Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

Refer to Source A2 in the Insert. Extra information: John wants to work with Raj once more, but he is suggesting that they set up a partnership and share profits and losses equally. Raj is unsure whether he ought to do this.
(a)[6]

Prepare a statement that works out the profit or loss from the venture.

(b(i))[5]

Prepare the account for the joint venture with John in Raj's books of account.

(b(ii))[7]

Prepare the joint venture account for Raj in John's books of account.

(c)[2]

State one advantage to both Raj and John of forming a joint venture.

(d)[5]

Advise Raj whether or not he should go into partnership with John. Justify your advice and support it with calculations where appropriate.

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