Is contributed capital a liability?

Question

0

Alpaugh 0 Comments

What are the journals posted for contributed capital and where can I find it in the balance sheet? Let’s say that I want to form a company and that I will initially contribute ten thousands as capital. Is that a liability and what kind of journals should I post?

1 Answer

score 0 · Answer 1 · 2012-12-02T20:04:21+00:00

Contributed capital is the capital that the investors have injected in a company. They have a share of the company and can have an active role in the day to day operations. The contributed capital is not a liability. It is equity and the entries that are posted are:

Debit Cash
Credit Equity