CMA Inter 1 Financial accounting CA/CMA Santosh kumar

Question:12. COC and TATA entered into a Joint venture to underwrite 5,00,000 equity shares of ₹10 each of a new issue of
Alaska Ltd. Alaska Ltd. agrees to allot them as fully paid 4,000 shares in the company in connection with the venture and
₹60,000 in cash. The following expenses are incurred:
COC - Printing and stationary ₹5,000
Postage ₹1,000
Advertisement ₹3,000

TATA - Postage ₹750

Solicitors’ fees ₹3,500
The public subscription was for 4,80,000 shares only and the short subscription was financed by Co- Venturers in the ratio of
3:1. Alaska Ltd paid the consideration to Co-Venturers. Cash as consideration from Alaska Ltd was received by COC.

COC sold 60% of their total holding through brokers @ ₹12.5 per share less brokerage 50 paisa per share and TATA sold 30% of
their holding @ ₹15 per share. Remaining shares were taken over by TATA at ₹14 per share. At the end of joint venture, they
settled their account among themselves. Prepare necessary accounts in the books of COC. (ICMAI Study material-modified)

Question:13. M and N decided to work in partnership with the following scheme, agreeing to share profits as under:
M --¾th share. N—¼th share. They guaranteed the subscription at par of 10,00,000 shares of Re 1 each in U Ltd. And to pay
all expenses up to allotment in consideration of U Ltd. issuing to them 50,000 other shares of Re 1 each fully paid together with
a commission @ 5% in cash which will be taken by M and N in 3: 2.
M and N introduced cash as follows:
M— Stamp Charges, ₹4,000; Advertising Charges ₹3,000; Printing Charges ₹3,000;
N— Rent ₹2,000; Solicitor’s Charges ₹3,000.
Application fell short of the 10,00,000 shares by 30,000 shares and N introduced ₹30,000 for the purchase of those shares. The
guarantee having been fulfilled, U Ltd. handed over to the venturers 50,000 shares and also paid the commission in cash. All
their holdings were subsequently sold by the venturer N receiving ₹18,000 and M ₹50,000. Write-up necessary accounts in the
books of both the parties on the presumption that Memorandum Joint Venture Account is opened for the purpose.
Answer: - Memorandum joint venture

Particulars Amount Amount (₹) Particulars Amt Amount (₹)

To N: Cost or Shares 30,000 By M: Cash (3/5) 30,000
To M: N: Cash (2/5) 20,000
Stamp Charges etc, 4,000
Advertising Charges 3,000 By M: Sale Proceeds of shares 50,000
Printing Charges 3,000 10,000 N: Sale Proceeds of shares 18,000
To N:
Rent 2,000
Solicitor’s Charges 3,000 5,000
To, Profit on Venture:
To, M — ¾ 54,750
To, N — ¼ 18,250 73,000

1,18,000 1,18,000

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In the book of M

JOINT VENTURE with N Account

Particulars Amount Particulars Amount
To, Bank: By Bank: (Commission in cash) 30,000
(Stamp, Adv. and Printing Charges) 10,000 By Bank: (Sale Proceeds of shares) 50,000
To, Share of Profit 54,750
To, Bank (Remittance) 15,250
80,000 80,000

In the book of N:-

Joint venture with M account
Particulars Amount Particulars Amount
To, Bank: Cost of Shares 30,000 By, Bank: (Commission in cash) 20,000
To, Bank: Rent and Solicitor’s Charges 5,000 By, Bank: (Sale Proceeds of shares) 18,000
To, Share of Profit 18,250 By, Bank (Remittance) 15,250
53,250 53,250

MEMORANDUM JOINT VENTURE METHOD:

Under this method each co-venturer will maintain an account called “Joint venture with other co-venturer account” wherein all
transactions done by him only are recorded.

Each co-venturer sends a periodic statement of transactions effected by him for the joint venture to the other co-venturer.

On the receipt of the above statement, each co-venturer prepares Memorandum Joint Venture Account for the profit or loss
from the joint venture.

Question:14: Solve question no 6 by memorandum joint venture method

Question:15. Solve question no 7 by memorandum joint venture method:

Solution: In the book of Ankit:

Joint venture with Navendu account
Particulars Amount Particulars Amount
To bank account: By Bank account (advance) 2,00,000
Material (9,000 x 80) 7,20,000 By Bank account(sale) 9,00,000
Freight 24,000 7,44,000 By goods/ purchases account 32,000
To goods/ purchases account 80,000 By bank A/c (Final settlement) 1,74,000
To commission (9,00,000 x 5%) 45,000
To profit and loss a/c (share in profit) 4,37,000
13,06,000 13,06,000

Note: No entry will be passed for transferring goods from one co-venturer to another.

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In the book of Navendu:

Joint venture with Ankit account
Particulars Amount Particulars Amount
To bank account:
Rent 65,000 By Bank account(sale) 10,00,00
Advertisement 28,000
Salary 26,000 1,19,000

To goods/ purchases account 20,000

To commission (10,00,000 x 5%) 50,000

To Bank account (advance) 2,00,000

To profit and loss a/c (share in profit) 4,37,000

To bank account (final settlement) 1,74,000

12,00,000 12,00,000

Working notes: Memorandum joint venture account

Particulars Amount Particulars Amount
Ankit: Ankit:
Material (7,20,000+ 80,000)= 8,00,000 Sale 9,00,000
Freight 24,000 Drawings 32,000 9,32,000
Commission 45,000
8,69,000
Navendu:
Rent 65,000 Navendu:(Sale) 10,00,000
Advertisement 28,000
Salary 26,000
Goods 20,000
Commission 50,000 1,89,000

To profit on joint venture:

Ankit 4,37,000
Navendu 4,37,000 8,74,000
19,32,000 19,32,000

Question:16. Solve question no 8 by memorandum joint venture method.

