B

31. B

32. A

33. A


Joint Venture -Practice Problems

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