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# How to Record Capital Entries?

Capital entries are used to record transactions related to the owner's capital — such as funds brought into the business or money withdrawn for personal use. These are manual journal entries passed directly through the Journal Voucher Book in Refrens.
> **Note:** Capital entries are manual journal entries. Make sure **Advanced Accounting** is enabled for your business before proceeding. [Learn how to enable Advanced Accounting >](https://help.refrens.com/en/article/how-to-create-manual-journal-entries-without-syncing-documents-1rdpb4l/)

## Steps to Record a Capital Entry
### Step 1 — Go to Voucher Books
Navigate to **Accounting → Voucher Books** from the left sidebar.
From the list of voucher books, click on **Journal Voucher Book**.

### Step 2 — Create a New Entry
Click on **+ New Entry** to open a blank voucher entry form.

![](https://storage.crisp.chat/users/helpdesk/website/-/a/b/8/8/ab884d8153100800/screenshot-www-refrens-com-202_1j17ssu.png =671x310)


### Step 3 — Add the Journal Entry Details
Fill in the following:
* **Date** — The date of the capital transaction
* **Voucher No.** — Auto-generated 
* **Narration** — Brief description of the entry (e.g., "Capital introduced by owner" or "Capital withdrawn by owner")
* **Remark** -- Description to be written on line item Basis.
Then add the **debit and credit ledger rows** as applicable. See the examples below for exact entries.

![](https://storage.crisp.chat/users/helpdesk/website/-/a/b/8/8/ab884d8153100800/screenshot-www-refrens-com-202_1c4qn0u.png =683x315)

### Step 4 — Save the Entry
Once all rows are filled and amounts are balanced, click:
* **Save and Preview** — to review the voucher before finalising
* **Save and Create New** — to save and immediately create another entry

## Examples:

### Example 1 — Capital Introduced by Owner
**Scenario:** The owner deposits ₹5,00,000 into the business bank account as capital.
| Ledger | Debit (₹) | Credit (₹) |
| ---- |
| Bank Account | 5,00,000 | — |
| Capital Account | — | 5,00,000 |
**Narration:** Capital introduced by owner via bank transfer
**Logic:** The business receives funds (Bank is debited), and the owner's equity increases (Capital Account is credited).

### Example 2 — Capital Withdrawal / Drawings
**Scenario:** The owner withdraws ₹50,000 from the business for personal use.
| Ledger | Debit (₹) | Credit (₹) |
| ---- |
| Drawings Account | 50,000 | — |
| Bank Account | — | 50,000 |
**Narration:** Capital withdrawn by owner for personal use
**Logic:** The owner's drawings reduce equity (Drawings Account is debited), and the business bank balance decreases (Bank Account is credited).



## __Things to Keep in Mind__

* The **Capital Account** and **Drawings Account** should exist under the **Capital** account group. If not already created, add them via **Accounting → Chart of Accounts** before passing the entry
* Always ensure the total **Debit = Credit** before saving — Refrens will not allow saving an unbalanced entry
* Drawings are typically tracked separately from the Capital Account to maintain a clean record of owner withdrawals over the financial year
* For cash transactions, use **Cash Account** instead of **Bank Account** in the ledger rows
* Anything other than Cash/Bank brought by owner should be used in the ledger rows with same effect as Cash/Bank.

If you still have questions, reach out to us at [care@refrens.com](mailto:care@refrens.com) or contact us via chat support for quicker assistance.