In relation to the supply of a service to a joint operation by one of the joint operators, which of the following statements is correct?
A) A joint operator can recognise 100% of the earned revenue through the supply of services to the joint operation.
B) A joint operator is entitled to recognise a profit from the supply of services to itself.
C) A joint operator cannot earn a profit on supplying services to itself.
D) It is uncommon for a joint operator to act in a management position for the joint operation.

Question

Quizplus · Accepted Answer

A joint operator cannot earn a profit on supplying services to itself because in accounting terms, transactions with oneself cannot generate profit. This is because the entity is essentially paying itself, so any "profit" would not reflect a true economic gain from an external transaction.

In Relation to the Supply of a Service to a Joint