CMA Intermediate · Financial Accounting · Joint Venture
In a joint venture with separate books, venturer Nikhil pays Rs 3,000 of venture expenses from his own pocket. How is this recorded in the joint venture books?
Debit Joint Venture Expenses A/c and credit Nikhil's A/c for Rs 3,000. The cost is a venture expense, and because Nikhil paid it personally, the venture becomes liable to him. The joint bank account is not affected as no joint funds were used.
- ADebit Joint Venture Bank A/c and credit Joint Venture Expenses A/c
- BDebit Nikhil's A/c and credit Joint Venture Expenses A/c
- CDebit Joint Venture Expenses A/c and credit Nikhil's A/cCorrect
- DDebit Joint Venture Expenses A/c and credit Joint Venture Bank A/c
Explanation
The expense belongs to the venture, so Joint Venture Expenses A/c is debited. Since Nikhil paid from private funds, the venture owes him that amount and his account is credited. No joint bank money was used, so crediting the Joint Bank A/c would be wrong.
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