Starting the books: opening entry, capital and drawings

Opening entry (new business)

If you start with ₹2,00,000 in the bank and furniture worth ₹50,000:

Bank A/c                       Dr  2,00,000
Furniture A/c                  Dr    50,000
    To Capital A/c                              2,50,000

Moving from another software mid-year

Enter each ledger's closing balance on the switch date as the opening balance in Hisab Central. Debtors and creditors should be entered bill-wise so ageing works. Check that the opening Trial Balance totals match.

Money you put in later (F6)

Bank A/c                       Dr   1,00,000
    To Capital A/c                              1,00,000

Drawings: money or goods taken for personal use (F5)

Drawings A/c                   Dr    25,000
    To Bank A/c                                   25,000

Goods taken for personal use are recorded at cost, and any GST input credit claimed on them must be reversed.

Year-end

Capital A/c                    Dr
    To Drawings A/c

Then profit is added to capital (or a loss deducted).

Key rule

Personal expenses such as home rent, family travel and personal insurance are drawings, not business expenses. Posting them as expenses reduces profit wrongly and can be disallowed in a tax audit.