Go through this Joint Venture and Consignment Account – CS Foundation Fundamentals of Accounting and Auditing Notes will help students in revising the entire subject quickly.
Joint Venture and Consignment Account – CS Foundation Fundamentals of Accounting Notes
Meaning of Consignment:
The term “Consignment” relates to dealing with a situation where one person or firm sends goods to another person or firm on the basis that the goods will be sold on behalf of and at the risk of the former.
Features of Consignment:
- The party which sends the goods is called consignor.
- The party to whom goods are send is called consignee.
- The ownership of goods remains with the consignor.
- The consignor sends to consignee a Performa invoice, statement that books like an invoice but is really not one.
- The object of perform a invoice is only to convey information to the consignee regarding particulars of the goods sent.
- The consignee recovers from the consignor all expenses in awed by him on the consignment and charge commission on Sales made by him also.
Accounting Entries in the Books of Consignor:
(1) On dispatch of goods:
Consignment A/c (with the cost of goods)
To Goods sent on consignment A/c
(2) On Payment of expenses on dispatch (with the amount spent as expenses)
Consignment A/c To Bank A/c
(3) On receiving advance (with the amount cash or bill)
Cash or bills receivable A/c
To Consignee personal A/c
(4) On the consignee reporting sale (with gross proceeds of sales) Consignee’s personal A/c
To consignment A/c
(5) For expenses incurred by the consignee, (with the amount of expenses)
Consignment A/c
To Consignee’s personal A/c
(6) For commission payable to the consignee (with the amount of expenses)
Consignment A/c
To Consignee’s personal A/c
Assuming that all the goods sent have been sold, the consignment account will show at this stage the actual Profit or loss made on it the same is transferred to profit and loss A/c.
The entry in case of profit is:
Consignment A/c
To Profit and loss A/c In case of loss the entry is:
Profit and loss A/c
To Consignment A/c
When Consignment is Partly Sold.
Stock on Consignment A/c To consignment A/c
Accounting Entries in the Books of Consignee:
(1) When Consignment goods are received:
No Entry
(2) For expenses incurred by the consignee:
Consignor’s personal A/c
To Cash A/c
(3) When advance is given:
Consignor personal A/c
To Cash or bills payable A/c
(4) When goods are sold:
Cash or Bank A/c
To Consignor’s personal A/c
(5) For Commission due:
Consignor’s personal A/c
To Commission A/c
Joint Venture A/c’s:
A Joint venture is a short duration “business” entered in to by two or more persons jointly.
Joint venture may be described as a temporary partnership between two or more persons without the use of the firm name, for a limited purpose.
Features of Joint Venture:
- It is short duration special purpose partnership and also may be described as temporary partnership.
- Parties in venture are called co-ventures.
- Co ventures may contribute funds for running the venture.
- Co-ventures share profit or loss of the venture at the agreed ratio, if agreement is event on this point the equal ratio.
- Generally profit or loss of the venture is computed on completion of the venture.
Difference between Joint Venture and Consignment:
| Basics of Difference | Joint Venture | Consignment |
| 1. Nature | It is a temporary partnership business without a firm name. | It is an extension of business by principal through agent |
| 2. Parties | The parties involved in joint venture are known as co-ventures. | consignor and consignee are involving parties in the consignment |
| 3. Relation | The relation between co-ventures is just like the partners in the partnership firm. | The relation between the consignor and consignee is ‘principle and agent’. |
| 4. Sharing Profit | The profits and losses of joint venture are shared among the co-ventures in their agreed proportion. | The profits and losses are not shared between the consigner, and consignee. Consignee gets only the commission. |
| 5. Right | The Covertures in the joint ventures have equal right | The consignment, the consignor enjoys principals right where as consignee enjoys the right of agent |
| 6. Exchange of Information | The Co-ventures exchange the required information among the regularly. | The consignor is the owner of the business. |
| 7. Method of Maintaining A/c | There are different method of maintaining accounts in joint venture as per agreement the co ventures maintain the account. | In consignment there is only one method of maintaining account. |
| 8. Basis of Accounting | Cash basis of accounting is applicable in joint venture. | Actual basis is adopted in consignment |
| 9. Continuity | It is terminated after the particular completion of business. | It exist according to the willingness of both consignor and consignee. |
Joint Venture and Consignment Account MCQ Questions
1. Consignment Account is a:
(a) Real Account
(b) Nominal Account
(c) Trading Account
(d) Personal Account
Answer:
(b) Nominal Account
2. A invoiced certain goods so as to show a profit of 20% on invoice price 1/10th of the goods were lost in transit. The cost price of goods lost is ₹ 40,000. The invoice value of goods sent out is:
(a) ₹ 5,00,000
(b) ₹ 4,80,000
(c) ₹ 4,50,000
(d) ₹ 4,00,000
Answer:
(a) ₹ 5,00,000
3. X sends out 400 bags to Y costing ₹ 200 each, consignor expenses were ₹ 4000. Y’s non selling expenses ₹ 2,000. and selling expenses of ₹ 1000. 300 bags were sold by Y. Value of consignment stock will be :
(a) ₹ 20,400
(b) ₹ 20,700
(c) ₹ 22,000
(d) ₹ 21,500
Answer:
(d) ₹ 21,500
4. X sends out goods costing ₹ 3,00,000 to Y at cost plus 25%, consignor’s expenses ₹ 5,000. 1/10th of goods were lost in transit. Insurance claim received ₹ 3,000. The net loss on account of abnormal loss is :
(a) ₹ 27,500
(b) ₹ 25,500
(c) ₹ 30,500
(d) ₹ 38,000
Answer:
(a) ₹ 27,500
5. P sent out goods costing ₹ 45,000 to Y at cost + 331/3%. 1/10th of goods were lost in transit. 2/3rd of the goods are sold at 20% above IP. The amount of sale value will be :
(a) ₹ 54,000
(b) ₹ 43,200
(c) ₹ 60,000
(d) ₹ 36,000
Answer:
(b) ₹ 43,200
6. Account Sales indicates :
(a) The net amount due from consignor to consignee by way of commission
(b) The net amount due from consignee to consignor
(c) Net sales effected by consignee
(d) None of these
Answer:
