 |
| Started Business With Cash Journal Entry |
When you start a business and invest your own money in the business, it is called capital. you'll make a journal entry that will reflect the initial capitalization of the business. Here's a simple example assuming you're a sole proprietor of the company.
Journal Entry for Starting a Business with Cash
Cash Account Debit
Owner's Equity or Capital Account Credit
- The "Cash" account is debited because of represents the increase in cash from the owner's investment.
- The "Owner's Equity" account is credited because of represents the owner's claim on the assets of the business. This might be specifically called "Owner's Capital."
This journal entry reflects the base on the initial of cash into the business by the owner. It establishes the initial financial position of the business.
