Question

What is the proper entry to show the owner making an investment in the company?

A a credit to cans and a debit to capital

B a debit to cash and a credit to capital

C. A debit to cash and a credit to revenue

D a credit to cash and a debit to revenue

Answer 1

Hello Sir/ Mam

YOUR CORRECT ANSWER IS OPTION B : a debit to cash and a credit to capital

Owner making investment in company means that owner is introducing capital in the company.

As owner will introduce new capital in cash, both the Cash A/C and Capital A/C will increase.

As the Cash A/C has debit balance and Capital A/c has credit balance,

the correct entry will be :

Debiting Cash and Crediting Capital.

I hope this solves your doubt.

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