Capital Amount Liabillities and Assets

Why is Capital amount put in Liabillities and not in Assets

Questions by Vimala Sridhar

Showing Answers 1 - 6 of 6 Answers

ravi.sankhyan

  • Jun 3rd, 2008
 

Because there is concept in the business i. e. business entity concept. According to that concept business and its owner,(incase of joint ventures etc) and in case of company its share holers both are seprate and can't bound to each other with their works.  When owner takes something from business that is trated as drawing and less from the capital.

Tha other reason is to maintain the account balance.

when someone invested capintal in the business then he must gave a assets to busniess and along with that assets gave a liab to business

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carajes

  • Jun 17th, 2008
 

The answer is very simple.One of the basic convention in accounting is separate legal entity.It means the business is different from those who manage it.When i contribute capital in to my business,it is liability to my business to repay it to me.

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