JOINT VENTURE

MEANING:
    A joint venture is a very short duration ''business'' (generally , confined to a single transaction, like, buying some surplus stores and selling them) entered into by two or more persons jointly. 
  Venture may be for the construction of a building or a bridge, for the supply of certain quantity of materials or labour and even for the supply of technical services. The person who have so agreed to undertake a joint venture are known as ''Joint venture'' or ''Co- venturers''.
FEATURES OF JOINT VENTURES:
 following are:

1. It is short duration special purpose partnership. Parties in venture are called co- ventures.
2. Co-venturers may contribute funds for running the venture or supply inventories from their regular business.
3. Co- venturers share profit/loss of the venture at an agreed ratio likewise partnership.

METHODS OF MAINTAINING JOINT VENTURE ACCOUNTS:

1. When separate set of books account is maintained for joint venture
2. When separate set of books is not maintained for the joint venture

1.A separate set of books is kept

When the size of the venture is large and the duration of the venture is protected, then a complete set of books of accounts is maintained under the double entry system for recording all joint venture transactions. Under this account, the following account is commonly maintained in the ledger.

Joint Bank Account: For the better financial control, a joint bank account is opened for the venture.  The co-venture operates this account jointly. This account is just like a cash book- All cash deposited into the bank is debited and all cash withdraw is credited. Capital contributed by the ventures and sale proceeds are deposited in this account.

Co-ventures Account: This account records the transactions between venture and co-ventures account. Since these are the capital account of the co-venture, they are credited for what they are deposited in the account and debited for what they are withdrawals from the account. The co-ventures’ contribution toward the joint venture by way of cash, goods, and services.

Joint venture account: it is nature of trading and profit and loss account. This account is prepared to ascertain the profit and loss account. Goods purchased, goods supplied by co-ventures, expenses incurred, etc. Are debited to this account and sales proceeds, unsold stock are credited to this account.  It is interesting to see that no separate account for purchases, sales and expenses are maintained. All these are directly entered into joint venture account.

2.No separate set of books is kept

When the size of the firm is small and each co-venture is residing at distant places, then co-venture may record joint venture transactions in his own book of account. In such case two variations are possible: when each co-venture maintains a complete record of all joint venture transactions; 2) when each co-venture maintains a record of transactions only.

When each co-venture maintains a complete record of all joint venture transactions

Joint venture account – it is nominal account and may be treated as special profit and loss account when disclose profit and loss on the venture. One’s own share of profit and loss is transferred to profit and loss account whereas the co-ventures’ share of profit is transferred to their respective personal account.

A personal account of co-venture: – these accounts are credited with cash, goods, and services supplied by the co-ventures and debited with the goods, sales proceeds taken over, remittance and share of profit and loss are credited and debited respectively to this account.

The balances of these accounts are shown on the balance sheet (if it has not been settled). Under this system, each co-venture will send from time to time a statement of the transactions entered by him to his co-venture who will accordingly make own its entries in his own book of account.