E-LESSON-9 OK

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BBA/BCOM 2 All right are reserved with CU-IDOL Basic Accounting Course Code: BBA/BCOM- 101 Semester: FIRST SLM Unit: 9 E-Lesson: 8 www.cuidol.in Unit 9(BBA /BCOM -101)

BASIC ACCOUNTING 33 OBJECTIVES INTRODUCTION To make students aware of the basic concepts of In this unit we are going to learn about the joint Venture. joint Venture and its concept of applicability. To develop an understanding of methods of Under this you will learn and understand the Accounting of joint Venture and its relevance for accounting methods of joint Venture. companies. In this unit you will learn the scope & To make students understand the methods of compliance of joint Venture . Accounting for joint Venture. www.cuidol.in Unit 9(BBAA/B1C01O)M -101) INASlTl ITriUgThEt OarFeDrIeSsTeArNvCeEd AwNitDh OCNUL-IIDNOE LLEARNING

Topics To Be Covered 4  Introduction  Objectives of Joint Venture  Difference between joint venture  Accounting Treatment of Joint Venture www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Introduction 5  Joint Venture is a restricted or a temporary partnership between two or more persons who undertake jointly to complete a particular adventure.  In general, the joint venture is formed for the purpose of consigning the goods from one place to another, undertaking contracts for construction works, underwriting of shares or debentures of joint stock companies, etc.  The persons who enter into this agreement are called co-venturers and this joint venture agreement will come to an end on the completion of the work for which it was formed. The profits or losses are shared between the co-ventures in their agreed ratio and in the absence of such agreement, the profits or losses are shared equally among themselves. As and when the venture is completed, the venture is closed by settling the co-venturers' accounts either by receipt of cash or by payment of cash. www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Meaning 6  A joint venture is usually a temporary partnership without the use of a firm name, limited to carrying out a particular business plan in which the persons concerned agree to contribute capital and to share profits or losses.  The parties in a joint venture are known as co-venturers and their liability is limited to the adventure concerned for which they agree to contribute capital and share profits or losses.  A joint venture may consist of a joint consignment of goods, speculation in shares, underwriting of shares or debentures, construction of a building, or any similar form of enterprise. www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Concept of Joint Venture 7 Joint Venture is defined as a business organization where two or more parties come together for completing a particular task, project or activity. The venture is formed for a limited period, also known by the name temporary partnership. Here, the parties to the venture are considered as Co-venturers who agree to run the venture jointly by combining their resources like capital, inventory, machinery, manpower, etc. and by sharing profits and losses in the specified ratio without the use of the firm name. www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Objectives of Joint Venture 8 1. To enter foreign market and even new or emerging market. 2. To reduce the risk factor for heavy investment. 3. To make optimum utilization of resources. 4. To gain economies of scale. 5. To achieve synergy. www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Features of Joint Venture: 9 1. Agreement 2. Joint Control 3. Pooling of resources and expertise 4. Sharing of profit and loss 5. Access to advanced technology 6. Dissolution www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Difference between Joint Venture and Partnership 10 Joint Venture Partnership 1. Joint Venture is a business formed by two or more 1. A business arrangement where two or more than two persons for a limited period and a specific persons agree to carry on business and have purpose. mutual share in the profits and losses is known as Partnership. 2. There is no such specific act. 2. The partnership is governed by the Indian Partnership Act, 1932. 3. Business carried on by Co-venturers. 3. Business carried on by Partners. 4. A minor cannot become a co-venturer. 4. A minor can become a partner to the benefits of the firms. 5. Basis of Accounting nature is Liquidation. 5. Basis of Accounting nature of Going Concern. 6. At the end of the venture or on interim 6. Ascertainment of profit is annually. basis as the case may be. 7. Not necessary to maintenance of 7. Mandatory to maintenance of separate set separate set of books. of books. www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Summary 11  Joint venture-Joint Venture: When two or more persons joint together to carry out a specific business and share the profits or losses on predetermined basis, it is known as a joint venture.  Memorandum Joint Venture Account: The profit or loss of the venture is computed in an account which is not part of the double entry mechanism and is termed as Memorandum Joint Venture Account.  A joint venture can be described as a contractual arrangement between two companies that aims to undertake a specific task. Whereas, a partnership involves an agreement between two parties wherein they agree to share the profits as well as any loss incurred. ... Joint ventures can be formed for specific purposes. www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Multiple Choice Question Q 1. Every co-venture records all the transactions in his books in connection with the__________. 12 [a] Partnership [b] Joint venture [c] Sole proprietorship [d] None 2. Which method in accounting treatment helps a lot of clerical work? [a] Method 1 [b] Method 2 [c] Method 3 [d] None 3. Joint venture account is a [b] A particular partnership [a] A general partnership [d] Not limited a particular venture [c] partnership Answers 1. [b], 2. [b] ,3 [b] www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

Frequently Asked Questions 13 Q1. What are the objectives of Joint Venture? Ans: Joint Venture is defined as a business organization where two or more parties come together for completing a particular task, project or activity. The venture is formed for a limited period, also known by the name temporary partnership. Here, the parties to the venture are considered as Co-venturers. Q2. Explain the features of Joint Venture. Ans: 1. To enter foreign market and even new or emerging market. 2. To reduce the risk factor for heavy investment. 3. To make optimum utilization of resources. 4. To gain economies of scale. www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

REFERENCES 14 1. Gupta, R.L., Radhaswamy,M.(2012). Advanced Accountancy. New Delhi: Sultan Chand&Sons. 2. Maheswari S.N.,(2018). Introduction to Accounting.New Delhi: Vikas Publishing House. 3. Shukla, M.C.,Grewal, T.S.,Gupta S.C.(2007). Advanced Accounts.New Delhi:S.Chandand Company Ltd. www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL

15 THANK YOU For queries Email: [email protected] www.cuidol.in Unit 9(BBA /BCOM -101) All right are reserved with CU-IDOL