BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Credited
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Debited
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Neither credited nor debited
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None of the above
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Detailed explanation-1: -When cash is brought into the business as capital, cash which is an asset increase. Hence, the cash account is debited.
Detailed explanation-2: -As cash has been brought into business, cash which is an asset increases. Hence cash account will be debited.
Detailed explanation-3: -The balance in a capital account is usually a credit balance, though the amount of losses and draws can sometimes shift the balance into debit territory. It is usually only possible for the account to have a debit balance if an entity has received debt funding to offset the loss of capital.
Detailed explanation-4: -The cash account is debited because cash is deposited in the company’s bank account. Cash is an asset account on the balance sheet. The credit side of the entry is to the owners’ equity account. It is an account within the owners’ equity section of the balance sheet.