What Does Debit Balance In Capital Account Mean
A Debit Balance in Capital Account means that the owners of the business withdraw more than the total capital amount that is invested in the business by the owners or when there is a case of Loss suffered by the business during the accounting period, then capital account shows negative or unfavorable balance. So, now, any exceeded amount will be the Liability of the owners to pay to the business according to B usiness Entity Concept or Separate Legal Entity Concept . This withdrawal from the business by the owners for personal use is called Drawings that is a Contra Equity Account and it is deducted from the balance of capital account. There is also a case in which a business suffers a loss during the accounting period, then the resulted figure of capital account is also showed us negative or debit balance. It is to be noted that if capital account increases we credit it and decreases we debit it according to the Rules of Debit And Credit ....