LET US SUM UP

 

13.5 LET US SUM UP

Joint Venture is a temporary partnership between two or more persons who have agreed to undertake jointly a specific project or a job. On the completion of the project or the job, the joint venture will automatically come to an end. The joint venture differs from consignment and partnership in many ways.

Tile accounts for the joint venture business can be kept in four ways: (i) all recording be. done in the books of one co-venturer only, (ii) the accounting records be maintained by each one of them ill their own books, (iii) each co-venturer records his own transactions relating to the joint venture and on the completion of the project a Memorandum Joint Venture Account is prepared to find out the profit or loss, or (iv) separate set of books of accounts may be maintained for the joint business and a joint account be opened in the bank.

Under the first method only oiie co-venturer records the joint venturer transactions who opens a Joint Venture Account and the personal accounts of other co-venturers. Under the second method each co-venturer opens a Joint Venture Account and the personal accounts of other co-venlurers. The Joint Venture Account serves the purpose of Profit and Loss Account. Undsr the third method, no Joint Ventlure Account is maintained. Eacn co-venturer simply opens the personal accounts of other co-venlurers and for ascertaining the profit or, loss or the venture, ii Memorandum Joint Venture Account is prepared.

When any of the above three methods is followed no separate books are maintained for the Joint Venture business. All transactions are recorded in the books of the co-venturers themselves. Under the fourth method a separate set of books are prepared for the joint venture business treating it as a separate accounting entity, and all transactions are recorded strictly according to the double entry system, The main accounts prepared under this method are (i) Joint ventdie Account (ii) Joint Banking Account, and (iii) the personal accounts of the co-venturers. In this case also the Joint Venture Account serves the purpose of a Profit and Loss Account.

13.6 KEY WORDS

Co-venturer: Persons who are parties to the agreement for canying out the joint venture business.

Joint Venture: A temporary partnership between two or more persons who agree to carry out a specific job or a project.

Memorandum Joint Venture Account: An account prepared for ascertaining the profit or loss of a joint venture where no Joint Venture Account is prepared by co-venturers.

Shares: A unit of the share capital of a company.

Underwriting: An undertaking to take up the shares which are not subscribed by the public.

13.7 ANSWERS TO CHECK YOUR PROGRESS

A         1 i) A and B ii) A's share Rs. 18,000 and 3's share Rs. 27,000

  2 i) False ii) True iii) False iv) False v) True

B          1 a)ii b)i c)ii d)i e)iii

C          2 i) Bank ii) Joint Venture iii) Joint Bank iv) Co-venturers' Personal Accounts v) unsubscribed