Q:

What is owner's capital?

A:

Quick Answer

In business, owner's capital, or owner's equity, refers to money that owners have invested into the business. In some instances, individuals prefer to finance activities through capital, rather than loans, to avoid facing any financial interest charges.When activities are financed through capital in a business, the profits must be paid to the owners.

Know More
What is owner's capital?
Credit: Hero Images Hero Images Getty Images

Full Answer

The capital portion of the balance sheet is representative of money towards which business owners have a claim. However, this money is not distinctly owed to the owners as would be liabilities owed to banks or creditors. The equity represents the business owner's business investment without the amount of liabilities. The owner's equity may be seen as a source of business assets.

Learn more in Accounting

Related Questions

  • Q:

    Who are the internal users of accounting data?

    A:

    Accounting information is helpful to any internal users, such as owners, managers and other employees, who want to understand a company's performance, according to Accounting-Simplified.com. Financial statements prepared for external users contain historical data that can be helpful in forecasting and evaluating products, departments and the company as a whole.

    Full Answer >
    Filed Under:
  • Q:

    What is capital in accounting terms?

    A:

    Capital in accounting, according to Accountingverse, is the worth of the business after the total liabilities owed by a company is subtracted from that company's total assets. Capital may also be labeled as the equity in a company or as its net assets.

    Full Answer >
    Filed Under:
  • Q:

    What is the definition of "costing"?

    A:

    In accounting terms, costing refers to a system of calculating the amount of money it takes to produce goods or operate a business. Generally, costs include variables like cost of labor, cost of materials, cost of distribution and selling, taxes and administrative costs.

    Full Answer >
    Filed Under:
  • Q:

    What does "accretion" mean in accounting?

    A:

    In accounting, the word "accretion" refers to growth in value over time. Accretion typically refers to the increase of value of a bond over time.

    Full Answer >
    Filed Under:

Explore