Capital account doubt

I have a doubt regarding capital account in balance sheet.

Let us assume that a proprietory business does not do any activity during a particular year. Hence, I assume that  there no profit nor loss. Hence, there is no P&L account. 

Now, interest on capital will be added to the capital account in the liability side of the balance sheet. 

I would like to know what is the corresponding entry done to the asset side of the balance sheet.

Replies (6)

The entry would be .....

1.      Interest  A/c..................Dr

             To Interest on Capital  A/c

2.     P/lL   A/c..................Dr

             To Capital A/c

 

Thus the debit balance of P/l should be shown in Assets side of B/s And Interest on Capital Shouls be should be shown in the Liability side of Balance Sheet.
 

So, can't be a business which has no P&L a/c ?

There are many cases where real estate players who recognise their revenue on contract completion basis do not file a P&L account but file only a Balance sheet ...

Originally posted by : Kannan Narayanan

So, can't be a business which has no P&L a/c ?

There are many cases where real estate players who recognise their revenue on contract completion basis do not file a P&L account but file only a Balance sheet ...

 

Download the Attached file and read carefuly.........

agree with suresh

As far I think if it is a proprietorship firm you cannot charge any Interest on Capital. Interest on Capital is charged in Partnership firm not Proprietorship.

If it is a propriteroy firm then it might have interest from bank so asset side would automatically increase,isnt it possible?

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
08 October 2026
Account Executive

Elite Taxation

New Delhi

CA Foundation

View Details
Company
ARTICLESHIP 07 October 2026
Article Trainee/ CMA Trainee

RMA And Associates LLP

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 30 September 2026
CA Article Assistant

CA Suraj Garg & Associates

New Delhi

CA Final

View Details
Company
ARTICLESHIP 21 September 2026
CA Article Assistant

KK & Company Chartered Accountant

Pune

CA Inter

View Details
Company
14 October 2026
Accountant

Rize.farm

Bengaluru

B.Com

View Details
Company
15 October 2026
Senior Accountant

Continental Belting Pvt Ltd

Mumbai

B.Com

View Details
Company
Featured 21 September 2026
Consultant - Reporting

Finrep Advisors LLP

Mumbai

CA

View Details
Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details