Question

why the rule of debit and credit are same for capital and liability

Answer 1

Business entity concept treats business and business owner separately. Capital of the owner is treated as liability to the business because the business has to repay the amount of capital to the owner, in case of closure of the business. ... Thus the rules of debit and credit are same for both liability and capital.

Answer 2

Explanation:

The rules of debit and credit are same for both liability and capital because capital is also considered as liability with the view point of business, In accounting, there is a concept, according to which business and businessman, both are separate and whatever is invested by the owner of a firm in that film is also treated as liability and shown in liability side of the balance sheet after adding to the owner's capital.