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Why are rules of debit and credit same for liability and capital? |
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Answer» Business entity concept treats business and business owner separately. Capital of the owner is treated as liability to the business because the business has to repay the amount of capital to the owner in Case of closure of the business ......... Thus the rules of debit and credit are same for both liability and capital Because according to business entity concept business is distinct and separate from its owner.Therefore capital invested by owner is liability for business. |
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