![]() ![]() Explanation 1 (DEALER): The $1000 investment causes owner’s equity to increase and owner’s equity is an equity account (a normal credit account), so the entry is a credit.Is the entry to the company’s owner’s equity account a debit or a credit? The owner of a car wash provides their company with a $1,000 initial investment.Explanation: The $1000 investment causes cash to increase and cash is an asset (a normal debit account), so the entry is a debit.Is the entry to the company’s cash account a debit or a credit? Purchase assets, like a laptop to work on (Assets).Pay the business’s bills like rent or employee salaries (Expenses).Distribute it back to the owners (Dividend).And, there are only three places that the business could spend that cash back to (IE Destination):.Business earned it by selling a product or service (Revenue). ![]() Owner invested into business from his/her own pocket (Equity).Borrowed from a third-party like a bank (Liabilities).If a business holds some cash, broadly speaking, there are only 3 possible places that cash could come from (IE Source):. ![]()
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