DIFFERENCE BETWEEN JOINT VENTURE AND CONSIGNMENT

DIFFERENCE BETWEEN JOINT VENTURE AND CONSIGNMENT

The Difference between Joint Venture and Consignment is as follows:

JOINT VENTURE

Joint venture may be defined as temporary partnership between two or more persons without the use of firm’s name for a specific purpose and limited time period. In other words, two or more persons agree to undertake a particular venture and to share the profits and losses thereof in an agreed ratio. The relationship of co-venturers is governed by the partnership law of land.

Joint venture normally enters into either

• To complete a particular job
• For a pre-contracted time limit period after which they are automatically terminated.

CONSIGNMENT

Consignment is a specialized kind of transaction which involves the two parties i.e. Consignor and Consignee. In this the consignor dispatches the goods to the consignee and consignee is required to sell those goods. For this, the consignee gets a commission. Consignment is a nature of transaction that leads to the expansion of business. The legal relationship between the consignor and consignee is of the agent and the principal.

DIFFERENCE BETWEEN JOINT VENTURE AND CONSIGNMENT

BASIS OF DIFFERENCE	JOINT VENTURE	CONSIGNMENT
NATURE	Joint venture is the temporary business between the two firms for a particular purpose or up to limited time period.	Consignment is the dispatch of the goods by the consignor to the consignee to be sold by the consignee.
PARTIES INVOLVED	The parties involved are known as Co-venturers.	The parties involved are known as Consignor and the Consignee.
RELATIONSHIP BETWEEN THE PARTIES	The relationship between the co-venturers is of associates and partners.	The relationship between the consignor and consignee is of principal and agent.
LEGISLATION	Joint venture is not governed by any special act, but being a particular partnership, some rules of partnership law are applicable.	Consignment is governed by the law of agency as given under the Indian Contract Act, 1872.
DURATION	Joint venture is for a specific purpose. That is why is generally for short time period.	The consignment agreement is for a long period and does not come to an end on the completion of a particular transaction.
SHARING OF PROFITS	Co-venturers share the profits or losses in the agreed ratio or equally in the absence of the agreement.	In consignment, all the profit is of consignor.
CONSIDERATION	The profits earned on the venture is the consideration for the risk undertaken by the co-venturer.	The consignee gets the commission as consideration for the goods sold by him on the behalf of the consignor.
OWNERSHIP OF GOODS	The co-venturers are the joint owners of the goods and property of the business.	The consignor is the owner of the goods, only the possession is transferred to the consignee.
POWERS/ AUTHORITY	All the co-venturers have equal rights or powers.	The consignee has not right in regard to the goods.
SCOPE	The scope of joint venture is wider. It consists of buying and selling of goods, underwriting of shares and debentures.	The scope of consignment is narrow. It is concerned with the sale of goods only.
CONTRIBUTION OF FINANCE	The finances are provided by all the co-venturers in case of a joint venture.	In case of consignment business, consignor is the main provider of finance.
MANAGEMENT	In joint venture, each co-venturer takes part in the management of the business.	In consignment, only consignor is responsible of managing the whole things.
LOSS OF GOODS	Co-venturers are equally responsible for loss of goods.	The consignor is responsible for the normal and abnormal loss of the goods.
METHODS OF ACCOUNTING	There are four methods of keeping accounts i.e. separate set of books are maintained, joint venture records maintained by all co-venturers or records maintained by one of the co-venturer or memorandum method.	The methods of accounts followed are: Cost price method Invoice Price method Memorandum Method.
ACCOUNT SALES	No ‘Account sales / is sent by the one co-venturer to another co-venturer.	An ‘Account Sales’ is prepred and submitted by the consignee to his consignor.
SUBJECT MATTER OF DEALING	Co-venturers can deal in both movable and immovable property.	Only movable property is the subject matter of the consignment.
TREATMENT OF CLOSING STOCK	The unsold stock belongs to all the co-venturers.	The unsold stock belongs to consignor only.
ACCOUNTS MAINTAINED	The accounts maintained are: Joint Venture A/c Co-Venturer Personal A/c	The accounts maintained are: Consignor’s A/c Consignee’s A/c Consignment A/c Stock Reserve A/c Commission A/c Stock sent on Consignment A/c

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Nature of Accounting	Receipts and Payments Account	Depreciation Accounting	Acid Test Ratio
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Difference between cost accounting and financial accounting	Financial accounting, cost accounting and management accounting	Difference between hire purchase and instalment system	Financial ratio analysis
Difference between transaction and event	Transactions	Users of Accounting	Ratio analysis
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Book Keeping	Revenue Expenditure	Reserves Accounting	Abnormal loss vs normal loss in consignment
Accountancy	Difference between capital and revenue expenditure	Provisions	Treatment of loss on consignment
Accounting as science or an art	Accounting Equation	Single entry system	Accounting treatment of consignment
Book Keeping vs accounting	Deferred Revenue Expenditure	Difference between statement of affairs and balance sheet	Joint venture vs consignment
Book keeping vs accountancy	Capital receipt	IFRS	Departmental Accounting
Accounting vs accountancy	Revenue receipt	Balance Sheet	Methods of departmental accounting
Basis of Accounting	Difference between capital and revenue receipt	Profit and loss Account	Allocation of expenses in departmental accounting
Branches of accounting	Difference between accounting concepts and conventions	Trading Account	Inter-departmental transfers
Cash and mercantile system of accounting	Accounting Standards	Voyage Account	Different types of branches
Accounting Principles	Objectives of Accounting	Accounting for Incomplete Voyage	Departmental vs Branch accounting
Golden ru les of accounting	Process of Accounting	Joint venture	Methods of branch accounting
Double entry system of book keeping	Scope of Accounting	Joint Venture Vs Partnership	Incorporation of branch trial balance
Double entry vs Single entry system	Accounting Concepts vs Accounting conventions	Methods of recording transactions in Joint Venture	Garner VS Murray Rule
History of Accounting	Difference between provisions and reserves	Consignment