(b) The net amount due from consignee to consignor
7. X sends out goods costing ₹ 2,00,000 to Y. 3/5th of the goods were sold by consignee for ₹ 1,40,000.
Commission 2% on sales plus 20% of gross sales less all commission exceeds cost price. The amount of commission will be :
(a) ₹ 5,667
(b) ₹ 5,800
(c) ₹ 6,000
(d) ₹ 5,600
Answer:
(a) ₹ 5,667
8. A sends out goods costing ₹ 2,00,000 to B. Consignor’s expenses ₹ 5,000. Consignee’s expenses in relation to sales ₹ 3000. 4/5th of the goods were sold at 20% above cost. The profit on consignment will be:
(a) ₹ 25,000
(b) ₹ 31,000
(c) ₹ 25,200
(d) ₹ 5,000
Answer:
(a) ₹ 25,000
9. Goods sent on consignment account is a :
(a) Personal account
(b) Real account
(c) Nominal account
(d) Sales A/c
Answer:
(b) Real account
10. The abnormal loss on consignment is credited to :
(a) Consignment A/c
(b) Profit & Loss A/c
(c) Consignee’s personal A/c
(d) All of the above
Answer:
(a) Consignment A/c
11. A proforma invoice is sent by :
(a) Consignee to consignor
(b) Consignor to consignee
(c) Debtors to consignee
(d) Debtors to consignor
Answer:
(b) Consignor to consignee
12. X sends out 200 boxes to Y costing ₹ 100 each. Consignor’s expenses ₹ 4000. Consignee’s non-recurring expenses ₹ 900.1/10th of the boxes were lost in transit. 2/3rd of the boxes received by consignee were sold for ₹ 20,000. The amount of consignment stock will be :
(a) ₹ 7,200
(b) ₹ 7,500
(c) ₹ 7,000
(d) ₹ 6,000
Answer:
(b) ₹ 7,500
13. X sent out certain goods to Y. 1/10th of goods were lost in transit. Invoice value of goods lost is ₹ 12,500. Invoice value of goods sent out on consignment will be :
(a) ₹ 1,20,000
(b) ₹ 1,25,000
(c) ₹ 1,40,000
(d) ₹ 1,00,000
Answer:
(b) ₹ 1,25,000
14. Suresh consigned 600 fans to Naresh to be sold at his risk. The cost of each fan is ₹ 300. Suresh paid ₹ 6000 as freight. Naresh paid ₹ 1500 for octroi; ₹ 3500 for godown rent. 500 fans were sold for ₹ 1,80,000. Naresh was entitled to 4% commission on sale @ ₹ 350 per fan and 20% of any surplus price realized Profit on consignment will be :
(a) ₹ 12,250
(b) ₹ 12,000
(c) ₹ 14,000
(d) ₹ 15,000
Answer:
(a) ₹ 12,250
15. Commission provided by the consignor to the consignee to promote credit sale is know as :
(a) Ordinary commission
(b) Del credere commission
(c) Over – riding commission
(d) Special commission
Answer:
(b) Del credere commission
16. If no del – credere commission is paid to the consignee, ________ account will be debited for credit sale :
(a) Consignment account
(b) Consignee account
(c) Consignor account
(d) Consignment debtors account
Answer:
(d) Consignment debtors account
17. On 1st Sept., 2006 goods costing ₹ 33,000 were consigned by X to his agent Y at a proforma price which was cost plus one sixth profit on invoice price. What is the invoice price of goods :
(a) ₹ 39,000
(b) ₹ 39,600
(c) ₹ 40,000
(d) ₹ 45,000
Answer:
(b) ₹ 39,600
18. Overriding commission is calculated on :
(a) Cash sales
(b) Credit sales Only
(c) Total sales
(d) Credit sales less Cash sale
Answer:
(c) Total sales
19. X consigns 500 bags to Y costing ₹ 400 each at an inflated price of ₹ 450 each. Consignor’s expenses ₹ 4000. Consignee’s expenses freight ₹ 1000, selling 7 2000,400 bags were sold. The amount of stock reserve will be :
(a) ₹ 5,000
(b) Nil
(c) ₹ 10,000
(d) ₹ 10,200
Answer:
(a) ₹ 5,000
20. What entry is required to be passed to nullify the effect of Loading:
(a) Goods sent on consignment A/c Dr.
To Trading A/c
(b) Goods sent on consignment A/c Dr.
To Consignment A/c
(c) Consignment A/c Dr.
To Goods sent on consignment A/c
(d) None
Answer:
(b) Goods sent on consignment A/c Dr.
To Consignment A/c
21. The risk of stock on consignment lies with ________.
(a) Consignor
(b) Consignee
(c) Buyer
(d) Seller
Answer:
(a) Consignor
22. X sends out 4000 boxes to Y costing ₹ 100 each. Consignor’s expenses 10,000.1/10th of boxes were lost in consignee’s godown and treated as normal loss. 2400 boxes were sold by consignee. The value of consignment stock will be :
(a) ₹ 1,36,667
(b) ₹ 1,23,000
(c) ₹ 1,20,000
(d) ₹ 1,20,500
Answer:
(a) ₹ 1,36,667
23. If the del credere commission is 10%, cash sales is ₹ 5,000 and credit sales is ₹ 10,000. Calculate the amount of del credere commission.
(a) 1,500
(b) 1,000
(c) 500
(d) None
Answer:
(a) 1,500
24. The Stock lying unsold with the consignee belongs to :
(a) Consignor
(b) Consignee as he bears the risk
(c) Both (a) and (b)
(d) None of these
Answer:
(a) Consignor
25. J of Jaipur sends 500 radios @ 7 200 each to D of Delhi. All the radios are sold by D at a profit of 25% on cost. D is entitled to a commission of 7 25 per radio sold plus 20% of gross sale proceeds as exceeds an amount calculated @ 20% profit on cost. Calculate commission.
(a) ₹ 12,500
(b) ₹ 13,500
(c) ₹ 11,500
(d) ₹ 10,500
Answer:
(b) ₹ 13,500
26. Account Sales includes ;
(a) Sales made
(b) Stock left with consignee
(c) Commission earned
(d) All of above.
Answer:
(d) All of above.
27. A sends 1000 units @ ₹ 56 to be sold on consignment basis. Consignor expenses amounted to ₹ 1000. 50 units were cost in transit. Find the new price per unit. (Loss is unavoidable).
(a) ₹ 50 per unit
(b) ₹ 60 per unit
(c) ₹ 58.95 per unit
(d) ₹ 57 per unit
Answer:
(b) ₹ 60 per unit
28. A consigned 1000 litres of coconut oil @ ₹ 50 per It. to B. The normal loss is estimated at 5%. The profit was fixed at 14% on the total cost. What is the sale price per litre?
(a) ₹ 57
(b) ₹ 60
(c) ₹ 70
(d) ₹ 55
Answer:
(b) ₹ 60
29. X sends goods to Y on consignment, but 15% of the goods were lost in transit. Such loss will be borne by:
(a) Consignee
(b) Consignor
(c) Both (a) and (b)
(d) Insurance company
Answer:
(b) Consignor
30. Who is owner of the unsold stock left with the consignee?
(a) Consignee
(b) Consignor
(c) Co-venturer
(d) Both (a) and (b)
Answer:
(b) Consignor
31. The Consignor sends ________ along With the consigned goods to the consignee.
(a) account sales
(b) proforma invoice
(c) both
(d) none
Answer:
(b) proforma invoice
32. X consigned goods to Y costing ₹ 30,000 at cost plus 25%. These goods are to be sold at invoice value plus 10%. Y sold a part of the goods for ₹ 33,000. What will be the value of stock lying with Y that will be shown by X at the closing of accounts?
(a) ₹ 8,250
(b) ₹ 6,000
(c) ₹ 7,500
(d) ₹ 8,000
Answer:
(b) ₹ 6,000
33. Del credere commission is fixed in terms of percentage say 10% and credit sales and cash sale are ₹ 10,000 and ₹ 5,000 respectively. Amount of del-credere commission will be?
