Question

explain why a loss for the year is debited to the owner's capital account ?

Answer 1

Answer:

Generally any profit or loss at the end of each year is transferred to current account. When partners draw any money current account is debited but not capital account. But if a capital account shows a debit balance it may be due to two reason.

There is no current account maintained,profit/ loss and drawings are transferred directly to capital a/c .

1.The proprietor had been consistently drawing money which is more than the cumulative profit.

2.The proprietor had not been drawing any money , but the cumulative loss is more than capital invested.

Hope it helped ❤

Answer 2

Answer:

hi mate

here is your answer

Expenses causes owner's equity to decrease.Since owner's equity's normal balance is a credit balance,an expense must be recorded as a debit.

At the end of the accounting year the debit balances in the expense account will be closed and transferred to the owner's capital account ,there by reducing owner's equity.

Hope it helps