Long-term debt can also be a shareholder loan who loaned money to the corporation or a partnership loan made by a partner who loaned money to the partnership. Total assets minus total liabilities equals capital or net worth. Capital Capital is the amount of money the owner has put into the business for working capital. Withdrawals or Drawing Withdrawals or drawing are the amounts the pays to herself or himself for personal expenses. These withdrawals are not income to the sole proprietor.
Withdrawals reduce the capital account.
Net income or loss Net income or loss is the amount the sole proprietor earned for the calendar of fiscal year. Net income increases the capital account and net loss decreases the capital account. Capital Capital is the amount of money the partners put into the partnership for working capital. Withdrawals or Drawing Withdrawals or drawing are cash distributions by the partnership to the partners for personal expenses. The cash distribution may also be a return of capital.