Capital account

What Is The Difference Between A Capital Account And A...

New postby Cheri » 21 Oct 2012, 20:05

What is the Difference between a Capital Account and a Income account?

My husband and I want to open a small buisness but We have to write up a business agreement. we dont understand these terms.

Please be discriptive and DO NOT point us to another website. If you can't give all the information here please donot try to answer. Thank you
Posts: 1429
Joined: 08 Apr 2009, 18:45

New postby Cameron » 21 Oct 2012, 20:05

The following explanation will make any accountant shudder because it is too simplistic.

A capital account has to do with your investment in the business.

An income account has to do with the profits your business earns during an accounting period.

Profits (and losses) from the Income accounts are transferred to Retained Earnings or Owner's Equity (both capital accounts) at the end of each accounting period (usually a month).

During the accounting period money and the value of any goods taken out of the business by the proprietor are credited to a Drawing Account
and at the end of the period the amount in the Drawing Account is used to reduce the Owner's Equity in the business.

Please get a basic accounting book and devote some time to it before you open your business. Understanding basic accounting will not guarantee your success, but not understanding basic accounting is almost certain to eventually lead to a lack of profits..

Hope this helps
Posts: 1365
Joined: 08 Apr 2009, 18:45

What is partners capital account analysis on schedule k-1...

New postby Gisela » 21 Oct 2012, 20:05

What is partners capital account analysis on schedule k-1 form 1065?

I want to know if the capital contributed during the year is only the cash contributed by the individual on the schedule k-1 or is the cash contributed amount on the line item from all the partners in the partnership. If so, do you take only the percentage ownership of the partner to figure out how much of the contributed cash is theirs?
Posts: 1424
Joined: 08 Apr 2009, 18:45

New postby Gricelda » 21 Oct 2012, 20:05

K-1 is your account. Includes what you put in plus your share of earnings, loss and distributions
Posts: 1335
Joined: 08 Apr 2009, 18:45

Return to Small Business

Who is online

Users browsing this forum: No registered users and 1 guest