SS2 Third Term Financial Accounting Lesson Note – Joint Venture Account

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WEEK SEVEN (6)

TOPIC: JOINT VENTURE ACCOUNT

CONTENTS:

• Meaning of joint ventures
• Features of joint ventures
• Accounting entries

Sub-topic 1:

Meaning of Joint Ventures

A joint venture is simply a venture undertaken jointly by two or more persons with a view to gaining a profit. Joint venture differs from a partnership in that it is of a more temporary character. Nowadays joint ventures are often concern with one isolated transaction, such as buying up bankrupt stocks or engaging in similar operation. In other words, joint ventures refer to the mutual advantage of two or more persons or firms to tackle a particular business venture together instead of engaging in it separately.

Features of Joint Ventures

1. The profit-sharing ratio must be clearly stated
2. The capital, activities and scope of the ventures must be laid down
3. Sometimes one venture is allowed credit for the use of his office, or for services provided, but this must be agreed to by all parties.

Differences between joint venture and partnership

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