What is the Owners Capital Account?

An owners capital account is the equity account listed in the balance sheet of a business. It represents the net ownership interests of investors in a business. This account contains the investment of the owners in the business and the net income earned by it, which is reduced by any draws paid out to the owners.

The information in the owners capital account will only be completely current through the end of the preceding fiscal year. For the current year, the following transactions will be recorded in temporary accounts, which will be flushed out to the owners capital account at the end of the fiscal year:

All revenue accounts
All expense accounts
All gain and loss accounts
The owners draw account

Thus, to obtain a completely current owners capital figure, you must aggregate all of the preceding accounts, as well as the ending balance in the owners capital account.

An example of what an owners capital account calculation might look like appears in the following exhibit.