This aspect of an account is the amalgamation of accounts of persons that are engaged in any temporary business for a definite purpose. The persons that are engaged in a joint venture are known as venturers. The joint venture can be terminated at the expiration of the specific purpose for which they started.
Note that each of the ventures will open an account of the joint venture in his book. Here, each of the ventures will credit his books with the values of any products taken over by him as well the value of all the value of all the sales made by him. He will also debit his books with the value of purchases that have been made by him as well as the expenditure made by him on behalf of the joint venture. All other debits to the book of the venturer will include the venturer’s share of the profits of the joint venturer as determined in the memorandum joint venture accounts.
At the end of the period, the book of the venturers are brought together. The entries in all the books are therefore extracted and entered up in a memorandum joint venture account. The debit in the venturers’ books shall be the debits in the memorandum joint venture account.
Note also that whenever the credit side of the memorandum joint venture account is more than, the debit side, then it suggests-that profit has been made. But whenever the debit side of the memorandum joint venture account is greater than the credit side, it indicates that a loss has been made. When more money is needed, the venturers decide on how they contribute capital and moreover when profit or loss is made, they also decide on how to share profit or loss.