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Homework answers / question archive / When starting a business, the owner (J

When starting a business, the owner (J

Accounting

When starting a business, the owner (J. Jones) invests their personal cash savings into the business. Identify which accounts are involved and whether they increase or decrease.

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The accounts involved are the Cash account and the Owner's Capital account.

In particular

  • The Cash account is an asset account. In this case, because the owner invests cash into the business, the Cash account increases.
  • The Owner's Capital account is an equity account that is reconciled with the owner's draw account to determine what equity the owner has in the business. In this case, the Owner's Capital account is credited which also increases its balance.