Capital is a liability (something you owe to investors). Cash is an asset. When you receive capital in the form of cash, you debit your assets (cash) and credi

Capital is a liability (something you owe to investors). Cash is an asset. When you receive capital in the form of cash, you debit your assets (cash) and credit your liabilities for the same amount (capital). It's "double-entry" accounting, total debits should equal total credits for every entry so that it balances out.