Your accountant or bookkeeper will use your capital account to record the money that comes into your company from an investor as well as the amount that the company earns minus the cumulative distributions to the owners. Thus this type of account keeps track of how much money the business owes its owners.
For example…
Your company’s capital account is a ledger showing the total after calculating the owner’s original investment, plus net income from the company’s operations, minus losses incurred by operations and minus any funds that have been withdrawn by the owners for personal use.