Question:17. Ram and Mohan entered into a Joint Venture to purchase and sell new year gifts. They agreed to share the
profits and losses equally. On 4th November, 2025 Ram purchased goods worth ₹1,00,000 and spent ₹6,000 in sending the
goods to Mohan. He also paid ₹2,000 for insurance. On the same date, Ram drew a bill of exchange upon Mohan for
₹1,00,000 at two months. He got the bill discounted @ 18% p.a.
On 12th December 2025, Mohan spent ₹3,000 on cartage, ₹5,000 as rent and ₹5,000 on advertisement. On 24 th December
2025, He sold all the gifts for ₹2,00,000 after retaining gift worth ₹2,000 for his personal use. He sent a cheque to Ram for
the amount due on 8th January, 2026.
You are required to prepare:
1.Memorandum joint venture account, and
2.Joint venture with Mohan Account in the books of Ram.

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Solution: In the book of Ram:

Joint venture with Mohan account
Date Particulars Amount Date Particulars Amount
4-11-25 To bank account: 4-11-25 By Bills receivable account 1,00,000
Material 1,00,000 (advance)
Freight 6,000
Insurance 2,000 1,08,000

4-11-25 To discount account 3,000 8-1-26 By bank A/c (Final settlement) 50,000
8-1-26 To profit and loss a/c 39,000
(share in profit)
1,50,000 1,50,000

In the book of Mohan:

Joint venture with Ram account
Date Particulars Amount Date Particulars Amount
12-12-25 To bank account: 24-12-25 By Bank account(sale) 2,00,000
Cartage 3,000
Rent 5,000 24-12-25 By purchases account 2,000
Advertisement 5,000 13,000

4-11-25 To bills payable (advance) 1,00,000

To profit and loss a/c(share in profit) 39,000

8-1-26 To bank account(final settlement) 50,000

2,02,000 2,02,000

Working notes: Memorandum joint venture account

Particulars Amount Particulars Amount
Ram: Ram: (sale) Nil
Material 1,00,000
Freight 6,000 Mohan:
Insurance 2,000
1,11,000 Sale – 2,00,000
Discount 3,000
Drawings 2,000 2,02,000
Mohan:
Cartage 3,000
Rent 5,000
Advertisement 5,000 13,000

To profit on joint venture:

Ram 39,000
Mohan 39,000 78,000

2,02,000 2,02,000

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Question:18. (Memorandum Joint Venture Account)

A and B decided to enter into joint venture for the sale of electric motors. On 21 st May, 2023, A purchased 200 electric motors

at ₹1,750 each and despatched 150 motors to B incurring ₹10,000 as freight and insurance charges. Ten electric motors were

damaged in transit. On 1st February, 2024, ₹5,000 was received by A from the insurers in full settlement of his claim. On 15 th

March, 2024, A sold 50 electric motors at ₹2,250 each. He received ₹1,50,000 from B on 1 st April, 2024.

On 25th May, 2024 B took delivery of electric motors and incurred the following expenses:

Clearing charges ₹1,700; Repairs for motors damaged in transit ₹3,000; Godown rent ₹6,000.

He sold the electric motors as below:

01.02.2024 10 damaged motors @ ₹1,700 each

01.02.2024 40 motors @ ₹2,000 each

15.03.2024 20 motors @ ₹3,150 each

01.04.2024 80 motors @ ₹2,500 each

It is agreed that they are entitled to commission at 10% on the respective sales affected by them and that the profits and losses

shall be shared by A and B in the ratio of 2: 1.B remits to A the balance of money due on 5 th April, 2004.

Prepare: (i) Joint Venture Account in the books of A and (ii) Memorandum Joint Venture Account.

(CMA exam 2021- 8 marks)

SOME MORE PRACTICE QUESTIONS:

Question:19 (conversion of joint venture into consignment):A and B enter into a joint venture and agreed to share profits and
losses equally. It is also agreed between them that A should make purchases for the joint venture at Ahmedabad, where he resides
and consign the same to B at Mumbai. Accordingly, A purchased goods worth ₹62,000 and sent them to Mumbai and in so doing
he had to pay ₹1,300 for insurance and ₹3,700 for carriage, freight and other expenses.

B reported after some time that he had sold some goods for ₹60,000 and the remaining goods could not be sold on account of bad
market conditions. A and B then handed over the unsold goods to local merchant, C, at Mumbai, who agreed to sale the goods on
their behalf. C was to be paid all the expenses in that connection and was to be allowed a commission at the rate of 2 1/2% on the
sale price of the goods sold.

C, after some time, sent to B a cheque for ₹4,500 after deducting expenses ₹375 and commission. The sale price of goods sold by
C was ₹5,000. C returned the unsold goods to B. A and B then decided to close the joint venture, B taking up the balance of the
goods unsold which had cost ₹25,000 at a discount of 8%.

B sent a statement of account to A showing the following payments made by him: Carriage. ₹1,600; Office expenses ₹2,800;
Insurance ₹2,500, Office and Godown rent ₹1,500; Brokerage, ₹3,600. He also sent a cheque for ₹70,000 to A.
You are required to prepare the necessary accounts in A's ledger showing his share of profit or loss on the joint venture and the
amount due to or by B.

