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    hwolfe307's Avatar
    hwolfe307 Posts: 1, Reputation: 1
    New Member

    Aug 21, 2008, 10:09 PM
    Invest idle cash
    I need to know what it is, and how it works thanks
    Superfly999's Avatar
    Superfly999 Posts: 235, Reputation: 14
    Full Member

    Aug 26, 2008, 11:47 AM
    You mean like cash out of a persons pocket and putting it into the business? If that's what you mean how you record it would just be like when you started the business. You would Debit the cash account and credit the Capital account. Being that it is not money from a sale or service but money coming out of a persons own pocket to invest in the business. The reason why you debit cash is because it is now free cash to use for the company.

    For instance, if you start a business and put say... $80,000 in it to get everything started you would have $80000 free cash to work with. This is the net value of the business at this point so you would credit the capital account for $80000 as well as debiting the cash account. It works the same way whenever you add extra money to the business because its just that, you are investing extra outside money into the business.


    Dr Cash $80000
    Cr Capital $80000

    If this isn't what you meant please go more in detail on your question so someone can further help you.

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