Question

What is the journal entry for introduced further capital?

Answer 1

Cash/Bank account Dr.
To Capital account

Answer 2

Answer:

Bank A/c   xxx

       To Capital A/c   xxx

(Being further capital introduced)

Explanation:

• If you own a business and want to invest your personal funds, stock, or assets in it, you must record this in Accounting. Using journals, you can easily record the capital you introduce.

• "The Golden Rules of Accounting are-

1. Debit the receiver and credit the giver.
2. Debit what comes in and credit what goes out.
3. Debit expenses and losses, credit income and gains."

• A capital account is a natural person's account, that is, an account of a living person. As a result, it qualifies as a personal account.
• Hence, here Rule 1 will be applicable as Capital account is a personal account of the owner and we credit the giver as per the rule.
• A bank account is a real account that deals with assets other than people. These are accounts that do not close at the end of the fiscal year and are carried forward.
• Hence, here Rule 2 will be applicable as Bank account is a real account and we debit what comes in as per the rule.

Hence, when you record the journal, you credit the capital introduced and debit the nominal ledger account you want to affect.

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