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Question 20. (conversion of joint venture into consignment) Sahani and Sahu entered into a joint venture to sale 800 bags of
food grains. The business risks are to be shared in the ration of 3:2 between them. Sahani supplied 400 bags at ₹800 per bag and
paid freight ₹8,000 and insurance ₹2,000. Sahu sent 400 bags at ₹1,000 per bag. He paid ₹2,500 as freight, insurance ₹8,000 and
sundry expenses as ₹500. Sahani paid ₹50,000 as advance to Sahu.
They appointed Sandeep as agent for sale of grains. Sandeep sold all bags at ₹1,200 per bag. He deducted ₹21,000 as his expenses
and commission of 5% on sales. He remitted ₹6,00,000 by cheque to Sahani and balance to Sahu by way of a bills of exchange.
The co-ventures settled their accounts. Prepare joint venture a/c, Sahu a/c and Sandeep account in the book of Sahani.
(ICMAI Study material)

Solution: Joint venture account (in the book of Sahani )

Particulars Amount Particulars Amount

To, Food grains A/c (400 × 800) 3,20,000 By, Sandeep A/c – Sales 9,60,000

To, Bank A/c - freight & insurance 10,000 (800 ×1200)

To, Sahu A/c -food grains (400 ×1000) 4,00,000

To, Sahu A/c-expenses (8,000+2,500 + 500) 11,000

To, Sandeep A/c - Expenses 21,000

To, Sandeep A/c - Commission 5% 48,000

To, Profit & Loss A/c (3/5th share) 90,000

To, Sahu A/c (2/5th share) 60,000

9,60,000 9,60,000

Sahu account
Particulars Amount Particulars Amount

To, Bank A/c - advance 50,000 By, Joint Venture A/c - grains 4,00,000

To, Sandeep A/c - bill 2,91,000 By, Joint Venture A/c - expenses 11,000

To, Bank A/c - final balance 1,30,000 By, Joint Venture A/c - profit share 60,000

4,71,000 4,71,000

Sandeep account
Particulars Amount Particulars Amount

To, Joint Venture A/c - sales 9,60,000 By, Joint Venture A/c - expenses 21,000
By, Joint Venture A/c - commission 48,000
By, Bank A/c - cheque received 6,00,000
By, Sahu A/c - Bill 2,91,000

9,60,000 9,60,000

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Question 21. (conversion of consignment into joint venture) Daga of Kolkata sent to Lodha of Kanpur goods costing ₹40,000
on consignment at a commission of 5% on gross sales. The packaging and forwarding charges incurred by consignor amounted
to ₹4,000. The consignee paid freight and carriage of ₹1,000 at Kanpur. Three-forth of the goods were sold for ₹48,000. Then
the consignee remitted the amount due from him to consignor along with the account sale, but he desired to return the goods
still lying unsold with him as he was not agreeable to continue with the arrangement of consignment. He was then persuaded
to continue on joint venture basis sharing profit or loss as Daga 3/5 and Lodha 2/5.
Daga then supplied another lot of goods of ₹20,000 and Lodha sold out all the goods in his hand for ₹50,000(gross). Daga paid
expenses ₹2,000 and Lodha ₹1,700 for the second lot of goods. Show necessary ledger account in the books of both the parties.
No final settlement of balance due is yet made. (ICMAI Study material)
Note: This question has been solved in last class of consignment. Solve this question only after finishing chapter‘
Consignment account”.

Question 22. Prabir and Mihir doing business separately as building contractors undertake jointly to build a skyscraper for a

newly started public limited company for a contract price of ₹1,00,00,000 payable as ₹80,00,000 in cash and the balance by

way of fully paid equity shares of the new company. A Bank A/c was opened for this purpose in which Prabir paid ₹25,00,000

and Mihir ₹15,00,000. The profit-sharing ratio was agreed as 2:1 between Prabir and Mihir.

The transactions were: (a) Advance received from the company ₹50,00,000 (b) Wages to contractors ₹10,00,000 (c) Bought

materials ₹60,00,000 (d) Material supplied by Prabir ₹10,00,000 (e) Material supplied by Mihir ₹15,00,000 (f) Architect’s fees

paid from Joint Bank account ₹21,00,000 The contract was completed and the price was duly paid. The joint venture was duly

closed by Prabir taking all the shares at ₹18,00,000 and Mihir taking over the balance material for ₹3,00,000.

Prepare the Joint Venture A/c, Joint Bank A/c. Co-venturer’s A/cs and Shares A/c. (ICMAI study material)

Solution: - Joint venture account

Particulars Amount (₹) Particulars Amount (₹)
To, Joint Bank A/c – wages 10,00,000 By, Joint Bank A/c - advance 50,00,000
To, Joint Bank A/c – material 60,00,000 By, Joint Bank A/c - balance price 30,00,000
To, Joint Banks A/c – Architect 21,00,000 By, Shares A/c – received 20,00,000
To, Prabir A/c – material 10,00,000 By, Mihir A/c - stock taken 3,00,000
To, Mihir A/c – material 15,00,000 By, Prabir A/c - 2/3rd loss 10,00,000
To, Shares A/c – loss 2,00,000 By, Mihir A/c - 1/3rd loss 5,00,000
1,18,00,000 1,18,00,000

Joint Bank Account

Particulars Amount (₹) Particulars Amount (₹)
To, PrabirA/c 25,00,000 By, Joint Venture A/c – wages 10,00,000
To, Mihir A/c 15,00,000 By, Joint Venture A/c – materials 60,00,000
To, Joint Venture A/c – advance 50,00,000 By, Joint Venture A/c – Architect 21,00,000
To, Joint Venture A/c – balance 30,00,000 By, Prabir A/c - balance paid 7,00,000
By, Mihir A/c - balance paid 22,00,000
1,20,00,000 1,20,00,000

