Which accounts should be considered?

[jordan2322]

Hi Guys,

New to the forums and Business / Accounting in general so please be nice.

I have a question regarding Owners invested capital into a proprietary company.

If i was to start up a proprietary company by opening a bank account in the business' name and invested money from my personal savings account into this new business account what transactions should be considered?

From the point of view of the balance sheet the Owners Equity goes up with this investment and so too does the cash in bank of the business (assuming cash transaction)

Are there any other accounts i should consider - such as the decrease in personal savings of the owner or is this data acurately captured through capital investment/ Owners Equity ?

Regards Jordan

 

[ArcSine]

You're correct that for your capital investment into the company's cash account, on the company's books your entry would be to Debit Cash and Credit Owner's Equity.

No other accounts need be considered on the company's books.

The decrease in your personal cash from the capital investment would be recorded with a journal entry only if you were also keeping a set of books for your personal accounts. In such case you'd Credit your personal savings account, and Debit some account such as Investment in Company. However, it's somewhat rare for people to keep a set of double-entry accounting books for their various personal assets, debts, incomes, and expenses.

 

[jordan2322]

Which accounts should be considered

Thank you for your reply. I have another scenario which i needed some clarity on also.

Suppose I perform services for a company on 1 March 2012 and send an invoice totalling $2000.

In this case which accounts should be considered..
obviously accounts receivable (which is an asset) increases, therefore debited to the account.

But are there any other accounts that are affected by this?

regards

 

[hankas]

Account receivable increases and so does your sales revenue account.

Are you sure you don't need an accountant? If you cannot afford one, try to get some accounting software to do the work.