CMA Foundation · Fundamentals of Financial and Cost Accounting · Joint Venture
Under the separate set of books method, the co-venturers open a Joint Bank Account. When co-venturer Meera deposits Rs 50,000 into this account as her contribution, the credit is given to which account in the joint venture books?
The credit goes to Meera's personal account. In the venture's separate books, Joint Bank Account is debited and the contributing co-venturer is credited, because the venture owes her the amount contributed. It is not income, so Joint Venture Account is not credited.
- AJoint Venture Account
- BMeera's personal accountCorrect
- CProfit and Loss Account
- DJoint Bank Account
Explanation
The venture keeps its own books. A cash contribution debits Joint Bank Account and credits the contributing co-venturer's personal account, since the venture now owes her that amount. Crediting Joint Venture Account would wrongly treat the contribution as venture income. Joint Bank Account is the account being debited, so it cannot also be credited.
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