Question

Which of the following account is not opened under joint venture accounts?

A. Joint bank account
B. Joint venture account
C. Co-venture's account
D. Stock reserve account​

Answer 1

So, the stock reserve account records the loading on closing stock remaining unsold with the consignee. In the case of joint venture, such a situation does not arise, and hence, stock reserve account is not required to be prepared.

Answer 2

The correct answer is OPTION D: Stock reserve account​

• The stock reserve indicates the profit that the organization did not realize as a whole.
• However, if one department transfers things to another at invoice price, the transferor department will profit.
• This does not imply that the company was profitable.
• When a relocated department sells things to outsiders, we can calculate the profit.
• The opening stock comprises a profit component, however, it is profit from the previous year, hence the previous year's G.P. rate is used.
• The stock reserve is transferred to the trading account's credit side to reduce the opening stock to its cost.