prior to closing total revenues were 8,315,000 and total expenses were 6,460,000 during the year the owner made no additional investments and withdrew $408,000 after the closing entries how much did the owners capital account change?
prior to closing total revenues were 8,315,000 and total expenses were 6,460,000 during the year the owner made no additional investments and withdrew $408,000 after the closing entries how much did the owners capital account change?
Capital is the amount invested by the owner into the business to carry the business activities.
Profits at the end of the year will be added to the capita. In case of losses the same has to be adjusted to the capital.
During the year owner may Withdraw amount from business in order to meet personal expenses. Drawings reduces the Capital balance.
Closing capital = Opening Capital +/- Profit / losses - Drawings.
At any point of time capital is the difference between Assets and Liabilities
CAPITAL = ASSETS - LIABILITIES
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