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Prabir’ account
Particulars Amount (₹) Particulars Amount (₹)
To, Shares A/c – taken 18,00,000 By, Joint Bank A/c 25,00,000
To, Joint Venture A/c - loss 10,00,000 By, Joint Venture A/c – material 10,00,000
To, Joint Bank A/c- Balance paid 7,00,000
35,00,000 35,00,000

Mihir account
Particulars Amount (₹) Particulars Amount (₹)
To, Joint Venture A/c – stock taken 300,000 By, Joint Bank A/c 15,00,000
To, Joint Venture A/c – Loss 500,000 By, Joint Venture – material 15,00,000
To, Joint Bank A/c - Balance paid 22,00,000
30,00,000 30,00,000

Shares account
Particulars Amount (₹) Particulars Amount (₹)
To, Joint Venture A/c 20,00,000 By, Prabir A/c 18,00,000
By, Joint Venture A/c – loss 2,00,000
20,00,000 20,00,000

Question 23. John and Smith entered into a joint venture business to buy and sale garments to share profits or losses in the ratio
of 5:3. John supplied 400 bales of shirting at ₹500 each and also paid ₹18,000 as carriage & insurance. Smith supplied 500
bales of suiting at ₹480 each and paid ₹22,000 as advertisement & carriage. John paid ₹50,000 as advance to Smith.

John sold 500 bales of suiting at ₹600 each for cash and also all 400 bales of shirting at ₹650 each for cash. John is entitling for
commission of 2.5% on total sales plus an allowance of ₹2,000 for looking after business. The joint venture was closed and the
claims were settled. Prepare Joint Venture A/c and Smith’s A/c in the books of John and John’s A/c in the books of Smith.

Answer: In the book of John

Joint Venture Account
Particulars Amount (₹) Particulars Amount (₹)
To, Goods A/c - shirting (400x500) 2,00,000 By, Cash A/c – sales
To, Bank A/c - carriage & insurance 18,000 shirting (500 x 600) 3,00,000
To, Smith A/c - suiting (500x480) 2,40,000 suiting (400 x 650) 2,60,000
To, Smith A/c - advertisement & Carriage 22,000
To, Commission A/c - 2.5% 14,000
To, Allowance A/c 2,000
To, P & L A/c (5/8th share) 40,000
To, Smith A/c (3/8th share) 24,000
5,60,000 5,60,000

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Smith account
Particulars Amount (₹) Particulars Amount (₹)
To, Cash A/c - advance 50,000 By, Joint Venture A/c – suiting 2,40,000
To, Cash A/c - balance paid 2,36,000 By, Joint Venture A/c – expenses 22,000
By, Joint Venture A/c – profit 24,000
2,86,000 2,86,000

In the book of smith:

John account
Particulars Amount (₹) Particulars Amount (₹)
To, Joint Venture A/c - sales 5,60,000 By, Cash A/c – advance 50,000
By, Joint Venture A/c - shirting 2,00,000
By, Joint Venture A/c - expenses 18,000
By, Joint Venture A/c - commission 14,000
By, Joint Venture A/c - Allowance 2,000
By, Joint Venture A/c - profit 40,000
By, Cash A/c - balance paid 2,36,000
5,60,000 5,60,000

Question 24. MCQ BASED QUESTIONS- PRACTICE SESSION 1

1. Joint venture account is of the nature of

(a) Personal A/c
(b) Nominal A/c
(c) Real A/c
(d) Suspense account

2. A and B purchased a piece of land for ₹40,000 and sold it for ₹60,000 in 2025. Originally A had contributed ₹24,000
and B ₹16,000. What will be the profit on venture?
(a) ₹20,000
(b) ₹16,000
(c) ₹30,000
(d) Nil

3. A, for joint venture with B, purchased goods costing ₹2,00,000. B sold 80% of the goods for ₹2,50,000 balances of
goods were taken over by B at cost less 25%. Find out profit on venture?
(a) ₹80,000
(b) ₹90,000
(c) ₹50,000
(d) None of these

4. If unsold goods costing ₹20,000 is taken over by venturer at ₹15,000. The Joint venture A/c will be credited by
(a) ₹20,000
(b) ₹15,000
(c) ₹5,000
(d) Nil

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5. Memorandum joint venture account is

(a) Personal account
(b) Real account
(c) Nominal account
(d) None of the above

6. A purchased goods costing ₹42,500. B sold goods of ₹40,000 at ₹50,000. Balance goods were taken over by A at same
gross profit percentage as in case of sale. The amount of goods taken over will be.
(a) ₹3,125
(b) ₹2,500
(c) ₹3,000
(d) None

7. What is the nature of joint venture with co-venturer account

(a) Nominal account
(b) Real account
(c) Personal account
(d) None of these

8. ‘M’ and ‘N’ enter into joint venture where ‘M’ supplies goods worth ₹6,000 and spend ₹100 on various expenses. ‘N’
sells the entire lot for ₹7,500 meeting selling expenses amounted to ₹200. profit sharing ratio equal. N remits M the
amount due. The amount of remittance will be
(a) ₹6,700
(b) ₹7,300
(c) ₹6,400
(d) ₹6,100
9. A and B purchased a piece of land for ₹20,000 and sold it for ₹60,000 in 2025. Originally A had contributed ₹12,000
and B ₹8,000. The profit on venture will be:
(a) ₹40,000
(b) ₹20,000
(c) ₹60,000
(d) Nil

10. A and B enter in to joint venture sharing profit and loss in the ratio 1:1 A purchased goods costing ₹20,000. B sold
the goods for ₹25,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales.
The profit will be
(a) ₹3,550
(b) ₹3,600
(c) ₹3,400
(d) ₹3,800

