Owners investment, bought assets for business use

Ellenas_Kitchen50268Ellenas_Kitchen50268 Member Posts: 2

Hello,

When I opened my restaurant, I bought a refridgerator ( actually I bought all the Assets needed to run a restaurant ). I bought this assets from my own personal savings. I made the following record in wave:

Debits: Asset account refridgerator 1000
Credits: Owners Investment 1000

On the Banlance Sheet there is every single asset I bought, it appear in the "longe term assets" (Asset > Property, Plant, Equipment ) and all the assets, also appear as a sum in the Equity as "owners investment".

Can anyone, tell me, if I record this on the rigth way ?

Thanks for answer
rob

Comments

  • MikegMikeg Member Posts: 936 ✭✭✭

    @Ellenas_Kitchen50268,
    That would be correct, except you do not need to break out every asset on the balance sheet. They can be grouped together in similar asset class. So for example, Appliances.

  • Ellenas_Kitchen50268Ellenas_Kitchen50268 Member Posts: 2

    Hi Mikeg

    thanks for answer. I also relized, if I do record it like this, it wont appear in the Cashflow Sheet in the section "Investing Activities Property, Plant, Equipment", because there was no cash flowing into the business. Or should I add a additional Record to the Asset like, Debits: Bank 1000 / Kredits: Owners Investment 1000. And after do a record like Debits: Asset account Refridgerator ( appliance) Kredits: Bank 1000 In other words, I deposit first money of my own, into the business bank account and than pay the refridgerator.

    Would you also record a Salery for the employee, which I pay from my savings, record the same way ? like.. Debits: Salery&Wages / Kredits: Owners Investment

    Thanks for you help
    Rob

  • MikegMikeg Member Posts: 936 ✭✭✭

    Yes on the salaries. Investments in the business are presented ton the cash flow as Investing Activities. You do not want to create a fake cash account for the business to record activity that is really Investing Activity.

  • VartelVartel Member Posts: 1

    @Mikeg said:
    @Ellenas_Kitchen50268,
    That would be correct, except you do not need to break out every asset on the balance sheet. They can be grouped together in similar asset class. So for example, Appliances.

    What if an employee bought the asset, ie a laptop? The current method i'm using is to credit 'Employee Prepayments' and debit 'Assets'. The asset expenditure will show up on the balance sheet, however, there will be no investing activity on the cash flow statement on waveapps, but in actual fact the company did spend the money to invest in the Asset. How do I rectify this?

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