In view of the coronavirus pandemic, we are making LIVE CLASSES and VIDEO CLASSES completely FREE to prevent interruption in studies
Home > Accounting and Auditing > Joint Venture and Consignment Account > Features of Joint Venture Accounts
Joint Venture and Consignment Account

Features of Joint Venture Accounts

A joint venture is a temporary or a short duration partnership between two or more persons jointly. They do not use the name of the firm. Also, this partnership is for a specific purpose and for a specific time. They also share profits and losses in the agreed ratio. Let us now discuss the joint venture accounts meaning and features.

Joint Venture Accounts

A Joint Venture Account is an agreement whereby two or more parties join together to carry a specific business, venture or purpose for a specified period of time.

Thus, there is joint control and the sharing of profits and losses is as per the agreed ratio. A Joint Venture ends when the time period elapses or the specific venture finishes. The persons who undertake a Joint Venture Account are Co-venturers.

Examples of a joint venture are a joint consignment of goods, underwriting of shares or debentures, construction of buildings, bridges or roads, etc.

Browse more Topics under Joint Venture And Consignment Account

Features of Joint Venture Accounts

  1. Duration: It is formed for a short period of time and thus, may be termed as a temporary partnership.
  2. Parties: The persons who come together to run a joint venture are the Co-venturers.
  3. Funds: The co-venturers bring the funds for the joint venture account.
  4. Sharing of profits or losses: The co-venturers share profits or losses are as per the agreement between them. In the absence of an agreement, they will share it equally.
  5. Computation of profits or losses: Usually, the co-venturers compute the profit or loss of the venture on its completion.

Learn more about Joint Venture Accounting here in detail.

 

joint venture accounts

Difference between the Joint Venture and Consignment:

Basis of Difference Joint Venture Consignment
1. Meaning It is a temporary or a short duration partnership between two or more persons jointly without using the name of the firm. It refers to the sending of goods by the Principal to his Agent for selling them.
2. Parties The parties are the Co-venturers. The parties are the consignor and the consignee.
3. Relationship The co-venturers are just like partners. The consignor and the consignee share the relationship of principal and agent.
4. Profit sharing The profits or losses are shared in the agreed ratio. There is no profit sharing between the consignor and the consignee. Thus, the consignee only receives a commission.
5. Rights The co-venturers have equal rights. The consignor has the rights of the principal and the consignee has the rights of an agent.
6. Ownership All the co-venturers are the co-owners of the business. Only the consignor is the owner of the business.
7. Information The co-venturers keep sharing the information on a regular basis. The consignee sends an account sale to the consignor.
8. Maintenance of Accounts There are various methods of maintaining accounts. The co-venturers maintain the accounts as per the agreement between them. There is only one method of maintaining the accounts of the consignment.
9. Continuity The joint venture comes to an end when the venture or the purpose is fulfilled. The continuity depends on the will of the consignor and the consignee.
10. Basis of Accounting Cash basis of accounting is followed. Accrual basis of accounting is followed.

Solved Example For You

What are the methods of recording Joint Venture transactions?

Ans.

Following are the methods of recording Joint Venture transactions:

  1. Each co-venturer records the transactions of the Joint venture in his books and opens a ‘Joint Venture A/c’ and the accounts of the other co-venturers.
  2. The co-venturers maintain a separate set of books.
  3. The co-venturers prepare ‘Memorandum Joint Venture A/c’ to compute the profit or loss of the venture. Also, all the co-venturers prepare ‘Joint Venture with……A/c’.
Share with friends

Customize your course in 30 seconds

Which class are you in?
5th
6th
7th
8th
9th
10th
11th
12th
Get ready for all-new Live Classes!
Now learn Live with India's best teachers. Join courses with the best schedule and enjoy fun and interactive classes.
tutor
tutor
Ashhar Firdausi
IIT Roorkee
Biology
tutor
tutor
Dr. Nazma Shaik
VTU
Chemistry
tutor
tutor
Gaurav Tiwari
APJAKTU
Physics
Get Started

Browse

Joint Venture and Consignment Account
  • Features of Joint Venture Accounts

Leave a Reply

avatar
  Subscribe  
Notify of

Browse

Joint Venture and Consignment Account
  • Features of Joint Venture Accounts

Stuck with a

Question Mark?

Have a doubt at 3 am? Our experts are available 24x7. Connect with a tutor instantly and get your concepts cleared in less than 3 steps.
toppr Code

chance to win a

study tour
to ISRO

Download the App

Watch lectures, practise questions and take tests on the go.

Get Question Papers of Last 10 Years

Which class are you in?
No thanks.