When preparing the financial statements, always check the general ledger (GL) account numbers that the client is encoded in the check register. Every time I see a balance sheet GL account number will automatically recheck. The reason I do this is that the balance is the least understood part of the financial statements for most customers. This is especially true with respect to the equity section. In a way, this is quite strange, since the equity section of the participation of the business owner. I would keep a close eye on my investment and in doing so effectively, they would have to know the nature of the capital account and how to interpret the changes in the accounts as they occur.

 

If I am a sole proprietor, is not as crucial, since everything in the equity section is mine. That is not to diminish the importance of knowing what it means that the accounts as there are other good reasons to keep track of increases and decreases that occur within them. However, if I am a partner in a partnership or a shareholder in a corporation, it is my responsibility to protect my investment interest for any errors and / or deliberate errors. This can be a challenge and accounting knowledge necessary.

 

It is in this light that I found a review of the capital accounts of a sole proprietorship, partnership, and corporation may be helpful. To do this, you must understand how debits and credits work.

 

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