Asked by sylva brown on May 01, 2024
Verified
The journal entry to record an investment by the owner would most commonly include:
A) a debit to Cash and a credit to Fees Earned.
B) a debit to Capital and a credit to Cash.
C) a debit to Fees Earned and a credit to Capital.
D) a debit to Cash and a credit to Capital.
Capital
Refers to financial assets or the financial value of assets, such as cash and goods, used by a business to fund its operations and growth.
Fees Earned
Income received from providing services, typically recognized in the accounting period when the services are rendered.
- Identify proper journal entries for different types of transactions, including investments, withdrawals, and purchases.
- Understand the recording and impact of owner's investments and withdrawals on capital.
Verified Answer
GS
Gursher SekhonMay 02, 2024
Final Answer :
D
Explanation :
When an owner invests in their business, the company receives cash (or other assets), which increases the Cash account (an asset account) through a debit. Simultaneously, the owner's equity in the company increases, which is recorded by crediting the Capital account. This reflects the owner's increased investment in the business.
Learning Objectives
- Identify proper journal entries for different types of transactions, including investments, withdrawals, and purchases.
- Understand the recording and impact of owner's investments and withdrawals on capital.