Basic accounting equation is Assets = Liabilities + Owner's Equity

When a business owner deposits their own money into the business, the effect on the basic accounting equation would be an increase in both the total Assets and Owner's equity. The journal entry for this transaction is as follows:

Cash account is a component of the total assets, and a debit to this account represents an increase. Capital account is a component of the Owner's Equity, and a credit to this account represents an increase.