Common scenarios in which you may want to use an Equity account or record an Equity Adjustment include:
Owner’s draws when you take money out of your business for personal use
Owner’s contributions when you deposit money for business use
Equity investments from other partners in your business.
This article will go through how to create Equity Accounts and tag Equity Adjustments in Ambrook.
Creating Equity Accounts in Ambrook
You may want to create an Owner's Equity account to track your personal contributions and withdrawals from the business. If you have multiple business partners, you may want to have an Equity account for each partner to track contributions and withdrawals separately.
To create an Equity account:
Go to Balances and click "New Account" at the top of the screen.
Choose Equity as the account type.
Set the Opening Date to the date you're starting your books in Ambrook.
Set the Opening Balance to $0, or as the balance you had in your previous system if you're migrating from another accounting software.
Save the account - you'll now see it on your Balances page.
Tagging Equity Adjustments in Ambrook
Equity Adjustments typically have corresponding activity - either withdrawals or deposits - in your Ledger which you can tag by:
Identifying the transaction in your Ledger
Click the “Category” button, then select “Equity Adjustment” under “Record to Balance Sheet”
Search for your equity account in the “To” field of the menu. If you haven’t created an equity account yet you can do so by selecting “New Balance Sheet Account”.
Note: If this is the first time you are tagging a transaction to the equity account, you can check your historical records to see what the opening balance might be.
Enter a description for your transaction, then click “Done” in the top-right corner.
Recording Equity Transactions
You can also create transactions on an Equity account to represent transactions you made for the business from a personal bank account or credit card that is not connected to Ambrook. You can do this by:
Ensure you've first created the Equity account (see Creating Equity Account above).
Go to the Ledger and click New, then Transaction.
Set the account to "Owner's Equity" or whichever Equity account you want to record the transaction from.
Enter the transaction amount, date, and description.
Click Record. You'll then see the transaction on your Ledger and can tag it to the appropriate expense category and enterprise.
Frequently Asked Questions
Should I be using an Owner's Equity account or a Personal Expense category?
This article explains the different options for recording personal transactions to help you decide between the two.