11. Goods costing ₹10,000 destroyed by an accident, insurance claim nil

(a) ₹10,000 will be credited to joint venture account
(b) No entry will be made in the books of joint venture
(c) ₹10,000 will be debited in Joint venture account as loss
(d) ₹8,000 will be credited in joint venture account

12. Which of the following statement is true?

(a) There is no difference between joint venture and partnership
(b) Consignment and joint venture is same
(c) There is not separate act for joint venture
(d) In case of joint venture, the number of third party is none only

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13. Which of the following accounts are maintained in the joint venture when separate set of books are maintained
(a) Joint bank A/c
(b) Joint venture A/c
(c) Co-ventruer A/c
(d) All of these

14. If A co-venturer takes away goods under memorandum joint venture method, then he will debit these goods in his
books to
(a) Joint venture account
(b) Personal account
(c) Purchases account
(d) Sales account

15. For opening joint bank account, in case of separate sets of books:
(a) Ventrue a/c will be debited and venturer A/c will be credited
(b) Joint Bank A/c is debited and ventures capital A/c is credited
(c) Joint venture A/c is debited and joint Bank A/c will be credited
(d) Joint Bank A/c will be debited and joint venture A/c will be credited

16. State which of the following statements is true?

(a) Memorandum joint venture account is prepared to find out profit on venture
(b) Memorandum joint venture account is prepared to find out amount due from co-venture
(c) Memorandum joint venture account is prepared when separate sets of books is maintained
(d) In memorandum joint venture account only one venture's transactions are recorded

17. Can a minor be admitted into a joint venture?

(a) Can be admitted
(b) Cannot be admitted
(c) Can be admitted subject to the consent of the co-venturer.
(d) Can be admitted for the benefit of minor

18. In case of purchase of furniture in joint venture through joint bank A/c, while separate set of books is maintained.
Which of the following is the correct entry?
(a) Debit furniture, credit joint bank A/c
(b) Debit furniture, credit joint venture A/c
(c) Debit Joint venture, credit joint bank A/c
(d) Debit Joint venture A/c, Credit furniture A/c

19. ‘A’ and ‘B’ enter into a joint venture business. ‘A’ purchased goods worth ₹30,000 and ‘B’ sold for ₹40,000. ‘A’ is
entitled to 1% commission on purchases and ‘B’ is entitled to 5% commission on sales. The profit-sharing ratio is 3:2
Profit shared by A & B is….
(a) ₹4,000; 2,000
(b) ₹4,620; 3,080
(c) ₹5,000; 2,500
(d) ₹4,200; 2,100

20. A and B entered in a joint venture A supplied goods worth ₹60,000 and paid Expenses ₹6,000 Y supplied goods worth
₹14,000 and paid Expenses ₹1,000. Y sold the goods for ₹1,00,000 and he is entitled to a commission of 5% on sales. Find
the profit on Joint Venture.
(a) ₹14,400
(b) ₹14,000
(c) ₹13,000
(d) ₹13,200

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Answer:
1. (b) 2. (a) 3. (a) 4. (b) 5. (c) 6. (a) 7. (c) 8. (a) 9. (a) 10. (a)
11.(b) 12. (c) 13. (d) 14. (c) 15. (b) 16. (a) 17. (c) 18. (c) 19. (b) 20. (b)

MCQ BASED QUESTIONS: PRACTICE SESSION 2

1. M and N enter into a Joint venture where M supplies goods worth ₹6,000 and spends ₹100 on various expenses. N
sells the entire lot for ₹7,500 meeting selling expenses amounting to ₹200. Profit sharing ratio equal, N remits to M the
amount due. The amount of Profit will be:
(a) ₹1,200
(b) ₹ (1,200)
(c) ₹1,000
(d) ₹1,100

2. Which of the following statement is true?

(a) Only one venturer bears the risk
(b) Only one venturer can sell the goods
(c) Only one venturer can purchase the goods
(d) In joint venture, provisions of partnership act applies

3. Which of the following statement is true:

(a) In case of separate sets of books method of JV, co-venturer's contribution of goods is debited in Joint Bank A/c
(b) Co-venturer's contribution in cash is debited in Venturer's personal account
(c) Discount on discounting of B/R is debited to Venturer's personal account
(d) Contract money received is credited to Joint Venture Account.

4. For purchase of plant from Joint Bank Account, in case separate sets of books are maintained, the correct journal
entry will be:
(a) Plant A/c will be debited and Joint Bank A/c will be credited
(b) Joint Venture A/c will be debited and Joint Bank A/c will be credited
(c) Plant A/c will be debited and Venturers Capital A/c will be credited
(d) Joint Venture A/c will be debited and Plant A/c will be credited

5. For material supplied from own stock by any of the venturer, the correct journal entry will be: (In case of separate
sets of books)
(a) Joint Venture A/c will be debited and Venturers Capital A/c will be credited
(b) Joint Venture A/c will be debited and Joint Bank A/c will be credited
(c) Joint Venture A/c will be debited and Material A/c will be credited
(d) Joint Bank A/c will be debited and Joint Venture A/c will be credited

6. A and B enter into a joint venture to underwrite the shares of K Ltd. K Ltd make an equity issue of 1,00,000 equity
shares of ₹10 each. 80% of the issue are subscribed by the party. The profit-sharing ratio between A and B is 3:2. The
balance shares not subscribed by the public, purchased by A and B in profit sharing ratio. How many shares to be
purchased by A.
(a) 80,000 shares
(b) 72,000 shares
(c) 12,000 shares
(d) 8,000 shares

