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Thread: Owners Equity Account vs Share Capital

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    Question Owners Equity Account vs Share Capital

    I understand that in a Partnership's and Sole Proprietor's books, contributions from owners are accounted for in Owner's Equity. But what of a small Private Company? What is the accounting treatment for owners depositing amounts into the company's bank account for example? Does that affect the share capital account? or am I missing something? If BANK debits, what will the contra account be?

    I apologise if this is a dumb question... Still learning

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    Site Caretaker Dave A's Avatar
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    If it isn't a payment to purchase shares, it'll be credited to the shareholder's (or director's) loan account. Depending on the repayment terms, this will be a long term or current liability account.

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    So consequently, If an owner pays for a company expense (like web hosting ) the resulting treatment would be;

    Dr Web Hosting Expense
    Cr Shareholder Loan Account

    ?

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    Correct.

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    You are leadership!

    Thank you.

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