Question

Could you please define "investment by owners" and provide examples of this type of transaction?

Answer 1

Investment by Owner- It is also called owner's investment or contributed capital. In other words, investment by owner means the amount of money or other assets that the owner invests in the company to start the business or keep the business running smoothly.

Whenever the owner contributes any amount or other assets to the business, his investments gets increased.

For example - Mr A after graduation, decided to start his own business of Garments. He took a showroom on rent by paying a deposit of $10,000/-, bought some garments at $25,000/- in cash and contributed his own Laptop to the business for billing purpose. Let's say laptop cost was $1,000/-.

Here the investment by owner in the business is = (10,000 + 25,000 + 1,000)= $36,000/-

$35,000 in cash and $1,000 in the form of other asset(Laptop).