Bahri University - Faculty of Administrative Sciences

Intermediate Accounting - Level 3

Practice Quiz on Joint Venture and Partnership Accounts

This quiz consists of multiple-choice and true/false questions to test your understanding of joint ventures and partnership accounting principles.

Instructions:

• Read each question carefully.
• Select the most appropriate answer.
• There is only one correct answer per question.
• Review your answers before submitting.

Quiz Sections:

• Part 1: True/False Questions
• Part 2: Multiple Choice Questions

Bahri University

Faculty of Administrative Sciences
Department of Accounting
Course: Intermediate Accounting (Level 3)
Exam Type: Comprehensive Practice Test
Total Questions: 70 Questions
Instructions:

• Answer all the questions.

• Time allowed: 2 hours.

• No use of mobile phones or electronic calculators during the exam.

• Write answers clearly.

Part 1: True/False Questions (30 Questions)

(Write True or False next to each statement)

1. A joint venture is a permanent business relationship between two or more parties.

2. In a joint venture, profits and losses are shared based on the agreed ratio.

3. A memorandum joint venture account is a real account that affects the double-entry system.

4. Co-venturer accounts are personal accounts.

5. Each co-venturer records all transactions of the joint venture in his books under the memorandum method.

6. Under a joint venture, unsold goods may be divided among the co-venturers.

7. Profit and loss accounts are not required in a joint venture.

8. Partnership requires a written agreement according to the law.

9. Interest on drawings is an expense to the partnership.

10. Partners must contribute equal capital to form a partnership.

11. Salaries to partners must be paid before calculating profit sharing.

12. Goodwill represents the monetary value of a business reputation.

13. A partnership deed is mandatory by law.

14. Profits in partnership must always be shared equally.

15. Interest on capital is treated as an appropriation of profit.

16. Joint venture accounts are always prepared in a separate set of books.

17. When a new partner is admitted, the goodwill must always be recorded in the books.

18. Interest on drawings discourages partners from withdrawing money early.

19. Partners may decide not to charge interest on capitals.

20. Revaluation of assets is necessary when a new partner joins.

21. Goodwill is a tangible asset.

22. In partnership accounts, drawings reduce the partner's capital.

23. A joint venture is different from a partnership because it is for a limited time and purpose.

24. Memorandum Joint Venture Accounts show the overall profit or loss of the venture.

25. Partnership agreements should contain profit-sharing ratios.

26. Joint venture profits are shared only after deduction of expenses.

27. Partnership salaries are added to profits before distribution among partners.

28. When a partnership is dissolved, goodwill must be sold.

29. Loss on revaluation is debited to partners' capital accounts.

30. Joint venture accounts are always prepared by an independent accountant.

Part 2: Multiple Choice Questions (30 Questions)

(Choose the correct answer and circle it)

1. A joint venture is established for:
   a) Continuing business
   b) A specific project
   c) Permanent partnership
   d) Non-profit purposes

2. The co-venturer’s account is:
   a) Real account
   b) Nominal account
   c) Personal account
   d) None of the above

3. In memorandum joint venture accounts, profits are calculated:
   a) In the co-venturer's account
   b) In a separate account
   c) In a capital account
   d) In a bank account

4. Partnership requires:
   a) Two or more persons
   b) One person
   c) Public registration
   d) Shareholders

5. Which of the following can be a source of goodwill?
   a) Large liabilities
   b) Bad debts
   c) Good reputation
   d) Increased expenses

6. Interest on capital is treated as:
   a) Liability
   b) Expense
   c) Appropriation of profits
   d) Income

7. Profit or loss on revaluation is transferred to:
   a) Revaluation Account
   b) Bank Account
   c) Drawings Account
   d) Loan Account

8. Goodwill usually arises when:
   a) A firm has high liabilities
   b) A firm is losing customers
   c) A firm has good customer relations
   d) A firm is closing

9. Partnership capital accounts are usually:
   a) Always fluctuating
   b) Fixed unless stated otherwise
   c) Depends on profits only
   d) Changes monthly

10. A joint venture without a separate set of books records transactions:
    a) Separately by each co-venturer
    b) Through a common bank account
    c) Only after profit is determined
    d) Never

11. Joint Venture profit is shared:
    a) According to investments
    b) According to effort
    c) According to agreed ratio
    d) Equally always

12. Memorandum Joint Venture Account is:
    a) Part of double-entry system
    b) Outside the double-entry system
    c) Same as Trading Account
    d) None of the above

