Repayment of Capital Accounts

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:28AM in AAT student discussion
Hello,<BR><BR>Can someone help me, if a sole trader invests equipment into his business, lets say, to the value of £1000.00, how do you go about repaying this? Can you just give them a grand at the end of the year? If so how would this be recorded? If you can't, can someone tell me how it should be repaid? <BR><BR>This is probably a really silly question, but I'm confused!?!?!?!?<BR><BR>Pop. x

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Repayment of Capital Accounts

    If a sole trader invests in his/her business (money or equipment) record this by a debit to the bank or the equipment account and a credit to the capital accouint. Why then should you repay them at the end of the year? Capital is normally regarded as permanent. However, if the owner wanted some/all of their capital back this would normally be shown as drawings (debit drawings and credit bank) and ultimately this will reduce the capital. Clear<BR><BR>Graham Blott
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Repayment of Capital Accounts

    Groovy, cheers.

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