If a company receives 12000 from the owner to establish a pr

If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Solution

In this Case, Journal Entry to be Passed: Particulars Dr. Amt. Cr. Amt. Cash    12,000.00 Capital Account    12,000.00 This means, Assets will be increased by $12,000 and Equity will be increased by $12,000.