Sign In

For the sake of quality, our forum is currently "Restricted" to invitation-only. In case if you wish to join our forum, please send an email seeking an invitation to "Contact@Accountingcapital.com".

Forgot Password

Lost your password? Please enter your email address. You will receive a link and will create a new password via email.

Captcha Click on image to update the captcha.

You must login to ask question.

Emin Radwan

What is started business with cash journal entry?

Share

1 Answer

  1. To begin with, three types of businesses can be commenced i.e. sole proprietorship, partnership, and joint-stock company. As we all know, to start any business a certain sum of money has to be invested by the owner which is known as the capital of the business in terms of accounting.

    Journal entry for started business with cash

    The cash a/c is debited as it is an asset for the business and the capital a/c is credited as it is a liability for the business according to the business entity concept.

    1. According to the golden rules of accounting:

    Cash a/c Debit Debit what comes in
    To Capital a/c Credit Credit the giver

    (being business commenced with cash)

    2. According to the modern rules of accounting:

    Cash a/c Debit Debit the increase in asset
    To Capital a/c Credit Credit the increase capital

    (being business commenced with cash)

    Example

    Mr. A commenced business with cash (capital) amounting to 1,00,000. The journal entry in the books of Mr. A is as follows

    Cash a/c Debit 1,00,000
    To Capital a/c Credit 1,00,000

    (being business commenced with cash)

    Hope this helps.

    • 0

Leave an answer