Partnership and Joint Venture
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Detailed Solution & Explanation
Partnership and Joint Venture:
When two or more persons join together, to do business on joint account on regular
basis & to share the profits or losses such relationship is known as partnership & the
persons are known as partners.
When two or more persons join temporarily to do a particular job or work & to share
profits or losses, is known as joint venture & the persons are known as co-venturer's.
Partnership is a relationship between persons who have agreed to share profits or
losses of a business carried on by all or any of them acting for all.
Whereas, a joint venture is a contractual agreement whereby two or more parties
undertake an economic activity which is subject to joint control.
Thus joint venture is a temporary partnership formed for a particular economic
activity or venture.
The following additional differences exist between joint venture and other forms of
partnership.
1. Accrual basis of accounting is followed in case of partnership and a joint venture
generally follows cash basis of accounting.
2. The financial results of a partnership are obtained at regular intervals ie. on annual
basis. On the other hand, the financial results of a joint venture are obtained generally
at the end of the venture.
About This Chapter: Partnership & Companies
Paper
Paper 1: Accounting
Weightage
15-20%
Key Topics
Admission, Retirement, Death, Shares, Debentures
This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.
View Official ICAI SyllabusExam Strategy Tip
This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.
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Following are the details of Assets and Liabilities of Mr. Sarthak for the year ended 31 March, 2023 and 31 March, 2024: 31.03.2023 31.03.2024 Assets Buildings Furniture Inventory Sundry debtors Cash at bank Cash in hand Liabilities: Loans Sundry Creditors 2,00,000 75,000 1,05,000 68,000 72,500 2,400 1,50,000 58,400 ? ? 1,95,000 94,000 86,800 3,800 1,25,000 79,500 It was decided to depreciate Building by 5% p.a. and Furniture by 10% p.a. On 1st June, 2023 an additional capital of 40,000 was brought in the business. Proprietor has withdrawn @ ₹ 2,500 p.m. for meeting the family expenses. Prepare Statement of Affairs as on 31 March, 2023 and 31 March, 2024. Find the profit or loss earned by Mr. Sarthak for the year ended 31st March, 2024. [Jan. 2025, 5 Marks]
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