Owner’s Capital: debit or credit?
Owner’s Capital increases on the credit side and decreases on the debit side: its normal balance is a credit.
Equity is the owners’ claim on the business: capital, reserves and retained profit. It increases with a credit.
Name in each convention
Account names and codes follow each convention; an account that does not exist in a convention is not offered there.
| Convention | Account |
|---|---|
| United States (US textbooks) | Owner’s Capital |
| Spain (PGC 2007) | 102 Capital |
| France (PCG 2025) | 101 Capital |
| Germany (generic accounts) | Eigenkapital |
Practice entries that use this account
- Owner invests cash to start the business
- Owner contributes a machine to start the business
- Owner invests cash and a delivery van
- Owner pays a business expense personally
- Owner contributes a private machine to the business during the year
- Closing net income to Owner’s Capital
- Closing a net loss to Owner’s Capital
- Closing Owner’s Drawings to Owner’s Capital