Capital
What is Capital?
Capital is money invested in a business
![cap1](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap1.jpg)
How it Works
To start a business, a business owner may use some of their own capital.
![cap1](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap1.jpg)
They would deposit this money in the business’s bank account.
![cap3](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap3.jpg)
If the owner was a corporation, the money would come from stockholders.
![cap3.1](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap3.1.jpg)
Once received, the business may use this capital to buy assets, such as equipment or buildings.
![cap4.1](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap4.1.jpg)
It may also use some of the money to buy inventory.
![cap4.2](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap4.2.jpg)
Recording Capital
When recording the transaction, you need to show the flow of money from one account to the other.
![cap9](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap9.jpg)
Here, you credit the capital account.
![cap 5](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap-5.jpg)
This shows money came from capital.
![cap 6](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap-6.jpg)
After that, you debit the checking account.
![cap7](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap7.jpg)
This shows the money went to the bank.
![cap8](https://seeaccountingnow.online/wp-content/uploads/2021/07/cap8.jpg)
© R.J (Bob) Hickman 2020
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