The capital account of a sole trader was credited with $5000. Which of these items would not give rise to such a credit?
A) The business earned a profit of $5000.
B) The owner brought in a private car valued at $5000 for business use.
C) The owner introduced $5000 new capital.
D) The owner paid an outstanding private gambling debt of $5000 from the business bank account.

Question

Quizplus · Accepted Answer

Payment of a private gambling debt from the business bank account does not give rise to a credit in the capital account. It would actually result in a debit to the cash account and a decrease in the owner's equity. Choices A, B, and C would all result in an increase in the capital account and could potentially give rise to a credit.

The Capital Account of a Sole Trader Was Credited with $5000