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Can retained earnings be used towards the capital needs of a business?
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What is the ending balance in retained earnings?
Ending balance in retained earning is that amount which is not distributed and not used as well for investing purpose by management and still available to be used and it is part of capital of buisness and liability for business towards it's owners.
Is retained earnings asset equity liability income or expense?
Retained earnings is that part of profit which is not distributed to the share holders so it is the liability of the business towards its owners and that's why like all liabilities it is also the liability of business and shown in balance sheet.
Is contributed capital a debit or credit?
As capital is a contibution by company owner towards business and capital is a liability of a business and due to which it has credit balance, that's why any contribution towards capital will be treated as liability of business and it will be credited to capital to increase capital
Are dividends part of comprehensive income?
Dividends act as a debit to Retained Earnings. Net Income is closed out by Crediting a gain to Retained Earnings which is a permenant equity account. Therefore Dividends are not a reduction to Net Income but instead a reduction of Retained Earnings and further of Owners Equity. As you may note, this also means that since Dividends are not included in Net Income they are not Tax Deductable which for many years resulted in double taxation of dividend income. Once at the corporate level and again at the personal level. Ex: In the financial statements it is going to be looking like this: Income Statement: Revenue-Expenses=Net Income Statement of Retained Earnings: Begging Retained Earning+Net Income-Dividends= Ending Retained Earnings
How share capital shown in balance sheet?
Capital is the owner contribution towards business at the start of business as well as during the business as well.
What type of an account is capital?
Capital account is liability nature of account because any capital introduce by owner towards business is the liability of business to return to it's owner.
What happens when the owner invests cash in a business?
When owner invests more cash in business it increases the owners capital in business and business becomes more liable towards it's owners.
Is additional paid in capital an asset or liability?
1. Capital introduced in business is liability of business towards it's owner to payback, so if owner's introduce more capital it increases the liability of business that's why it is also liability.
Is owners capital a liability?
Yes owners capital is liability for businss towards its owners to be return back at the even of liquidation of business.
Why drawing is directly credited to capital account in closing accounts?
Capital is item which is contributed by owner towards business and drawing is item which is received by owner from business or take out money from business so as when owner provide money to business increase capital the same way taking out money simply reduce that capital amount that';s why drawing directly credited to capital to show the net capital asset of owner in business.
Why cash is debited and capital is credited in journal of accounting?
1. Cash is debited because business cash is increased and capital is credited because it is the liability of the business towards its owner to return back at the time of dissolution of business.
Is paid up capital a debit or a credit account?
aid up capital is the amount invested by owners towards business and it is the liability of business to pay back so it is liability of business and as all liability accounts it has also credit balance.
