Adding External Equity Investment
arshad935
Member Posts: 3
i want to ask that if an outsider want to invest in my company so in what account i will add the cash of that investor and how will it be balanaced.
1
Comments
@arshad935,
Going to depend on whether it is treated as debt or equity by the outside party. If debt, then set up a Loan Payable - "NAME". or if equity investment set up Equity Investment - "NAME". Either of these accounts can be set up under Accounting/Chart of Accounts. Go to liabilities if treated as debt or Equity if treated that way. Since the investor is contributing cash you would categorize the deposit to either one of those accounts depending on what you set up. If you are manually entering transactions then it would be a debit to the cash account and a credit to debt or equity.
Got it. Thank You
Thank you @Mikeg!
> @arshad935,
> Going to depend on whether it is treated as debt or equity by the outside party. If debt, then set up a Loan Payable - "NAME". or if equity investment set up Equity Investment - "NAME". Either of these accounts can be set up under Accounting/Chart of Accounts. Go to liabilities if treated as debt or Equity if treated that way. Since the investor is contributing cash you would categorize the deposit to either one of those accounts depending on what you set up. If you are manually entering transactions then it would be a debit to the cash account and a credit to debt or equity.
How would I enter this into my transactions?
Depends on whether transactions are automatically imported or whether they are manually entered. If they are automatically importing then you will need to categorize on the transaction journal. If manual then a journal entry should be created.