

You must debit certain accounts and credit others in

order to enhance the balance in your business accounts.
Depending on the type of account you're handling, what
you do will vary:

You credit an account to increase it and debit it to

decrease it. You debit an account to increase it and credit
it to decrease it. You debit an asset account to increase it
and credit a liability account. When it comes to a capital
account, you credit to increase it and debit to lower it.

A capital account example

The directors and shareholders of a limited company are
frequently the same person or group of persons who
own and run the business (s).

If the company is a limited company or LLP, the amount

of prior years' profits that have not yet been distributed
to shareholders or members is also considered a capital
account because it is money that the owners could
hypothetically withdraw.
If you are a shareholder-director, the funds you used to
purchase firm shares will be deposited into a capital
account known as "share capital." Any further funds you
are owed by the business, such as outstanding salaries or
expenses you have already paid for