(a) ₹ 1,000
(b) ₹ 1,500
(c) ₹ 500
(d) None of the above
Answer:
(b) ₹ 1,500
34. X sends out 400 bags costing ₹ 200 each to Y. Sales are to be made at cost +45%. X draws a bill on Y for an amount equivalent to 60% of sales value. The amount of bill will be:
(a) ₹ 69,600
(b) ₹ 60,300
(c) ₹ 61,250
(d) ₹ 63,000
Answer:
(a) ₹ 69,600
35. Goods costing ₹ 1,00,000, Invoice Price ₹ 1,20,000, send to consignee. Goods sold by consignee for ₹ 96,000 at Invoice Price. Consignee is entitled to a commission of 5% to cost price of sale made and 10% additional commission on difference of invoice price and cost price of sale made. Amount of commission payable to the consignee will be:
(a) ₹ 4,000
(b) ₹ 5,600
(c) ₹ 1,600
(d) ₹ 9,600
Answer:
(b) ₹ 5,600
36. Mr. A sold goods amounting to ₹ 30,000 (cost of goods ₹ 24,000) received on consignment, during the month of April, 2009. Half of the sales was on credit. He is entitled for 5% commission on sales. In addition to that he is also entitled for 2% del credere commission. What is the total amount of commission due to Mr. A for the month of April, 2009?
(a) ₹ 4,000
(b) ₹ 1,500
(c) ₹ 1,800
(d) ₹ 2,100
Answer:
(d) ₹ 2,100
37. ________ Commission is given to consignee for his hardwork in introducing a new product in the market.
(a) del credere
(b) extra salary
(c) over riding commission
(d) commission on total sales.
Answer:
(c) over riding commission
38. If stock is left with consignee at the end of the year, then it will be credited to ________?
(a) P/L a/c
(b) consignment A/c
(c) trading a/c
(d) none of these.
Answer:
(b) consignment A/c
39. The revenue for the transaction of consignment sales is recognized ________.
(a) When the goods are sold to customers by consignee.
(b) When the goods are sent to consignee.
(c) When the advance against delivery is received by consignor.
(d) When consignor receives the payment from consignee.
Answer:
(a) When the goods are sold to customers by consignee.
40. X Ltd. sends 5,000 bags of cement on consignment to Y Ltd. The Cost per bag is ₹ 40. The Carriage Inward in ₹ 25,000. It is estimated that the normal loss rate is 10%. Calculate the cost per bag?
(a) ₹ 45
(b) ₹ 45.50
(c) ₹ 50.00
(d) ₹ 40.00
Answer:
(c) ₹ 50.00
41. The balances of “goods sent on consignment account” is transferred to:
(a) Trading Account
(b) Profit and Loss Account
(c) Consignment Account
(d) Consignee’s Account
Answer:
(c) Consignment Account
42. S of Surat sent goods costing ₹ 3,00,000 to C of Chennai at cost + 20%. Half of the goods sent were sold by C at 10% above the invoice value. The sales value of goods will be
(a) ₹ 1,98,000
(b) ₹ 1,50,000
(c) ₹ 1,80,000
(d) ₹ 1,65,000
Answer:
(a) ₹ 1,98,000
43. Radhika sent goods worth ₹ 1,20,000 on consignment to Sarika. 1 /8th of the goods were lost in transit. No claim was receivable for the same. Sarika sold 2/3 of the goods received for ₹ 1,00,000. What was the cost of the goods lying with Sarika?
(a) ₹ 29,000
(b) ₹ 35,000
(c) ₹ 29,167
(d) ₹ 40,000
Answer:
(b) ₹ 35,000
44. When the del-credere commission is allowed by consignor to consignee, abnormal loss will be borne by:
(a) Consignor
(b) Consignee
(c) Both, consignor and consignee in equal proportion.
(d) Neither consignor nor consignee.
Answer:
(a) Consignor
45. 1000 kgs of vegetables were consigned at ₹ 18,000 and freight expenses amounted to ₹ 4,000. During the transit there is a normal loss of 40 kg. If 800 kgs were sold, what will be the value of stock at the end?
(a) ₹ 2,880
(b) ₹ 3,000
(c) ₹ 3,520
(d) ₹ 3,667
Answer:
(d) ₹ 3,667
46. Mr. X paid commission to his consignee Y, ₹ 25,000 which was @ 5% on sales affected by him. Goods were sold by Mr. Y at a profit of 25% on cost. Stock in hand on 31/3/11 is ₹ 50,000 at cost. So, cost of goods
(a) ₹ 4,50,000
(b) ₹ 75,000
(c) ₹ 5,50,000
(d) ₹ 6,00,000
Answer:
(a) ₹ 4,50,000
47. Overriding commission is given by consignor to consignee in order to:
(a) to encourage the consignee to overcome bad-debts
(b) to encourage the consignee to promote the sales at a price higher than the specified selling price
(c) to sell the goods sent by consignor
(d) to sell and take care of goods sent by consignor to consignee
Answer:
(b) to encourage the consignee to promote the sales at a price higher than the specified selling price
48. A loss which is natural and unavoidable is called:
(a) Abnormal Loss
(b) Normal Loss
(c) Contingent Loss
(d) None of these.
Answer:
(b) Normal Loss
49. Periodical statement sent by consignee to consignor is known as ________:
(a) performa invoice
(b) account sale
(c) bill of exchange
(d) hundi
Answer:
(b) account sale
50. Goods sent on consignment at cost of ₹ 50,000. 1 /4th of the goods lost in transit and claim received ₹ 10,000. The amount of abnormal loss to be transferred to General P & L account is:
(a) ₹ 12,500
(b) ₹ 10,000
(c) ₹ 2,500
(d) None of the above.
Answer:
(c) ₹ 2,500
51. Del-credere commission is given for:
(a) Sales at higher price than specified.
(b) Speeding up the collection.
(c) Covering the risk of bad debts.
(d) Prompt payment from consignee.
Answer:
(c) Covering the risk of bad debts.
52. At the time of valuation of unsold stock on consignment, which of the following expenses will not be included?
(a) Insurance of warehouse of consigner
(b) Carriage
(c) Loading expenses
(d) Octroi
Answer:
(a) Insurance of warehouse of consigner
53. P of Punjab sent goods costing ₹ 6,00,000 to A of Aligarh. Goods were to be sold at cost plus. The consignee had to send advance to the consigner at a fixed percentage of sales value and A sent accordingly ₹ 4,80,000. What is the percentage of such advance on sales value?
(a) 60%
(b) 50%
(c) 45%
(d) 40%
Answer:
(a) 60%
54. Del-Credere commission is fixed in terms of percentage say 10%. The credit sales is of ₹ 1,00,000 and cash sales is of ₹ 50,000, amount of del-credere commission will be:
(a) ₹ 10,000
(b) ₹ 15,000
(c) ₹ 5,000
(d) None of the above.
Answer:
(b) ₹ 15,000
55. Overriding commission is a commission:
(a) Based on fixed percentage of the gross sales proceeds made by the consignee
(b) Based on fixed percentage of the cash sales made by the consignee
(c) An extra commission to promote sales of higher price than specified
(d) A commission on credit sales for protection from bad debts
Answer:
(a) Based on fixed percentage of the gross sales proceeds made by the consignee
56. Yojan Kumar consigned goods of ₹ 1,00,000 at an invoice price of 20% above the cost to Singham Kumar. Consignee is entitled for 5% commission on total sales up to invoice, 20% commission on sale proceeds in excess of invoice price and 2% del credere commission on credit sales. Singham Kumar sold 25% goods for cash at ₹ 40,000; 50% goods at ₹ 70,000 on credit and kept 10% goods at invoice price for himself. Calculate the commission payable to Singham Kumar.
