In order for the establishment to start practicing its activity, it needs financing that helps it to start practicing its activity, and this financing is either obtained from internal sources from the owners of the establishment, which is represented by capital, or obtained from external sources from others in the form of loans.
capital
It is all that the establishment needs in terms of cash and in-kind resources that help it to start practicing its activities and achieve its goals, so that the owner of the establishment or the partners provide the appropriate capital for the establishment to start practicing and practicing its business.
It is all that the establishment needs in terms of cash and in-kind resources that help it to start practicing its activities and achieve its goals, so that the owner of the establishment or the partners provide the appropriate capital for the establishment to start practicing and practicing its business.
Methods of contributing to the capital
Contribution to the capital in the form of cash
Contribution to the capital in the form of cash
Contribution to the capital in the form of in-kind assets
If the owner of the establishment contributes cash amounts in addition to in-kind assets as his share of the capital, then the following entry is written:
Contribution to the capital in the form of in-kind assets
So that the owner of the facility or one of the partners contributes by providing some in-kind assets that the facility needs in its business as a share in the capital, and the assets are either in circulation like goods
Or if the assets are fixed assets such as land and buildings, or the assets are intangible such as the goodwill of the shop and trademarks, then the following entry is written:
Contributing to the capital by submitting an existing individual project
One of the partners may have an existing sole proprietorship and wants to contribute to it as his share in the capital of the new firm, then the difference between the assets and liabilities of the old sole proprietorship
It represents the capital contributed by the partner in the new facility.
Capital reduction
The owner of the establishment or the partners may wish to reduce the capital of the establishment due to the occurrence of losses or the desire to open other companies and projects that may bring them greater profits.
The owner of the establishment or the partners may wish to reduce the capital of the establishment due to the occurrence of losses or the desire to open other companies and projects that may bring them greater profits.
Debtor creditor statement
of those mentioned
xxx
h / fund
xxx
h / lands
xxx to h/capital
Increasing the capital with cash and in-kind amounts
Capital reduction
The owner of the facility or the partners may wish to reduce the capital of the facility due to losses, or the desire to open other companies and projects that may bring them greater profit. Then, the entry of the reduction is recorded by making the capital account on the debtor side as follows:
Debtor creditor statement
From h/ capital
to mentioned
xxx h/bank
xxx h/auto
Reducing the capital by withdrawing cash and in-kind assets
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