Where a Joint Venture Is a Partnership

question 22

Multiple Choice

Where a joint venture is a partnership:

• A) It should be accounted for by the venturer using the equity method.
• B) It should be accounted for by the venturer using partnership accounting separately to the financial accounts of the venturers and any profit on sale of the output from the joint venture reported in the income statement of the individual venturers.
• C) It should be accounted for by the venturer as a partnership and the line items added into the group's financial statements.
• D) It should be accounted for using full consolidation accounting.
• E) None of the given answers.

---

Definitions:

Borrowed Funds

Funds obtained through loans or credit, not from direct earnings or investments.

Leverage

The ability to finance an investment through borrowed funds, increasing both the potential for return and the level of risk.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, encompassing stocks, bonds, real estate, and other assets.

Principal

An amount of money borrowed from a lender.