4
Question
Amount brought in by proprietor should be credited to ______ account.
Amount brought in by proprietor should be credited to ______ account.
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Solution
The correct option is B Capital
Business Entity concept defines that the business and its owner are two separate legal entity. Owner is considered as a creditor like other creditor. Amount contributed by the owner as capital is treated as liability. Accounting entry will be as under:
Cash A/c Dr. To Capital A/c
Business Entity concept defines that the business and its owner are two separate legal entity. Owner is considered as a creditor like other creditor. Amount contributed by the owner as capital is treated as liability. Accounting entry will be as under:
Cash A/c Dr.
To Capital A/c
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