Answer to Question #298064 in Accounting for Fekadu Badeg

Question

1.     On January 3, 2003, Ale Hab, an ex-manager of the CBE Bole Branch, established his own consultancy business. He named his business "AH Consultancy Services". The objective of the business is to render financial consultancy services to clients on a fee basis. Below are business activities occurred during the first month of operation of the firm (3 to 31 of January, 2003).

a.      Alemu deposited $20,000 cash in a bank account in the name of his business - AH Consultancy Services (Deposit slip # 1). He has $250,000 cash in his personal bank account with Dashen Bank and $50,000 cash in a safe deposit box at home.

Answer 1

All the funds that are deposited in the accounts of AH Consultancy Services by the owner including all other available funds like the cash in hand and cash in safe are the capital of the AH Consultancy Services. This is the amount the owner has for the business.