(a) ₹ 10,500
(b) ₹ 9,900
(c) ₹ 10,200
(d) None of the above
Answer:
(d) None of the above
57. In absence of any agreement in consignment business, the loss of goods by fire in consignees godown is borne by:
(a) Consignor
(b) Consignee
(c) Shared by both consignor and consignee
(d) Insurance company
Answer:
(a) Consignor
58. On 1.1.2014, Amit of Varanasi consigned goods of the value of ₹ 50,000 to Sumit of Chennai. Amit paid ₹ 2,500 as freight and ₹ 1,500 for insurance. During transit, 1/10th of the goods were totally destroyed by fire. 1 /9th of the remaining goods were again destroyed by fire in godown. On 1.4.2014 half of the original goods were sold for ₹ 30,000. You are required to ascertain the stock:
(a) ₹ 15,000
(b) ₹ 24,000
(c) ₹ 16,200
(d) ₹ 20,000
Answer:
(c) ₹ 16,200
59. Goods sent on consignment by Kumar to Suresh. Invoice value of goods sent is ₹ 6,00,000 at cost + 25% profit 1/4th of the goods were lost in transit. Insurance claim received ₹ 72,000. The amount of abnormal loss to be transferred to General Profit and Loss A/c will be:
(a) ₹ 40,500
(b) ₹ 48,000
(c) ₹ 1,20,000
(d) ₹ 1,50,000
Answer:
(b) ₹ 48,000
60. R of Dwarka sends out certain goods at cost + 25%. Invoice value of goods sent out ₹ 2,00,000.4/5,h of the goods were sold by consignee at ₹ 1,76,000. Commission 2% upto invoice value and 10% of any surplus above invoice value. The amount of commission will be:
(a) ₹ 4,800
(b) ₹ 5,200
(c) ₹ 3,200
(d) ₹ 1,600
Answer:
(a) ₹ 4,800
61. 5,000 metres of cloth sent out on consignment at the invoice price of ₹ 30 per metre which were purchased by consignor at the cost price of ₹ 20 per metre. Consignor’s expenses ₹ 5,500. Consignee’s expenses ₹ 2,000. Consignee sold 4,000 metres ₹ 40 per metre. Consignee is entitled to a commission of 5% on total sales proceeds plus a further 20% of any surplus above ₹ 30 per metre. Owing to a fall in market price, the inventories of cloth in hand is to be reduced by 10%. What will be the profit on consignment?
(a) ₹ 54,500
(b) ₹ 63,500
(c) ₹ 56,490
(d) ₹ 55,490
Answer:
(d) ₹ 55,490
62. D of Delhi sent out goods on consignment so as to show a profit of 20% on invoice price. 1/5,h of the goods were lost in transit. The cost of goods lost is ₹ 60,000. The invoice value of goods sent out was:
(a) ₹ 3,75,000
(b) ₹ 3,60,000
(c) ₹ 3,50,000
(d) ₹ 3,00,000
Answer:
(a) ₹ 3,75,000
63. Munnabhai of Mumbai send out certain goods to Chunky of Chennai at cost + 25%. 3/4,h of the goods received by Chunky is sold at ₹ 1,98,000 at 10% above invoice price. Cost value of goods send out is :
(a) ₹ 2,40,000
(b) ₹ 1,44,000
(c) ₹ 1,80,000
(d) ₹ 1,92,000
Answer:
(d) ₹ 1,92,000
64. Over-riding commission is generally calculated on:
(a) Credit Sales
(b) Total sales excluding invoice value/cost
(c) Cash sales only
(d) Both on Credit and Cash Sale
Answer:
(b) Total sales excluding invoice value/cost
65. 1000 kgs of bananas are consigned to a wholesaler, the cost being ₹ 8 per kg, plus ₹ 925 of freight. It is considered that a loss of 15% is unavoidable. The cost per kg of banana will be:
(a) ₹ 9.41
(b) ₹ 10.50
(c) ₹ 10.00
(d) ₹ 8.925
Answer:
(b) ₹ 10.50
66. Gautam of Goa consigned goods for the value of ₹ 74,500 to Rama of Rameshwaram and paid freight etc. of ₹ 7,000. He drew a bill on Rama for 3 months after date for ₹ 25,500 as an advance against consignment and discounted the bill for ₹ 24,500. Further he received Account Sales showing that, part of the goods had realized gross ₹ 83,500 and that his expenses and commission amounted to ₹ 2,500 and ₹ 6,000 respectively. The inventory unsold was valued at ₹ 27,500. Consignee wants to remit a draft for the amount due. The amount of draft will be:-
(a) ₹ 56,500
(b) ₹ 55,500
(c) ₹ 50,500
(d) ₹ 49,500
Answer:
(d) ₹ 49,500
67. If Del-credere commission is allowed for bad – debt, consignee will debit the bad – debt, amount to:
(a) Commission earned A/c
(b) Consignor A/c
(c) Trade Receivable A/c
(d) General Trading A/c
Answer:
(a) Commission earned A/c
68. X consigned goods costing ₹ 1,50,000 to Y of Navi Mumbai at cost plus 25%. 1/10th goods are lost in transit. Y sold 3/5th of the remaining goods at 10% above invoice price. The amount of sales will be:
(a) ₹ 1,85,625
(b) ₹ 1,01,250
(c) ₹ 1,23,750
(d) ₹ 1,11,375
Answer:
(d) ₹ 1,11,375
69. Roy of Chennai sends goods costing ₹ 2,00,000 to Sai of Delhi. 3/5th of the goods were sold by consignee for ₹ 1,40,000. Commission 2% on sales plus 20% of gross sale less all commission as exceeds cost price. The amount of commission will be:
(a) ₹ 5,666
(b) ₹ 5,800
(c) ₹ 6,000
(d) ₹ 5,600
Answer:
(a) ₹ 5,666
70. Goods sent out on consignment ₹ 2,00,000. Consignor’s expenses ₹ 5,000. Consignee’s expenses ₹ 2,000. Cash sales ₹ 1,00,000. Credit sales ₹ 1,10,000. Consignment inventories ₹ 40,000. Ordinary commission payable to consignee ₹ 3,000. Del-credere commission ₹ 2,000. The amount irrecoverable from customer ₹ 2,000. What will be the profit on consignment?
(a) ₹ 38,000
(b) ₹ 40,000
(c) ₹ 36,000
(d) ₹ 43,000
Answer:
(a) ₹ 38,000
71. Del-Credere Commission is allowed for bad-debts, consignee will debit the bad-debts amount to:
(a) Commission earned A/c
(b) General P/L A/c
(c) Trade receivables A/c
(d) Consignor A/c
Answer:
(b) General P/L A/c
72. Consignment Account is a account and consignee account is the nature of ________.
(a) nominal, real
(b) real, nominal
(c) nominal, personal
(d) artificial, personal.
Answer:
(c) nominal, personal
73. Goods sent on consignment ₹ 50,000. During transit 1/10th of goods were destroyed by fire later, 1/9th of the goods received by consignee were also destroyed by fire in godown. Half of the remaining goods were sold ₹ 30,000. Freight and Insurance paid by consignor ₹ 2,500 and ₹ 1,500 respectively. Calculate closing stock.
(a) ₹ 24,000
(b) ₹ 21,600
(c) ₹ 20,000
(d) None of the above.
