Capital Account

[Deepak82]

Hello students,

Thank you for participating in the questions posted by us.Hope this helps you in your preparations for the exams.

Here's another question for you

Jack has just started-up a business. He introduced $10,000 of her own savings, equipment worth $2,500 and obtained a bank loan of $1,000.

What is the balance in Jack's capital account balance after the above transactions?
A $10,000
B $13,500
C $12,500
D $11,000

Answer would be posted shortly.

Thanks
Andrew.

[Jeremy007]

My answer would be C.

[Poonam]

Hello students,

Keep it up Jeremy.

The correct answer is C

According to Business entity concept – owner and business are separate entities.
Loan of 1,000 taken is in the name of business and not Jack.
Hence the amount of 1,000 cannot be included in the capital account balance.

Thanks & regards
Poonam.