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Difficulty: EasyJoint Venture Accounting: Separate Set of Books Method

When a separate set of books is maintained for a joint venture, which account is credited when a co-venturer contributes capital into the venture's bank account?

  1. Co-venturer's personal accountAnswer
  2. B
    Joint Bank Account
  3. C
    Joint Venture Account
  4. D
    Profit and Loss Account

Answer

Co-venturer's personal account
Under the separate set of books method, any capital contributed by a co-venturer into the Joint Bank Account increases the bank asset (debit Joint Bank Account) and creates an equity claim in favor of that venturer (credit Co-venturer's personal account).

Step-by-Step Solution

1
Identify the accounts involved in receiving a capital contribution from a co-venturer under a separate set of books.
The two accounts involved are the Joint Bank Account and the Co-venturer's personal account.
Money is deposited into the joint bank account by the individual venturer.
2
Apply standard double-entry bookkeeping rules to the transaction.
Debit the Joint Bank Account (to record an increase in bank asset) and credit the Co-venturer's personal account (to record the capital contribution introduced by that venturer).
Under the separate set of books method, individual capital contributions are credited to the personal ledger account of the contributing venturer.

Key Concept

Recording capital contributions in Joint Venture Separate Set of Books Method
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Topics

Joint Venture Accounting: Separate Set of Books Method

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