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7. A and B enter into a joint venture to underwrite shares of K Ltd. K Ltd make an equity issue of 2,00,000 equity shares.
80% of the shares underwritten by the venturer. 1,60,000 shares are subscribed by the public. How many shares are to
be subscribed by the venturer?
(a) Nil
(b) 32,000
(c) 36,000
(d) None.
Hint:
Total shares underwritten (2,00,000 X 80%) 1,60,000
Less: proportainate subscribed shares to be adjusted under guarantee 1,28,000
(1,60,000 X 80%)
Shares to be subscribed under guarantee by Joint venture 32,000

8. A and B enter into a joint venture sharing profit and losses in the ratio 2:1. A purchased goods costing ₹2,00,000. B
sold the goods for ₹2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on
sales. The profit on venture will be:
(a) ₹35,500
(b) ₹36,000
(c) ₹34,000
(d) ₹38,000

9. P and Q enter into a Joint Venture sharing profits and losses in the ratio 3:2. P purchased goods costing ₹2,00,000.
Other expenses of P ₹10,000. Q sold the goods for ₹1,80,000. Remaining goods were taken over by Q at ₹20,000. The
amount of final remittance to be paid by Q to P will be:
(a) ₹2,15,000
(b) ₹20,000
(c) ₹2,10,000
(d) ₹2,04,000

10. C and D entered into a Joint Venture to construct a bridge. They did not open separate set of books. They shared
profits and losses as 3:2. C contributed ₹1,50,000 for purchase of materials. D paid wages amounting to ₹80,000. Other
expenses were paid as: C – ₹5,000 D – ₹15,000. C purchased one machine for ₹20,000. The machine was taken over by
C for ₹10,000. Total contract value of ₹3,00,000 was received by D. What will be the profit on venture?
(a) ₹30,000
(b) ₹40,000
(c) ₹20,000
(d) ₹15,000

11. R and M entered into a joint venture to purchase and sell new year gifts. They agreed to share the profit and losses
equally. R purchased goods worth ₹1,00,000 and spent ₹10,000 in sending the goods to M. He also paid ₹5,000 for
insurance. M spent ₹10,000 as selling expenses and sold goods for ₹2,00,000. Remaining goods were taken over by him
at ₹5,000. What will be the amount to be remitted by M to R as final settlement?
(a) ₹1,55,000
(b) ₹1,50,000
(c) ₹1,15,000
(d) ₹80,000

12. R and M entered into a joint venture to purchase and sell new year gifts. They agreed to share the profit and losses
equally. R purchased goods worth ₹1,00,000 and spent ₹10,000 in sending the goods to M. He also paid ₹5,000 for
insurance. M spent ₹10,000 as selling expenses and sold goods for 2,00,000. Remaining goods were taken over by him at
₹5,000. Find out profit on venture?
(a) ₹70,000
(b) ₹75,000
(c) ₹80,000
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(d) ₹85,000

13. A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A will purchase goods and B will affect
the sale. A purchased goods costing ₹2,00,000. B sold it for ₹3,00,000. The venture is terminated after 3 months. A is
entitled to get 10% interest on capital invested irrespective of utilization period. The amount of interest received by A
will be.
(a) ₹20,000
(b) ₹10,000
(c) ₹15,000
(d) ₹25,000

14. A bought goods of the value of ₹10,000 and consigned them to B to be sold by them on a joint venture, profits being
divided equally. A draws a bill on B for an amount equivalent to 80% of cost on consignment. The amount of bill will
be:
(a) ₹10,000
(b) ₹8,000
(c) ₹6,000
(d) ₹9,000

15. A bought goods of the value of ₹10,000 and consigned them to B to be sold by them on a joint venture, profits being
divided equally, A paid ₹1,000 for freight and insurance. A draws a bill on B for ₹10,000. A got it discounted at ₹9,500.
B sold the goods for ₹15,000. Commission payable to B, ₹ 500. Find out the profit on venture?
(a) ₹3,000
(b) ₹3,500
(c) ₹4,000
(d) ₹3,200

16. A bought goods of the value of ₹10,000 and consigned them to B to be sold them on a joint venture, profits being
divided equally, A paid ₹1,000 for freight and insurance. A draws a bill on B for ₹10,000. A got it discounted at ₹9,500.
B sold the goods for ₹15,000. Commission payable to B, ₹500. The amount to be remitted by B to A will be:
(a) ₹12,500
(b) ₹3,000
(c) ₹14,500
(d) ₹13,500

17. If any stock is taken over by the venturer, if will be treated as an:
(a). Income of the joint venture, hence credited to Joint Venture Account
(b). Expenses of Joint venture, hence debited to Joint Venture Account
(c). To be ignored from Joint Venture Transaction
(d). It will be treated in the personal book of the venturer and not in the books of the joint Venture.

18. Advise which of the statement is true:

(a). The Joint Venture can be formed by a single person only.
(b). A legal deed should be drafted before forming Joint Venture,
(c). The profit to be shared between the venturer in agreed ratio
(d). Joint Venture follows going concern concept.