Answer:
(b) ₹ 21,600
74. Mukesh purchased 5000 bags of wheat costing ₹ 250 each and sent them to Manoj on consignment basis. Carriage ₹ 1,500 and Insurance expense ₹ 3,500 were paid by Mukesh. 3/5’h of the stock were sold by Manoj at ₹ 300 per bag. Remaining stock was taken over by Manoj at cost. The amount of stock taken over will be:
(a) ₹ 5,00,000
(b) ₹ 12,55,000
(c) ₹ 5,02,000
(d) ₹ 5,51,000
Answer:
(c) ₹ 5,02,000
75. Rishi of Kolkata sent out goods costing ₹ 50,000 to Zenith of Mumbai at cost + 20%. 10% of the goods were lost in transit. 70% of the goods received are sold at 15% above invoice price. The amount of sales value will be ________.
(a) ₹ 37,800
(b) ₹ 39,600
(c) ₹ 43,470
(d) ₹ 44,370
Answer:
(c) ₹ 43,470
76. If consigner draws a bill on consignee and discounted it with the banker, the discounting charges will be debited in:
(a) Trade Debtors Account
(b) Consignment Account
(c) Consignee’s Account
(d) General Profit and Loss Account.
Answer:
(b) Consignment Account
77. M and N enter into a joint venture where M supplies goods worth ₹ 6000 and spends ₹ 300 on expenses. N sells the entire lot for ₹ 7,800 meeting selling expenses amounting to ₹ 300. Profit sharing ratio equal. N remits to M the amount due. The amount of remittance will be:
(a) ₹ 6,900
(b) ₹ 7,500
(c) ₹ 6,300
(d) ₹ 6,600
Answer:
(a) ₹ 6,900
78. What is the nature of joint venture with co-venture’s A/c :
(a) Nominal account
(b) Real account
(c) Personal account
(d) None
Answer:
(c) Personal account
79. When unsold stock is taken away by a co – venturer, then ________ account is debited:
(a) joint stock
(b) joint venture
(c) joint bank account
(d) co – venturers capital account
Answer:
(d) co – venturers capital account
80. A bought goods costing 2,00,000. B sold 4/5th of goods for ₹ 2,50,000. Balance goods were taken over by B at cost less 20%. Find out profit on venture :
(a) ₹ 82,000
(b) ₹ 90,000
(c) ₹ 50,000
(d) None
Answer:
(a) ₹ 82,000
81. Joint Venture Accounting follows which concept:
(a) Accrual Concept
(b) Going Concern Concept
(c) Cost Concept
(d) Cash Basis
Answer:
(d) Cash Basis
82. Joint venture is a ________ Account.
(a) personal
(b) real
(c) nominal
(d) capital
Answer:
(c) nominal
83. A for joint venture with B, purchased goods costing ₹ 2,00,000. B sold the goods for ₹ 2,80,000. Unsold material costing ₹ 10,000 was taken over by A at ₹ 8,000. A is entitled to get 1 % commission on purchases. B is entitled to get 2% commission on sales, Profit on venture will be :
(a) ₹ 80,000
(b) ₹ 80,800
(c) ₹ 81,200
(d) ₹ 80,400
Answer:
(d) ₹ 80,400
84. The parties to joint venture are called ________.
(a) Co-venturers
(b) Partners
(c) Principal and agent
(d) Friends
Answer:
(a) Co-venturers
85. When co-ventures initially contribute for a joint should be debited in case when separate set of books are maintained:
(a) Purchases A/c
(b) Joint ventures A/c
(c) Venture’s Capital A/c
(d) Joint Bank A/c
Answer:
(d) Joint Bank A/c
86. A and B enter into a joint venture to underwrite the shares of K Ltd. K Ltd. make an issue of 1,00,000 equity shares of ₹ 10 each. 80% of issue are subscribed by the party. The profit sharing ratio between A and B is 3 : 2. The balance unsubscribed shares are purchased by A and B in profit sharing ratio. How many shares are purchased by A?
(a) 80,000 shares
(b) 72,000 shares
(c) 12,000 shares
(d) 8,000 shares
Answer:
(c) 12,000 shares
87. If separate set of books is maintained and discount is received at the time of purchase of goods then such a discount will be treated as :
(a) Income of Joint Venture hence credited to joint venture account
(b) Expense of Joint Venture hence debited to joint venture account
(c) Will not be recorded in books of account
(d) Credited to co-venturers account
Answer:
(a) Income of Joint Venture hence credited to joint venture account
88. X and Y enter into a joint venture. X supplied goods to Y worth ₹ 70,000. X incurred expenses amounting to ₹ 6,000 on joint venture. The venture resulted in a total profit of ₹ 15,000 of which their ratio of distribution is 2:1. The entire sale proceeds were received by Y. Amount received by X from Y in final settlement will be :
(a) ₹ 85,000
(b) ₹ 86,000
(c) ₹ 80,000
(d) ₹ 75,000
Answer:
(b) ₹ 86,000
89. For material supplied from over stock by any of the venture, the correct journal entry will be :
(In case of Separate set of books of a joint venture)
(a) Joint Venture A/c Dr.
To Venturer’s Capital A/c
(b) Joint Venture A/c Dr.
To Joint Bank A/c
(c) Joint Venture A/c Dr.
To Materials A/c
(d) Joint Bank A/c Dr.
To Joint Venture A/c
Answer:
(a) Joint Venture A/c Dr.
To Venturer’s Capital A/c
90. Memorandum joint venture account is prepared :
(a) When separate set of books is maintained
(b) When each co-venturer keeps record of all the transactions himself
(c) When each co-venturer keeps records of their own joint venture transaction
(d) None of these
Answer:
(c) When each co-venturer keeps records of their own joint venture transaction
91. X spending a sum of ₹ 10000 on account of joint venture, will be credited to ________ account in case of the records being maintained in the books of X.
(a) memorandum J.V.
(b) joint venture
(c) co – venturers
(d) cash
Answer:
(d) cash
92. A and B enter into a joint venture sharing profits and losses equally. A bought 5000 Kg of rice @ ₹ 25/Kg. B bought 1000 Kg of wheat @ * 30/Kg. A sold 1000 Kg of wheat @ ₹ 35/Kg and B sold 5000 Kg of rice @ ₹ 30/ Kg. The profit on venture will be :
(a) ₹ 55,000
(b) ₹ 50,000
(c) ₹ 60,000
(d) ₹ 30,000
Answer:
(d) ₹ 30,000
93. Following are the characteristics of joint venture except:
(a) No common firm name
(b) Contribution of funds
(c) Sharing of profits/losses
(d) None of these
Answer:
(d) None of these
94. Which of the following methods of valuation of closing stock is followed in joint venture accounting?
(a) Net realizable value
(b) Cost price
(c) Least of cost or Net realizable value
(d) None of these
Answer:
(d) None of these
95. Karim and Rahim enter a joint venture sharing profits in 2:1. Karim purchases goods of ₹ 2,00,000 and Rahim sells goods of ₹ 2,50,000. Karim gets 1% commission on purchase and Rahim gets 5% commission on sales. Find profit on joint venture.
