Owner's Capital

by David Bazile
(Manhattan )

Hi Kathy,


If your bank statement reports your beginning cash balance for a new fiscal year, let's say $200, would that be considered your balance for your capital account? I'm a little unsure because this beginning balance does not reflect any capital transactions during the new year.

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Your cash balance is not the same as your equity. Your equity balance reflects any cash or property put into the company by the owner, plus any profits less any losses for the year or years the business has been operating, less any cash taken out of the business by the owner for those years.

You hopefully have a starting Balance Sheet for the business, maybe on a tax return?


Kathy

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Oct 20, 2015
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by: Kathy

Yes, but there's another aspect to equity - company profits or losses.

Your Owners Equity account is an accumulation of owner contributions less draws, plus profits minus losses.

Kathy

Dec 27, 2013
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Owner's Capital
by: Anonymous

Good evening Kathy,
Thank you once again for your timely response. I guess I just needed some reassurance. Put simply, equity is based on the contributions from the owner.

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