19. A and B were partners in a joint venture sharing profits and losses in the proportion of 3/ 5th and 2/5th respectively.
A supplies goods to the value of ₹80,000 and incurs expenses amounting ₹6,000. B supplies goods to the value of ₹14,000
and his expenses amount to ₹2,000. B sells goods on behalf of the joint venture and realizes ₹1,50,000. B entitled to a
commission of 5% on sales. B settles his account by bank draft. Find out A's share of profit on venture?
(a) ₹24,300
(b) ₹25,000
(c) ₹26,000
(d) ₹20,300
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20. A and B were partners in a joint venture sharing profits and losses in the proportion of 3/ 5th and 2/5th respectively.
A supplies goods to the value of ₹60,000 and incurs expenses amounting ₹6,000. B supplies goods to the value of ₹16,000
and his expenses amount to ₹3,000. B sells goods on behalf of the joint venture and realizes ₹1,20,000. B entitled to a
commission of 5% on sales. B settles his account by bank draft. How much amount, B will pay to A as final settlement?
(a) ₹83,400
(b) ₹93,200
(c) ₹80,000
(d) ₹66,000

21. A and V enter into a joint venture to sell a consignment of biscuits sharing profits and losses equally. A provides
biscuits from stock ₹10,000. He pays expenses amounting to ₹1,000. V incurs further expenses on carriage ₹1,000. He
receives cash for sales ₹15,000. He also takes over goods to the value of ₹2,000. What will be the amount to be remitted
by V to A?
(a) ₹13,500
(b) ₹15,000
(c) ₹11,000
(d) ₹10,000

22. A and V enter into a joint venture to sell a consignment of biscuits sharing profits and losses equally. A provides
biscuits from stock ₹10,000. He pays expenses amounting to ₹1,000. V incurs further expenses on carriage ₹1,000. He
receives cash for sales ₹15,000. He also takes over goods to the value of ₹2,000. Find out profit on venture?
(a) ₹3,000
(b) ₹5,000
(c) ₹6,000
(d) ₹3,500

23. A purchased 1000 kg of rice costing ₹200 each. Carriage 2,000, insurance 3,000. 4/5th of the boxes was sold by B at
₹250 per boxes. Remaining stock were taken over by B at cost. The amount of stock taken over will be:
(a) ₹40,000
(b) ₹41,000
(c) ₹50,000
(d) ₹50,200

24.Goods costing ₹10,000 destroyed by an accident, insurance claim nil.

(a) ₹10000 will be credited to Joint Venture Account.
(b) No Entry will be made in the books of Joint Venture
(c) ₹10000 will be debited in Joint Venture Account as Loss
(d) ₹8000 will be credited in Joint Venture Account

25. A and B were partners in a joint venture sharing profits and losses in the proportion of 3/5th and 2/5 respectively.
A supplies goods to the value of ₹60,000 and incurs expenses amounting ₹6,000. B supplies goods to the value of ₹14,000
and his expenses amount to ₹1,000. B sells goods on behalf of the joint venture and realizes ₹1,00,000. B entitled to a
commission of 5% on sales. B settles his account by bank draft. Find out the profit on venture?
(a) ₹14,400
(b) ₹14,000
(c) ₹13,000
(d) ₹l3,200

26. A purchased goods costing 1,00,000. B sold the goods for ₹1,50,000. Profit sharing ratio between A and B equal. If
same sets of books is maintained, what will be the final remittance?
(a) B will remit ₹1,25,000 to A
(b) B will remit ₹1,50,000 to A
(c) A will remit ₹1,00,000 to B
(d) B will remit ₹25,000 to A

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27. A purchased goods costing ₹2,00,000, B sold 4/5th of the goods for ₹2,50,000. Balance goods were taken over by B at
cost less 20%. If same sets of books is maintained, find out profit on venture?
(a) ₹82,000
(b) ₹90,000
(c) ₹50,000.
(d) none

28. A purchased goods costing ₹2,00,000; B sold the goods for ₹2,80,000. Unused material costing ₹10,000 taken over by
A at ₹8,000. 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) ₹40000
(b) ₹40400
(c) ₹40600
(d) ₹40200

29. A and B enter into joint venture sharing profit and loss equally. A purchased 100 kg of rice @ ₹20/kg. Brokerage
paid ₹200; carriage paid ₹300. B sold 90 kg of rice @ ₹22/ kg. Balance rice was taken over by B at cost. The value of rice
taken over to be recorded in joint venture will be:
(a) ₹200
(b) ₹250
(c) ₹230
(d) ₹220

30. A and B enter into a joint venture sharing profit and losses equally. A purchased 5000 kg of rice @ ₹50/kg. B
purchased 1,000 kg of wheat @ ₹60/Kg. A sold 1,000 kg of wheat @ ₹70/kg and B sold 5,000 kg of rice @₹60/kg. The
profit on venture when same sets of books is maintained will be:
(a) ₹1,10,000
(b) ₹1,00,000
(c) ₹1,20,000
(d) ₹60,000

31. A and B enter into a joint venture sharing profits and losses equally. A purchased 5,000 kg of rice @ ₹50/kg. B
purchased 1,000 kg of wheat @ ₹60/kg. A sold 1,000 kg of wheat @ ₹70/kg and B sold 5,000 kg of rice @ ₹60/kg. What
will be the final remittance?
(a) B will remit ₹2,10,000 to A
(b) A will remit ₹2,10,000 to B
(c) A will remit ₹2,00,000 to B
(d) B will remit ₹1,80,000 to A

32. A and B enter into a Joint Venture by opening a joint bank account contributing ₹10,00,000. The profit-sharing ratio
between A and B is 3:2. How much amount to be contributed by A?
(a) ₹6,00,000
(b) ₹4,00,000
(c) ₹3,00,000
(d) ₹5,00,000

33. A, B and C are co-venturer. The relative Profit-sharing ratio between A and B is 3:2 and between B and C is also
3:2.Fine out the PSR between A, B and C.
(a) 3:2:2
(b)9:6:4
(c) 4:3:2
(d) 3:2:1

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34. A and B entered into a joint venture. They opened a joint bank account by contributing ₹2,00,000 each.The expenses
incurred on venture is exactly equal to ₹2,00,000. Once the work is completed, contract money received by cheque
₹4,00,000 and in shares ₹50,000. The shares are sold for ₹ 40,000. What will be the profit on venture?
(a) ₹2,50,000
(b) ₹2,40,000
(c) ₹4,40,000
(d) ₹4,50,000

35. If a venturer draws a bill on his co-venturer and if the drawer discounts the bill with same sets of books maintained,
the discounting charges will be borne by:
(a) The drawer of the bill
(b) The drawee of the bill
(c) The discounting charges will be recorded in memorandum account
(d) The discounting charges will be borne by bank

36. Which of the following statement is not true?

(a) Joint venture is a going concern
(b) Joint venture is terminable in nature
(c) Joint venture does not follow accrual basis of accounting
(d) The co-venturer shares the profit in agreed ratio.

