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Accounting Procedures for JV 📚

Since JV is temporary, we don't always open a full set of new books. There are 3 Main Methods of accounting:

Method 1: Separate Set of Books 📒

  • When used: When the venture is Large and lasts for a long time.
  • Action: They open a separate Bank Account (Joint Bank A/c) and maintain a full set of double entry books (Journal, Ledger).
  • Accounts Opened:
    1. Joint Bank A/c
    2. Joint Venture A/c (P&L)
    3. Co-Venturers' A/c (Capital)

Method 2: No Separate Set of Books 📖

  • When used: When the venture is Small or short-term.
  • Action: No new books. Existing partners record JV transactions in their own books.
  • Sub-methods:
    • A. Only One Venturer keeps records: Rare.
    • B. All Venturers keep records: Common. (Memorandum Method).
Big Project?"Yes -> Separate Books (Method 1)"
↓
Small Project?"Yes -> No Separate Books (Method 2)"

Quiz Time! 🎯

Test Your Knowledge

Question 1 of 5

1. Separate set of books is maintained when:

Venture is small
Venture is large and long duration
Partners are lazy
None

💡 Final Wisdom: "If you are building a Metro Line (Huge), open new books. If you are just selling one truckload of mangoes (Small), just write it in your diary!" 📓

Next up: Separate Set of Books - The Joint Bank Method! 🏦

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