(a) ₹ 35,500
(b) ₹ 36,000
(c) ₹ 34,000
(d) ₹ 38,000
Answer:
(a) ₹ 35,500
96. A and B entered into a joint venture. They agreed to share profits and losses equally. A purchased goods worth ₹ 16,000. Goods of ₹ 4,000 were destroyed by fire. Insurance claim of ₹ 3,000 is received. B sold the rest of the goods for ₹ 20,000. A and B share profits equally A’s share of profits is:
(a) ₹ 4,000
(b) ₹ 3,000
(c) ₹ 3,500
(d) None
Answer:
(c) ₹ 3,500
97. A and B entered into joint venture. A supplied goods worth ₹ 7,000 and incurred expenses of ₹ 300. B sold the goods for ₹ 10,000 and incurred expenses of ₹ 500. What is the amount of final remittance?
(a) ₹ 8,400
(b) ₹ 7.900
(c) ₹ 8,900
(d) None of these.
Answer:
(a) ₹ 8,400
98. Which of the following is incorrect?
(a) Joint Venture is not based on going concern.
(b) Joint Venture can be formed with minor.
(c) A bill of exchange is a negotiable instrument.
(d) Noting charges are the expenses of drawee.
Answer:
(b) Joint Venture can be formed with minor.
99. A and B entered into a Joint Venture. A bought goods for ₹ 6,00,000. He sold 80% of the goods for ₹ 5,60,000 and took the remaining goods at cost less 20%. Find the amount of profit.
(a) ₹ 56,000
(b) ₹ 60,000
(c) ₹ 70,000
(d) None
Answer:
(a) ₹ 56,000
100. When Memorandum Joint Venture Method is followed, in Books of X, “Joint Venture with Y A/C” will be credited with ________, for amount received by X.
(a) y
(b) sales
(c) debtor
(d) cash
Answer:
(d) cash
101. A & B started a joint venture. After the sales the unsold stock worth ₹ 15,000 was taken over by B at a cost of ₹ 20,000. The amount to be credited to Joint venture Account will be?
(a) ₹ 20,000
(b) ₹ 15,000
(c) ₹ 5,000
(d) ₹ 35,000
Answer:
(a) ₹ 20,000
102. X and Y entered into a joint venture to sell 1,000 bags of wheat costing ₹ 200 each. X paid ₹ 2,000 for freight and ₹ 3,000 for insurance. 4/5th of the bags were sold by Y at ₹ 250 each bag. Remaining stock was taken over by Y at cost. The amount of the stock taken over by Y will be ________.
(a) ₹ 40,000
(b) ₹ 45,000
(c) ₹ 41,000
(d) ₹ 50,000
Answer:
(c) ₹ 41,000
103. Tinku and Bunty enter into a joint venture to share profits and losses equally. Tinku supplied 200’Refrigerators costing ₹ 2,00,000 to Bunty incurring freight charges ₹ 10,000. Bunty sold 140 Refrigerators for ₹ 2,40,000. He took over 10 refrigerators himself.
The profit & loss on joint venture will be:
(a) Loss ₹ 40,000
(b) Profit ₹ 30,000
(c) Profit ₹ 40,000
(d) Profit ₹ 40,500
Answer:
(d) Profit ₹ 40,500
104. In case of Joint Venture, a minor:
(a) Can be a co-venturer for the benefit of the venture.
(b) Can be a co-venturer if all other co-venturers agree.
(c) Can be a co-venturer if permitted by the competent authority.
(d) Cannot be a co-venturer
Answer:
(d) Cannot be a co-venturer
105. A and B entered in a joint venture and decided to share profits and losses equally.
A supplied goods worth ₹ 7,000 and incurred expenses of ₹ 300. B sold •the goods for ₹ 10,000 and incurred expenses of ₹ 500. What will be the amount of the final remittance to be send by B to A?
(a) ₹ 7,900
(b) ₹ 5,200
(с) ₹ 8,400
(d) ₹ 8,800
Answer:
(с) ₹ 8,400
106. Which of the following statement is true?
(a) Co-venturers always shares profits and losses equally.
(b) Number of co-venturers can never be more than two.
(c) The relationship between co-venturers is principal & agent.
(d) Co-venturers may contribute funds for running the venture.
Answer:
(d) Co-venturers may contribute funds for running the venture.
107. A & B has started a joint venture for purchase and sale of garments. Initial capital contribution was ₹25,000 and ₹ 50,000 respectively. There is no written agreement about share of profit/loss amongst them. They purchased garments worth ₹ 50,000 and sold for ₹ 75,000. The profit of ₹ 25,000 shared by them as:
(a) ₹ 8,333 and ₹ 16,667
(b) ₹ 10,000 and ₹ 15,000
(c) ₹ 12,500 and ₹ 12,500
(d) ₹ 20,000 and ₹ 5,000.
Answer:
(c) ₹ 12,500 and ₹ 12,500
108. Karthik and Dhoni enter into a joint venture sharing profit and loss in the ratio of 2 : 1. Karthik purchased the goods costing ₹ 2,00,000. Dhoni sold the goods for ₹ 2,50,000. Karthik is entitled to get 1 % commission on purchase and Dhoni 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.
Answer:
(a) ₹ 35,500
109. The minimum number of co-venture will be atleast ________ in joint venture business.
(a) 2
(b) 5
(c) 7
(d) 4
Answer:
(a) 2
110. Which of the following is true?
(a) Co-ventures always shares profit equally
(b) Number of co-ventures can never be more than two
(c) The relationship between co-ventures is principal & agent
(d) Co-ventures may contribute funds for running the venture
Answer:
(d) Co-ventures may contribute funds for running the venture
111. C and D enter into a joint venture to share profit in the ratio 5: 3. Apart from the profit, D is entitled to a commission of 5% of net profit after charging such cpmmission. If net profit of joint venture is ₹ 33,600 before charging such commission. What will be share profit of C and D:
(a) C will get profit ₹ 19,950 and D ₹ 11,970
(b) C will get profit ₹ 20,000 and D ₹ 12,000
(c) C will get profit ₹ 21,000 and D ₹ 12,600
(d) C will get profit 7 21,600 and D ₹ 12,000
Answer:
(b) C will get profit ₹ 20,000 and D ₹ 12,000
112. Aastha and Shivani entered into a Joint venture sharing profits and losses in the ratio 2:1. Aastha purchased goods costing ₹ 30,000. Shivani sold the goods for ₹40,000. Aastha was entitled to get 1% Commission on purchase and Shivani was entitled for 5% Commission on sales. Aastha’s and Shivani’s share in profit on venture would be:
(a) ₹ 1,467 and ₹ 733 respectively
(b) ₹ 5,133 and ₹ 2,567 respectively
(c) ₹ 4,400 and ₹ 2,200 respectively
(d) ₹ 3,667 and ₹ 1,833 respectively.
Answer:
(b) ₹ 5,133 and ₹ 2,567 respectively
113. In case of Joint Venture business, the method of accounting to be followed is decided by:
(a) Separate act for Joint Venture
(b) Accounting Standard
(c) Co-ventures as per their convenience
(d) ICAI
Answer:
(c) Co-ventures as per their convenience
114. In case of Joint Venture, for purchase of machinery from Joint Bank a/c, in case separate set of books are maintained, the correct journal entry will be:
(a) Debit Machinery A/c and Credit Joint Bank A/c
(b) Debit Joint Venture A/c and Credit Joint Bank A/c
(c) Debit Machinery A/c and Credit Venture’s Capital A/c
(d) Debit Joint Venture A/c and Credit Machinery A/c
Answer:
(b) Debit Joint Venture A/c and Credit Joint Bank A/c
115. Mohit and Rohit entered into a joint venture sharing profits and losses in the ratio 2:1 respectively. Mohit purchased goods costing ₹ 2,00,000 and incurred ₹ 15,000 as freight and sent it to Rohit. Rohit purchased goods to the value of ₹ 56,000 and incurred expenses amounting to ₹ 5,000. Rohit sold the goods on behalf of the joint venture and realized ₹ 4,00,000. He was entitled to 10% commission on sales. How much amount will Rohit pay to Mohit as final settlement?