37. A and B were partners in a joint venture sharing profits and losses in the proportion of 4/ 5th and 1/5th respectively.
A supplies goods to the value of ₹50,000 and incurs expenses amounting to ₹5,400. B supplies goods to the value of
₹14,000 and his expense amount to ₹800. B sells goods on behalf of the joint venture and realizes ₹92,000. B is entitled
to a commission of 5 per cent on sales. B settles his account by bank draft. What will be the final remittance?
(a) B will remit ₹69,160 to A
(b) A will remit ₹69,160 to B
(c) A will remit ₹69,000 to B
(d) B will remit ₹69,000 to A

38. A and B were partners in a joint venture sharing profits and losses in the proportion of 4/5th and 1/5th respectively.
A Supplies goods to the value of ₹50,000 and incurs expenses amounting to ₹5,400. B supplies goods to the value of
₹14,000 and his expense amount to ₹800. B sells goods on behalf of the joint venture and realizes ₹92,000. B is entitled
to a commission of 5% on sales. B settles his account by bank draft. What will be the profit on venture?
(a) ₹17200
(b) ₹17000
(c) ₹18000
(d) ₹l8200

39. In a Joint venture A contributes ₹5,000 and B contributes ₹10,000. Goods are purchased for ₹11,200. Expenses
amount to ₹800. Sales amount to ₹14,000. The remaining goods were taken by B at an agreed price of ₹400. A and B
share profit and losses in the ratio of 1:2 respectively. As a final settlement, how much A will receive?
(a) ₹5,800
(b) ₹6,000
(c) ₹5,000
(d) ₹10,800

40. Which of the following statement is true?

(a). There is no difference between Joint Venture and Partnership
(b). Consignment and Joint Venture is same
(c). In case of Joint Venture, none of the act is applicable
(d) In case of Joint Venture, the number of related parties is one only.

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41. A and B enter into a venture sharing profit and losses in the ratio 2:3. Goods purchased by A for ₹45,000. Expenses
incurred by A ₹13,500 and by B ₹5,200. B sold the goods for ₹85,000. Remaining stock taken over by B at ₹7,200. What
will be the final remittance to be made by B to A:
(a) ₹6,9900
(b) ₹11,400
(c) ₹17,100
(d) ₹7,200

42. If separate sets of books is maintained and suppliers grant discount at the time of making the payment for purchase
of goods, such discount received will be treated as:
(a) Income of Joint Venture, hence credited to Joint Venture A/c
(b) Will be credited to Joint Bank A/c
(c) Will be credited to Co-venturer's Capital A/c
(d) Will be ignored from the books.

43. If unsold goods costing ₹20,000 is taken over by Venturer at ₹15,000, the Joint Venture A/c will be credited by:
(a) ₹20,000
(b) ₹15,000
(c) ₹35,000
(d) nil

44. A and B enter into a venture sharing profits and losses in the ratio 2:3. Goods purchased by A for ₹45,000. Expenses
incurred by A, ₹13,500 and by B ₹5,200. B sold the goods for ₹85,000. Remaining stock taken over by B at ₹7,200. The
profit on venture will be:

(a) ₹28,500
(b) ₹21,300
(c) ₹35,700
(d) ₹9,800

45. State which of the statement is true?

(a) Memorandum Joint Venture Account is prepared to find out profit on venture.
(b)Memorandum Joint Venture Account is prepared to find out amount due from co-venturer.
(c) Memorandum Joint Venture Account is prepared when separate sets of books is maintained.
(d) In Memorandum Joint Venture Account only one venturer's transaction is recorded.

46. A and B enter into a joint venture for purchase and sale of Type-writer. A purchased Typewriter costing ₹1,00,000.
Repairing expenses ₹10,000, printing expenses ₹10,000. B sold it at 20% margin on selling price. The sales value will be:
(a) ₹1,25,000
(b) ₹1,50,000
(c) ₹1,00,000
(d) ₹1,40,000

47. Which of the following statement is true?

(a) When separate set of books is maintained, expenses paid by venturer will be credited to joint bank account.
(b) When separate set of books is maintained, expenses paid by venturer will be credited to venturer's capital account.
(c) When separate set of books is maintained, expenses paid by venturer will be credited to Jt. venture account.
(d) When separate set of books is maintained, expenses paid by venturer will be credited to Outstanding Expenses A/c.

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Answer: -
1.A 2.D 3.D 4.B 5.A 6.C 7.B 8.A 9.D 10.B

11.A 12.C 13.A 14.B 15.A 16.B 17.A 18.C 19.A 20.A

21.A 22.B 23.B 24.B 25.B 26.A 27.A 28.D 29.B 30.D

31.A 32.A 33.B 34.B 35.C 36.A 37.A 38.A 39.A 40.C

41.A 42.D 43.B 44.A 45.A 46.B 47.B

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