13. In partnership, a written agreement is called:
    a) Contract
    b) Memorandum
    c) Deed
    d) Constitution

14. Partnership profit sharing ratio must be:
    a) Equal to capital ratio
    b) Based on work only
    c) As agreed
    d) Based on age

15. Which of the following increases goodwill?
    a) Poor location
    b) Strong customer loyalty
    c) Frequent losses
    d) High liabilities

16. Revaluation account is used when:
    a) Only new partner joins
    b) A partner retires
    c) Change in profit-sharing ratio
    d) All of the above

17. Interest on drawings is treated as:
    a) Expense
    b) Income
    c) Liability
    d) Asset

18. Profit-sharing in a partnership is usually done:
    a) Before paying expenses
    b) After deducting salaries and interests
    c) Before charging goodwill
    d) After distributing drawings

19. When a partner dies, the firm's goodwill is:
    a) Ignored
    b) Adjusted among partners
    c) Given fully to the deceased partner
    d) Written off

20. A co-venturer taking goods for personal use is recorded by:
    a) Credit Drawings Account
    b) Debit Joint Venture Account
    c) Debit Drawings Account
    d) Credit Bank Account

21. In Joint Venture, if a venturer pays expenses:
    a) His capital is increased
    b) He records expense in Joint Venture Account
    c) He reduces the selling price
    d) No entry needed

22. A partnership can be created by:
    a) Operation of law
    b) Agreement
    c) Court order
    d) Public auction

23. Which is NOT a characteristic of a Joint Venture?
    a) Temporary purpose
    b) Mutual agency
    c) Sharing of profits and losses
    d) Continuity like partnership

24. Revaluation gains are:
    a) Credited to partners' capital accounts
    b) Debited to partners' capital accounts
    c) Credited to Profit and Loss Account
    d) Ignored

25. Goodwill is recorded in the books when:
    a) Business is sold
    b) New partner joins
    c) Retiring partner leaves
    d) All of the above

26. Losses on revaluation are shared:
    a) Equally
    b) In old profit-sharing ratio
    c) In new profit-sharing ratio
    d) Only by new partners

27. Under Memorandum Joint Venture method, each venturer records:
    a) All transactions
    b) Only his own transactions
    c) Other’s transactions too
    d) No transactions

28. Which statement is true about partnership drawings?
    a) Drawings always include goods only
    b) Drawings are added to capital
    c) Drawings are deducted from current accounts
    d) Drawings are ignored

29. In absence of agreement, profits in partnership are shared:
    a) According to capitals
    b) Equally
    c) According to salaries
    d) Based on goodwill

30. When goodwill is brought privately by a new partner:
    a) It is recorded in the firm's books
    b) No entry is passed
    c) It is added to capital
    d) It is distributed among all partners

Part 3: Fill in the Blanks (10 Questions)

1. A __________ is a temporary arrangement between two or more parties for a specific task.

2. In partnership, the __________ agreement defines profit sharing and responsibilities.

3. __________ is the value of reputation and customer loyalty of a business.

4. __________ on capital is paid to partners before distribution of profits.

5. Expenses related to joint ventures are debited to __________ account.

6. The __________ account is prepared to calculate profit or loss in a joint venture.

7. In a partnership, salaries to partners are treated as an __________ of profits.

8. A __________ account is created for asset value adjustments.

9. __________ discourages partners from making large withdrawals during the year.

10. When a new partner is admitted, the __________ sharing ratio usually changes.

Part 4: Problem-Solving (2 Problems)

Problem 1: (Joint Venture)

Ahmed and Ali entered into a joint venture. Ahmed supplied goods costing $2,000 and paid expenses of $300. Ali paid transport charges of $200 and sold goods for $3,500. Profits are shared equally.
Required:
Prepare the Memorandum Joint Venture Account.

Problem 2: (Partnership Accounts)
Tom and Ali are partners with capitals of $60,000 and $40,000 respectively. They agreed on 5% interest on capital and to share profits equally. Net profit for the year is $20,000.
Required:
Prepare the Profit and Loss Appropriation Account.

Model Answer Key

Part 1: True/False Questions

Part 2: Multiple Choice Questions

Part 3: Fill in the Blanks

Part 4: Problem-Solving

Problem 1: Memorandum Joint Venture Account

Profit sharing:

• Ahmed = $500

• Ali = $500

Problem 2: Profit and Loss Appropriation Account

Profit sharing:

• Tom = $7,500

• Ali = $7,500