(a) ₹ 1,85,000
(b) ₹ 2,71,000
(c) ₹ 3,11,000
(d) ₹ 2,99,000
Answer:
(b) ₹ 2,71,000
116. When the record of transactions relating to joint venture are made in the books of one venturer, then the venturer recording the transactions, records his share of investment by ________.
(a) debiting cash a/c
(b) crediting cash a/c
(c) crediting his personal a/c
(d) no entry required.
Answer:
(b) crediting cash a/c
117. A and B were partners in joint venture sharing profit and losses in proportion of 3 : 2. A supplies goods to the value of ₹ 60,000 and incurs expenses amounting ₹ 6,000. B supplies to the value of ₹ 14,000 and his expenses amounted ₹ 1,000. B sells goods on behalf of the joint venture and realises ₹ 1,00,000. B is entitled to a commission of 5% on sales. B settles his account by a bank draft. Find out the profit on venture.
(a) ₹ 14,400
(b) ₹ 14,000
(c) ₹ 13,000
(d) ₹ 13,200
Answer:
(b) ₹ 14,000
118. In a joint venture X contributes ₹ 25,000 and Y contributes ₹ 50,000. Goods are purchased for ₹ 56,000. Expenses amount to ₹ 4,000, sales amount to ₹ 70,000, the remaining goods costing ₹ 3,000 were taken over by Y at an agreed price of ₹ 2,000. X and Y share profit and losses in ratio of 1:2 respectively. As a final settlement, how much X will receive?
(a) ₹ 29,333
(b) ₹ 30,000
(c) ₹ 25,000
(d) ₹ 29,000
Answer:
(d) ₹ 29,000
119. Memorandum joint venture account is prepared:
(a) When each co-venture keeps records of all the joint venture transactions himself.
(b) When separate set of joint venture books is prepared.
(c) When each co-venture keeps records of their own joint venture transaction.
(d) None of the above.
Answer:
(c) When each co-venture keeps records of their own joint venture transaction.
120. Raj and Simran enter into a joint venture to sell silk, sharing profits anc losses equally. Raj provides silk from his inventory ₹ 1,00,000. He pay expenses amounting ₹ 10,000. Simran incurs further expenses or carriage ₹ 10,000. She received cash on sale of silk ₹ 1,50,000. She also takes over goods to the value of ₹ 20,000. Profit on venture will be ________.
(a) ₹ 30,000
(b) ₹ 40,000
(c) ₹ 50,000
(d) ₹ 60,000
Answer:
(c) ₹ 50,000
121. X and Y enter into a joint venture sharing profits and losses equally purchased 1,000 kg. of sugar @ ₹ 25 per kg. Brokerage paid ₹ 1,00 and carriage paid ₹ 500. Y sold 950 kg. of sugar @ ₹ 32 per kc Balance sugar was taken over by Y at cost. The value of sugar take: over to be recorded in joint venture will be ________.
(a) ₹ 1,325
(b) ₹ 1,250
(c) ₹ 1,300
(d) ₹ 1,275
Answer:
(a) ₹ 1,325
122. A minor can join as a co-ventures in a joint venture business:
(a) Yes, if accepted by all co-ventures
(b) Yes, if accepted by competent authority
(c) Cannot become co-ventures
(d) Yes, for the benefit of joint venture.
Answer:
(c) Cannot become co-ventures
123. Aar and Bar were partners in a joint venture sharing profits and losses in the ratio of 4/5th and 1/5th respectively. Aar supplies goods to the value of ₹ 50,000 and his expenses amount to ₹ 5,400. Bar supplies goods to the value of ₹ 14,000 and his expenses amount to ₹ 800. Bar sells goods on behalf of the joint venture and realises ₹ 92,000. Bar is entitled to a commission of 5% on sales. Bar settles his account by bank draft. What will be the final remittance?
(a) Bar will remit ₹ 69,160 to Aar
(b) Aar will remit ₹ 69,160 to Bar
(c) Aar will remit ₹ 69,000 to Bar
(d) Bar will remit ₹ 69,000 to Aar.
Answer:
(a) Bar will remit ₹ 69,160 to Aar
124. Sales made by A and B ________.
(a) ₹ 30,000; ₹ 39,375
(b) ₹ 40,500; ₹ 39,375
(c) ₹ 40,500; ₹ 35,625
(d) ₹ 41,250; ₹ 24,375
Answer:
(a) ₹ 30,000; ₹ 39,375
125. Profit for the venture will be:
(a) ₹ 7,000
(b) ₹ 7,375
(c) ₹ 8,875
(d) Long ₹ 1,500
Answer:
(b) ₹ 7,375
126. Which of the following terms are not true with regard to Joint Venture business?
(a) Account Sales
(b) Account Current
(c) Del-Credere Commission
(d) All of the above.
Answer:
(d) All of the above.
127. Which of the following statement is true?
(a) Memorandum joint venture account is prepared to find out amount due from co-venturer.
(b) In memorandum joint venture account only one venturer’s transaction is recorded.
(c) Memorandum joint venture account is prepared to find out profit on venture.
(d) Memorandum joint venture account is prepared when separate set of books is maintained for joint venture.
Answer:
(c) Memorandum joint venture account is prepared to find out profit on venture.
128. Which of the following statements 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 if lasts for less than a year.
(d) The Co-venturer shares the profit in agreed ratio.
Answer:
(a) Joint Venture is a going concern.
129. Ram and Rahim entered into a joint venture to underwrite the equity shares of M/s Antony Ltd. @ 5% underwriting commission. M/s Antony Ltd. made a public issue of 1,00,000 equity shares of ₹ 10 each. 90% of the issue was subscribed by the public. The profit sharing ratio between Ram and Rahim is 2:3. The balance shares not subscribed by the public are to be purchased by Ram and Rahim in profit sharing ratio. How many shares are to be purchased by Rahim?
