There are three vays in which Joint Venture Accounts can be kept. The)’ are as follows:
I. When Separate Set ofBooks for the venture are maintained. This will be necessary when venture is of a large magnitude.
2. When One Venturer keeps the accounts, In this case entire work is entrusted to one of the venturers and the rest simply contribute their share of investment and place it at the disposal of the working venturer.
3. When All Venturers keep accounts, Where venture is not of such magnitude as to warrant a distinct set of books being kept, each venturer will record only such transactions as directly concern him.
In the following pages each of these methods, has been discussed in detail.
WHEN SEPARATE SET OF BOOKS ARE MAINTAINED
Where a complete set of books are maintained for the Joint Venture, following accounts are opened: (i) Joint Bank Account (II) Joint Venture Account (iii) Personal accounts of each Venturer.
In this method parties first pay their contribution tojoint funds in the Joint Bank Account and their payments on joint account are made out of Joint Bank Account.
Joint Venture Account is of the nature of an ordinary Trading and Profit & Loss Account.
It is debited with goods purchased, and expenses incurred) while credited with the sales made. It’s balance shows the profit or loss incurred on the joint venture.
Personal account of each venturer is also opened. It is credited with the amount of contribution made by him tothejoint funds and his share ofprofit(and debited in case of loss).