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capital account


Querist : Anonymous (Querist) 04 May 2011

i want to ask if a person is proprietor of a firm then is it necessary that his capital account in that firm and in his individual accounts that firm's name account are shown at same balance .. if yes then what is the treatment of profit tht firm has earned..
sir please help me in this regard.

05 May 2011

Proprietorship firm capital account should have same balance which have been shown as investment in individuals personal balance sheet in that firm because individual have some other business in which he has some investment. Accordingly every investment should be reconcile with the capital invested in the business capital account including profit.

Querist : Anonymous (Querist) 05 May 2011

so sir , what will be the entry in his individual accounts for profit earned in that firm in which he invested

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