Which account is normally debited when the owner introduces additional cash as capital?
Correct answer: A. Cash Account
- A. Cash Account
- B. Capital Account
- C. Drawings Account
- D. Sales Account
Explanation
Cash increases when the owner introduces money into the business, so Cash Account is debited. Capital Account is credited because the owner’s claim on the business increases.
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About Ledger Accounts and the Trial Balance
Ledger accounts collect transactions under individual headings and use debit and credit sides to determine balances. The trial balance lists those balances to check arithmetical agreement before financial statements are prepared, but it does not reveal every error, such as complete omission, compensating errors or entries made in the wrong account.
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