(a) 4,000 shares
(b) 2,000 shares
(c) 6,000 shares
(d) 3,000 shares
Answer:
(c) 6,000 shares
130. Joint Venture Account is the nature of:
(a) Personal A/c
(b) Nominal A/c
(c) Real A/c
(d) None of these
Answer:
(b) Nominal A/c
131. In banking method, if a co-venture makes payment for the joint venture, the amount is Credited to:
(a) Joint venture A/c
(b) Co- venture’s A/c
(c) Joint Bank A/c
(d) None of these
Answer:
(b) Co- venture’s A/c
132. In banking method, a co-venture takes over the unsold goods, the amount is credited to.
(a) Joint Bank A/c
(b) Co- ventures’s A/c
(c) Joint venture A/c
(d) None of these
Answer:
(c) Joint venture A/c
133. Joint Venture with B is the nature of:
(a) Nominal A/c
(b) Real A/c
(c) Personal A/c
(d) None of these
Answer:
(c) Personal A/c
134. When A advances money to B, in the course of Joint Venture, A debits such money to:
(a) Expenses A/c
(b) B’sA/c
(c) Joint Venture A/c
(d) Advance A/c
Answer:
(b) B’sA/c
135. When a venture supplies goods to the Joint venture from his own stock, he credits the amount to:
(a) Joint Venture Account
(b) Capital A/c
(c) Sales A/c
(d) Purchases A/c
Answer:
(d) Purchases A/c
136. The amount of discount on the discounting of B/R from the bank by a co-venture will be debited:
(a) Discount A/c
(b) Bank A/c
(c) Joint Venture A/c
(d) None of the above
Answer:
(d) None of the above
137. In the case of joint venture, when each party records all the transactions in the books, on stock being taken by the other co-venture, debit is made to
(a) Co-ventu re’s A/c
(b) Joint Venture A/c
(c) Stock A/c
(d) Goods A/c
Answer:
(c) Stock A/c
138. When goods are purchased for Joint Venture out of joint bank, the amount is debited to ________.
(a) Joint- Bank A/c
(b) Joint venture A/c
(c) Purchases A/c
(d) Goods A/c
Answer:
(a) Joint- Bank A/c
139. When separate set of books are maintained of Joint Venture, the Ledger accounts prepared are:
(a) Memorandum Joint Venture A/c and Joint Venture A/c with the other party.
(b) Joint Venture A/c and the personal A/c of the party.
(c) Joint Bank A/c, joint venture A/c and Co-venture’s capital A/c
(d) Memorandum Joint Venture A/c and Personal account of the other a party.
Answer:
(b) Joint Venture A/c and the personal A/c of the party.
140. If unsold goods costing ₹ 20,000 is taken over by a co-venture at cost less 25% the joint venture A/c will be credited by
(a) ₹ 20,000
(b) ₹ 15,000
(c) ₹ 5,000
(d) Nil
Answer:
(c) ₹ 5,000
141. Commission will be shared by:
(a) Consignor and consignee
(b) Only consignee
(c) Only consignor
(d) Third Party
Answer:
(b) Only consignee
141. Commission will be shared by:
(a) Consignor and consignee
(b) Only consignee
(c) Only consignor
(d) Third party
Answer:
(b) Only consignee
142. Goods costing ₹ 3,00,000 sent out to consignee at cost + 25% invoice price invoice value of goods will be ________.
(a) ₹ 3,75,000
(b) ₹ 4,00,000
(c) ₹ 4,25,000
(d) None
Answer:
(b) ₹ 4,00,000
143. A purchased an old computer costing ₹ 10,000 and incurred ₹ 1,000 on its repairs and ₹ 500 on its packing. He sold the computer at 20% margin on selling price. The sales value will be:
(a) ₹ 12,500
(b) ₹ 11,000
(c) ₹ 14,375
(d) ₹ 13,800
Answer:
(c) ₹ 14,375
Cost of old computer purchased = ₹ 10,000
Repairs on old computer = ₹ 1,000
Packing charges = ₹ 500
Total Cost of old computer = 10,000 + 1,000 + 500 = ₹ 11,500
If 20% or \(\frac { 1 }{ 5 }\) on selling price then 25% or \(\frac { 1 }{ 4 }\) on cost price. So, Sales
Value will be = 11,500 + 11,500 x \(\frac { 1 }{ 4 }\)
= 11,500 + 2,875
= ₹ 14,375
144. If there is no agreement between the joint ventures then the profit and loss is shared.
(a) Equally
(b) In capital ratio
(c) In agreed ratio
(d) Any of the above.
Answer:
(a) Equally
Co-ventures share profits or losses of the venture at the agreed ratio; if there is no agreement on this point then in equal ratio.
Hence, option (a) is correct.
145. Del Credere Commission is given by ________.
(a) Consignee
(b) Consignor
(c) Seller
(d) Buyer
Answer:
(b) Consignor
Del Credere Commission is a special kind of commission given by Consignor to Consignee to undertake the risk of any bad debts out of the credit sale; so we can also treat it as insurance premium against bad debts.
146. Consignment A/c is a:
(a) Nominal A/c
(b) Real Nc
(c) Personal A/c
(d) None of the above.
Answer:
(a) Nominal A/c
Consignment Account is a nominal account.
Hence, option (a) is correct.
147. Commission will be shared by:
(a) Consignor and Consignee
(b) Only Consignee
(c) Only Consignor
(d) Third party.
Answer:
(b) Only Consignee
Commission is given by consignor to consignee and only borne by consignee. Thus, option (b) is correct.
148. When A advances money to B, in the course of Joint Venture, A debits such money to ________.
(a) Expenses A/c
(b) B’s A/c
(c) Joint Venture A/c
(d) Advance A/c
Answer:
(c) Joint Venture A/c
When A advance money, in the course ot Joint venture, such amount will be debited to:
In case of advanced money by one co-venture to other, the entry will be,
Joint venture A/c Dr.
To A’s Account Hence, option (c) is correct.
149. The consignor sends along with the consigned goods to the consignee.
(a) Account Sales
(b) Proforma Invoice
(c) Both of the above
(d) None of the above.
Answer:
(b) Proforma Invoice
The consignor sends “Proforma Invoice” along with consigned goods to the consignee. Hence, option (b) is correct.
150. Account Sales includes:
(a) Sales Made
(b) Commission earned
(c) Stock left with consignee
(d) All of the above
Answer:
(d) All of the above
Sales Account: Contains all sales transactions includes both cash & credit sales. The account total is then paired with the sales returns and allowances account to derive the net sales. Thus, option (d) is correct.
151. The stock lying unsold with the consignee belongs to:
(a) Consignor
(b) Consignee as he bears the risk
(c) Both (a) and (b)
(d) None of these.
Answer:
(a) Consignor
The stock left unsold with consignee belongs to consigner as he has the ownership of such goods. Thus, option (a) is correct.
152. If the del credere commission is 10% cash sales is ₹ 5,000 and credit + sales is ₹ 10,000. Calculate the amount of del credere commission.
(a) ₹ 1,500
(b) ₹ 1,000
(c) ₹ 500
(d) None of the above.
Answer:
(b) ₹ 1,000
If the del credere commission is 10%, cash sales ₹ 5,000, credit sales ₹ 10,000. Calculate the amount of commission: Del credere commission is charged on Credit Sales only;
Hence, @ 10% of credit sales = 10,000 x \(\frac { 10 }{ 100 }\) = ₹ 1,000
Thus, option (b) is correct.
153. Joint Venture calculate their profit ________.
(a) After sale
(b) After purchase
(c) After specific time
(d) After completion of venture
Answer:
(d) After completion of venture
Profit of Joint Venture is calculated after completion of venture.
154. Consignee A/c is a ________?
(a) Real A/6
(b) Nominal A/c
(c) Personal A/c
(d) All of the above
Answer:
(c) Personal A/c
Consignee’s Account is a personal account and therefore, in case the consignee has not remitted thebalance due by him in full, he will be a debtor, whereas it has remitted more than the balance due by him, he will be a creditor. Goods sent on consignment account is a real account.
155. Co-venturer are ________?
(a) Partners
(b) Agent
(c) Principal – Agent
(d) Relatives
Answer:
(a) Partners
The relation between the consignor and consignee is principal and agent. But the relation between co-ventures is just like the partners in partnership firm.