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. These withdrawals are not income to the partners.
Withdrawals reduce the partners' capital accounts.
Capital Stock Capital Stock is the amount of stock that was issued by the corporation. Retained Earnings Retained earnings is an accumulation account. It includes the corporation's net income or loss for the calendar or fiscal year and accumulated net income or losses since the inception of the corporation. Dividends reduce retained earnings. Dividends paid are not deductible to the corporation for income tax purposes.