3 things that affect a capital T account?

3 THINGS THAT AFFECT A CAPITAL T ACCOUNT?
Let's have a look at three things that may affect a capital T account. Jane, a sole trader, started a business investing £6,000 in the business bank account. This transaction would have an effect on the capital account and because Jane has invested money in the business bank this means capital has increased. To record this we would enter the details on the credit side of the capital T account. We will presume the transaction took place on the 6th February 2016 which can be shown as 6/2/16. Then we will note it as bank in the details column because that is the name of the other account that has been affected during the transaction. And finally 6,000 is entered in the £ column. During the next month of trading, Jane withdrew £500 from the business bank account for personal use. The business entity concept states that the transactions related to a business should be treated separately to that of its owners and vice versa. Therefore this transaction would have an effect on the capital account because Jane, the owner, has withdrawn money from the business bank for her own use and this causes capital to decrease. To record this we would enter the details on the debit side of the capital T account. We will presume the transaction took place on the 15th March 2016 which can be shown as 15/3/16. Then we will note it as Jane bank in the details column but normally it is the initial of the persons first name and then their full surname. And finally 500 is entered in the £ column. Then at the end of the month, Jane’s business had made £200 in profit. This would have an effect on the capital account because the profits made during the trading period belong to the owners of the business, i.e. Jane, and therefore will cause capital to increase. To record this we would enter the details on the credit side of the capital T account. We will presume the transaction took place on the 31st March 2016, which can be shown as 31/3/16. Then we will note it as profit in the details column because that is the name of the other account that has been affected during the transaction. And finally 200 is entered in the £ column.

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