Explain the following terms: (A) Capital And (B) Drawings: - Vidyadip

Question

Explain the following terms: $(A)$ Capital And $(B)$ Drawings:

✓

Answer

$(A)$ Capital : An investment made by the owner to commence the business is known as capital. Item provided by the owner, each of them should have monetary value and can be usedfor business.Capital is one kind of liability for the business towards owner, and it has generally creditbalance. For ownership firms, owner provides capital, for partnership firms, partners providescapital and for company, shareholders provides capital.
$(B)$ Drawings: When owner of the business withdraws cash or goods (or benefit of anybusiness services) for personal purpose then it is known as drawings.

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