Recording Introduction of Capital

Capital refers to the funds introduced by promoters or owners for business operations. In accounting, this is also known as Equity. To record the introduction of capital in Envoici, follow these steps:

Step 1: Create a Capital Account #

1. Navigate to Chart of Accounts: Go to Accounting > Chart of Accounts.
2. Create Capital Account:
   • Account Name: Name the account after the person or entity introducing the capital.
   • Account Group: Select Capital Accounts from the dropdown.
   • Effective Date: Enter the date from which the capital is introduced.
   • Opening Balance: Leave this as NILL unless there is a pre-existing balance.

For businesses such as Proprietorships, Partnership Firms, LLPs, or Private Limited Companies, you may create separate capital accounts for each proprietor, partner, or shareholder.

Step 2: Record the Capital Introduction via Journal Entry #

1. Navigate to Journal Entries: Go to Accounting > Journal Entries.
2. Add New Journal Entry: Click on + Add New Record.
3. Enter Transaction Details:
   • From Account: Select the Cash/Bank Account and debit it with the amount of capital introduced.
   • To Account: Select the appropriate Capital Account and credit it with the same amount.
   • Description: Provide a description (e.g., “Capital Introduced by [Person’s Name]”).
4. Save: Click Save to complete the journal entry.

Example Accounting Entries #

Capital Introduced via Bank Transfer: #

• Debit: Bank Account
• Credit: Capital Account

Capital Introduced via Cash: #

• Debit: Cash Account
• Credit: Capital Account