Capital A/c

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:31AM in AAT student discussion
I have to find a person's starting capital ,would i include a provision for depreciation in the liabilities or not .

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital A/c

    Can you be a little clear on what you are asking? I am unsure what you need the answer to regarding the capital account.

    The "Provision for Depreciation" is charge to the P&L account (DR entry) and you then put a "Charge for Depreciation" to the group of assets you are depreciating (CR entry)

    Regards

    Dean

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital A/c

    sry should of been clearer . i have to find the starting capital
    Under assets I have
    Debtors
    Prepayments
    Motervans less depriciation
    materials
    Bank Account

    the other side is
    Creditors
    Accruals

    But my Profit & loss does not balance . It can only be the capital account or the depreciaiion sinc ei have double checked all the others and they are fine
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital A/c

    Surely it's just Capital = Assets - Liabilities

    Capital doesn't appear in the P&L so I'm not sure where that comes in anyway. Capital only appears in the 'Financed by' section of the balance sheet

    Provision for depreciation (aka accumulated depeciation) is deducted from the fixed asset values on the balance sheet. The yearly depreciation charge is an expense in the P&L.

    Chris (who's a little puzzled)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital A/c

    Hi.

    I agree with Chris.

    Total your Assets.

    Deduct your total Liabilities.

    This gives you your Capital figure.

    This figure does not appear in your P&L account.

    It is only your Depreciation expense for the year that goes in your P&L - the total reduces the value of the Fixed Asset on the Balance Sheet.

    Have you adjusted your Expenses to take into account your Accruals & Prepayments.

    Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital A/c

    Lol, I am still confused. :lol:

    Although out of the answers that have been given you should get some indication of what you were intially trying to ask.

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital A/c

    sry just relised what i put down , i was doing a trial balance . but in the end i sent it off to be assesed see what comes back

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