capital and drawings

Question 1

capital

Answer 1

resources contributed by owner to the business

Question 2

drawings

Answer 2

assets withdrawn by owner for personal use

Question 3

explain the accounting of drawings and capital in relation to relevant accounting theory

Answer 3

in accordance to accounting entity theory which states that activities of business are separate from activities of owner. only transactions that affect the business are recorded.

Question 4

journal entries for capital contributions by owner

Answer 4

dr assets
cr capital

Question 5

journal entries for drawings by owner

Answer 5

dr drawings
cr assets

Question 6

journal entries for transfer of drawings to capital account

Answer 6

dr capital
cr drawings

Question 7

journal entries for business make profit

Answer 7

dr income summary
cr capital

Question 8

journal entries for business makes a loss

Answer 8

dr capital
cr income summary

Question 9

drawings account

Answer 9

date-particulars-dr-cr-balance
date of withdrawal: dr balance
year end date: cr capital, - balance

Question 10

capital account

Answer 10

date-particulars-dr-cr-balance
start with balance b/d, ends with balance b/d
if there is additional capital, cr
income summary: if profit, dr and if loss, cr
drawings: always debit