Arvind is setting up his own business. He opens a business bank account and pays in £25,000 of his own money with which to finance the early months of trading. Which one of the following is the correct double entry to record this transaction in Arvind's books of account?

Question

Quizplus · Accepted Answer

When Arvind deposits his own money into the business bank account, it increases the business's assets (bank balance) and also increases the owner's equity (capital). Therefore, the bank account is debited to reflect the increase in assets, and the capital account is credited to reflect the increase in owner's equity.

Arvind Is Setting Up His Own Business