A 50:50 Joint Operation Was Commenced Between Two Participants $\text { DR\quad Building in JO } \quad£ 50,000$

question 7

Multiple Choice

A 50:50 joint operation was commenced between two participants. Participant One contributed cash of £50 000, and Participant Two contributed a Building with a fair value of £50 000. Using the line-by-line method of accounting, participant One would record:

• A)\(\text { DR\quad Building in JO } \quad£ 50,000\)
• \(\text { CR } \quad \text { Cash } \quad\quad\quad £ 50,000\)
• B) \(\text { DR\quad Building in JO } \quad£ 50,000\)
• \(\text { CR } \quad \text { Cash } \quad\quad\quad £ 50,000\).
• C)\(\begin{array} { l c c c }
• \text { DR } & \text { Investment in joint operation } & £ 50,000 & \\
• \text { CR } & \text { Cash } & & £ 50,000
• \end{array}\)
• D)
• \(\begin{array} { l c l l }
• \text { DR } & \text { Cash in JO } & £ 25,000 & \\
• \text { DR } & \text { Building in JO } & £ 25,000 & \\
• \text { CR } & \text { Cash } & & £ 50,000
• \end{array}\)

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Definitions:

Uncovered Put

A type of options strategy where the seller (or writer) of a put option does not hold a short position in the underlying stock, leading to higher risk if the option is exercised.

Uncovered Call

An uncovered call is an options strategy where the seller sells call options without owning the underlying securities, exposing the seller to unlimited risk.

Strike Price

The price at which a derivative contract can be exercised, specifically referring to the price at which the holder of an option can buy (call option) or sell (put option) the underlying asset.

Listed Options

Contracts traded on a stock exchange that give buyers the right, but not the obligation, to buy or sell a security at a specified price within a certain time period.