A joint venture is an arrangement in which two or more

parties agree to pool their resources for the purpose of a

specific task or transaction. This task may be a fresh
project or any other business activity. In a joint venture,
each of the members is responsible for profits, losses and
costs associated with it. However, the venture is an entity
separate from its participants. Here, we will discuss
the Joint Venture Accounting with Separate Books.

Joint Venture Accounting with Separate Books

The joint venture accounting can be done in any of the

following two ways:

1.When the separate set of books are maintained

2.When the separate set of books are not maintained

We will here deal with the situation when the separate set
of books are maintained. Thus, the following accounts are
made:

•Joint bank account

•Joint venture account

•Co-venturers account
(1) Joint Bank Account

The co-venturers open a separate bank account for the

venture transactions. They make initial contributions to
this account. The bank account is normally operated
jointly. Expenses are met from this Joint Bank Account.
Sales or collections from transactions are deposited into
this account.

However, if any co-venturers make direct payments and

direct collections; in such a case their Personal Accounts
will be credited/ debited for the transactions done. On
completion of the venture, the Joint Bank Account is
closed by paying the balance to co-ventures.

(2) Joint Venture Account

This account is prepared for measurement of venture

profit. This account is debited with all venture expenses
and credited with all sales or collections. The excess
balance of credit side over the debit side shows the profit
on joint venture and vice versa. Profit /Loss are
transferred to co-venturers’ accounts in the profit-sharing
ratio.
A joint venture is an arrangement in which two or more
parties agree to pool their resources for the purpose of a
specific task or transaction. This task may be a fresh
project or any other business activity. In a joint venture,
each of the members is responsible for profits, losses and
costs associated with it. However, the venture is an entity
separate from its participants. Here, we will discuss
the Joint Venture Accounting with Separate Books.

Joint Venture Accounting with Separate Books

The joint venture accounting can be done in any of the

following two ways:

1.When the separate set of books are maintained

2.When the separate set of books are not maintained

We will here deal with the situation when the separate set
of books are maintained. Thus, the following accounts are
made:

•Joint bank account

•Joint venture account

•Co-venturers account
(1) Joint Bank Account

The co-venturers open a separate bank account for the

venture transactions. They make initial contributions to
this account. The bank account is normally operated
jointly. Expenses are met from this Joint Bank Account.
Sales or collections from transactions are deposited into
this account.

However, if any co-venturers make direct payments and

direct collections; in such a case their Personal Accounts
will be credited/ debited for the transactions done. On
completion of the venture, the Joint Bank Account is
closed by paying the balance to co-ventures.

(2) Joint Venture Account

This account is prepared for measurement of venture

profit. This account is debited with all venture expenses
and credited with all sales or collections. The excess
balance of credit side over the debit side shows the profit
on joint venture and vice versa. Profit /Loss are
transferred to co-venturers’ accounts in the profit-sharing
ratio.
(3) Co-venturers’ Accounts

Personal accounts of the venturers are maintained to

keep a record of their contributions of cash, goods.
Expenditure directly paid and payments directly received
by co-venturers are also recorded in this account. The
profit or loss so made on the venture is transferred to this
account in the agreed profit sharing ratio. This account is
also closed on completion of the venture.