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June 25, 2008

Is contributed capital a non-current asset or a current asset, and is it a debit or credit?

The account Contributed Capital is part of stockholders’ equity and it will have a credit balance. Contributed capital is also referred to as paid-in capital.

When a corporation issues shares of its stock for cash, the corporation’s current asset Cash will increase with the debit part of the entry, and the account Contributed Capital will increase with the credit part of the entry. If the corporation then uses some of its cash to purchase equipment, its current asset Cash will decrease and its non-current asset Equipment will increase.

If a corporation receives equipment in exchange for newly issued shares of stock, the non-current asset Equipment will increase and Contributed Capital will increase.

The effects of double entry accounting are illustrated under the topic Accounting Equation.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.



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Comments

13 Responses to “Is contributed capital a non-current asset or a current asset, and is it a debit or credit?”

  1. ho on June 27th, 2008 11:27 pm

    Is the bad debt recovered a incme or expenses for a company?

  2. ho on June 27th, 2008 11:28 pm

    Is the bad debt recovered a income or expenses for a company?

  3. munish gupta on July 3rd, 2008 1:44 pm

    i want to do course in quick books presently we r using profile in our office could u please assist me in this

  4. sridhar on July 3rd, 2008 2:28 pm

    it was good refereshing ……………….

  5. Muhammad Saeed Khan on July 8th, 2008 1:21 am

    i need more clerification in this question & answer please anwer me as soon as possible my cell # 092-91-300-5872570

  6. SWEATA on July 8th, 2008 11:04 pm

    A company receives a subletting part of its opening stock.

    Rent, receivable quarterly in advance, is received as follows ;

    DATE OF RECEPIT PERIOD COVERED $

    1 OCTOBER 2001 3 months to 31 December 2001 7500
    30 December 2001 31 march 2002 7500
    4 April 2002 30 June 2002 9000
    1 July 2002 30 September 2002 9000
    1 October 2002 31 December 2002 9000

    What figure, based on these receipts, should be appear in the company’s financial statements for the end of the year ended 30 November 2002 ?

  7. hanif khan on July 8th, 2008 11:36 pm

    i want more explaination on non current assets. thanks

  8. Mantis on July 11th, 2008 9:24 am

    is really the opening cash of the company and they turned in to shares if the company is own by two to three people is along term investments.

  9. josh on October 23rd, 2008 9:20 pm

    It want to study this topic but i find it just so boring could u hlp me make it interesting

  10. atasha nathalie on February 12th, 2009 6:09 am

    Can I have drills with regards to the Philippine Accounting Standards?thanks.

  11. ManzXi on March 29th, 2009 8:46 pm

    Can you give a some tips to understand more about accounting..please..i want to be an accountant someday..thankz..

  12. ManzXi on March 29th, 2009 9:28 pm

    where can i find the answer to my question?!

  13. Jane on November 19th, 2009 9:18 pm

    hi hows goin
    can u hlp me with this q
    thank u

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