Meaning of Joint Venture:- Joint venture is a temporary partnership between two or more persons. Without the use of a firm name. In such business two or more persons who agree to undertake a particular venture. In such business only a number of transactions and projects. Which are carried mainly for a short period.
In other words:- It is a short duration special purpose partnership. It contains a combination of Skills and Capital between two or more partners. Such businesses never use firm names. Thus, the going concern accounting concept is not appropriate in the joint venture business.
Joint Venture agreement comes to an end when the work undertaken is completed. The persons and parties who undertake a venture are called Co-venturers or joint venturers.
Note:- Such business needs to arise due to the limitations of available time, Money, expertise to execute jobs etc. These limitations force businessmen to join hands with other businessmen to execute a particular job for a particular period. In brief, joint ventures suitable for the following type of business. Now lets now know the difference between joint venture and partnership
- Purchase or Sales of goods
- Underwriting Shares and Debentures
- Speculation of Shares and Debentures
- Construction of roads, bridges and Buildings.
- Purchase and Sale of Property
- Making of films, etc.
DIFFERENCE BETWEEN JOINT VENTURE AND PARTNERSHIP
|Basis of Difference
Joint Venture Partnership
|1.Members known as
|Joint VentureThe members of joint venture business are known as “Co-venturers” or “Joint Ventures”.
PartnershipMembers of partnership business are known as partners.
|2.Name use of firm in business
|Joint VentureJoint ventures do not use a firm’s name.
PartnershipIn the partnership business, the firm has a name of its own.
|Joint VentureJoint venture is a temporary business. Which run only for a short period with limited projects. When these projects are completed the joint venture will wind up.
PartnershipPartnership business carry on for an indefinite period. However partners as per their desire they can wind up by passing resolutions.
|4.Methods of Accoun-ting
|Joint VentureIn the business of joint venture profit and loss are ascertained based on the cash basis of Accounting.
PartnershipIn the business of partnership profits and losses are ascertain on the accrual basis of Accounting.
|5.Freedom to carry on business
|Joint VentureThe joint venturers are free to carry out their own separate competitive business unless they are prohibited by special agreement to do such business.
PartnershipPartners Can not carry on their independent competitive business.
|6.Termination of Business
|Joint VentureJoint venture business is set up for a specific purpose or a limited duration. The business comes to an end as soon as the venture business is completed.
PartnershipPartnership firms are established to carry on business for the long term. And business can not be terminated on the completion of a particular project of business.
|7.Maintenance of Accounts
|Joint VentureSometimes, separate books of accounts are not maintained for joint ventures. The co-venturers record transactions relating to joint ventures in their business books.
PartnershipIn the partnership business separate books of accounts are maintained in the business firms.
|8. Ascertain-ment of Profits / Loss
|Joint VentureIn the joint venture business profits and loss are ascertained at the end of specific ventures. If the venture continues for a short period. But if business continues for a long period then it can be ascertained on the basis of annually.
PartnershipIn the business of partnership profits and losses are ascertained on an annual basis.
|Joint VentureNo specific act is applicable to joint venture business.
PartnershipIn the partnership business firms are governed by Indian partnership Act, 1932.
|10.Doctrine of Implied Authority
|Joint VentureThe doctrine of implied authority is not applicable to co-venturers.
PartnershipThe doctrine of implied authority is applicable to partners.
|11.Basis of Accounting
|Joint VentureJoint venture is a short period duration business. It is maintained on liquidation concept. No balance sheet is prepared for joint ventures.
PartnershipAccounts of Partnership business are maintained on a going concern basis. Generally, an annual balance sheet is prepared for a partnership.
|12.Settlement of claims
|Joint VentureOn the termination of the joint venture, claims of the co-venturers are settled.
PartnershipIn the partnership firms, partners share profits and losses in the agreed profit sharing ratio. Claims of the partners are settled at the time of retirement, or death of a partner or dissolution of partnership.
Conclusion:- Joint Venture is a temporary project which mostly runs under the short run. So after the accomplishments of such projects profit and loss is settled between Co-venturers in the joint venture business. Whereas in the partnership run in the long run as per the agreement of the partnership. It runs under the 1932 act. Whereas no special act is applied on the business of joint ventures Account. difference between joint venture and partnership
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