Chart of Accts. Cash vs. Owners Equity

by Steve H
(Anchorage, Alaska)

For a sole proprietorship, do I need to set up a cash account/capitol account or is owner's equity basically the same thing? They both equity accounts correct?

IE: My quickbooks program doesn't have a cash account or capitol account listed in the chart of accounts (I can add one if needed). The chart of accounts does have owners equity listed.

Thanks, Steve

Hi Steve,

Thanks for your question. You should have a cash account set up, but it would be an Asset Account.

You should also have both Opening Balance Equity and Retained Earnings Capitol Accounts, in addition to the Owners Equity Account.

The owners equity account might also have two subcategories called Owners Draw and Owners Contributions.