What is the difference between company and owner ? Mainly on why capital is a liabilities ?

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Hear I introduction the all of topic easys way as possible. So all of them easyly to understand .

  • What is a Company :

company is a legal entity from by a Person or a Organization. A company may be organized in various ways for tax and financial liability purposes depending on the corporate law of its jurisdiction. The line of business the company is in will generally determine which business structure it chooses. 
Example : Partnership , proprietorship , corporation etc.
  •  What is Owner of Company :

A owner of company was who created the company with his investment.
Example:
Mukesh Ambani is owner of Reliance gio.
So Mukesh Ambani is Owner and Reliance gio his company
  • What is Capital ?

Capital is starting investment of Creation a company.
Example:
Ritesh saha  started a company Batabyal co. Ltd. With investing ₹ 50,00,000
So hear ₹50,00,000 is Capital of Company.

 So come to the point 
  • Why capital is liability ?


 in our one of Accounts rule says company and owner is Two difference person. That why when owner Take some money from The company cash book. Accounts will be say that was Drawings Account.
 Here i answer this question for making Accounting ledger and Voucher entrys.

 Mr x created a company ABC co. Ltd. with investing ₹ 200000 . 

 So the entry will be made in company  Accounts book

 Cash A/c    Dr       ₹ 200000
    To Capital A/c  ₹ 200000

 In the other way I guess owner will made his own book.
So the owner Accounts book entry was

 ABC co. Ltd A/c       Dr         ₹ 200000
    To Cash A/c                       ₹ 200000

 Ledgers are on company Accounts :
 1.  Cash A/C        Balance ₹ 200000 (Dr)
 2. Capital A/C     Balance ₹ 200000 (Cr)

 Ledgers are on owner Accounts :
1. ABC co. Ltd A/C. Balance ₹ 200000 (Dr)
2. Cash A/C.             Balance ₹ 200000 (Cr)

 You can see in owner Accounts cash was credit and ABC co. Ltd was sundry Debitor beacuse ABC co. Ltd. Credited to Pay to the owner ₹200000

 And thats why capital was always show in Liability sites on Balance sheet. Because company loan this money from owner and has to pay his Amount .

 That's all Thanku for reading .

   

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