Investor Capital Accounts

A subscriber's commitment says what they agreed to fund. Their capital account records the accounting balance associated with the subscription. A USD100,000 commitment therefore does not mean the investor already has USD100,000 of capital in the books.

Start with the participation and its ledger

The subscription identifies the subscriber, share class and commitment. Subscription Activities record operational events such as calls, contributions and distributions. A Capital Account identifies the corresponding entity, class and subscription in the investor accounting ledger.

Capital-Account Transactions record its accounting movements. Follow their source references and related journals instead of assuming that every operational activity has reached the capital ledger.

Use Subscriptions & Capital Activity for the operational side and Capital Accounts to inspect capital accounts and transactions.

Explain the closing balance

Closing capital = Opening capital + Contributions − Distributions + Net allocated results + Other capital movements

Opening capital carries the prior accounting balance. Contributions and distributions record capital paid in and returned; net allocated results assign the period's profit or loss; other supported capital movements explain changes such as transfers or direct charges. The closing balance is the result of these movements, not the subscription's original commitment.

In this hypothetical example, opening capital is USD100,000. A USD20,000 contribution increases it to USD120,000; a USD5,000 distribution reduces it to USD115,000; USD3,000 of net allocated results produces USD118,000 closing capital.

Net allocated results can include income, expense, realized gains or losses and unrealized gains or losses. Inspect the saved allocation components and their signs. If USD3,000 already includes a fee cost, subtracting that same fee again would understate capital.

Other capital movements include recorded transfers, redemptions and direct capital fees where applicable. A transfer may move capital between participations without new bank cash. A direct fee reduces capital through its own charge rather than through allocated profit and loss. Read the transaction type, source and period treatment; do not place an unexplained difference in an “other” amount to make the balance agree.

Trace the amounts before accepting the statement

For contributions and distributions requiring cash, compare the capital transaction with subscription activity and supported cash settlement. For allocations and fees, inspect the saved result and the related accounting treatment. A finalized run and a Posted journal are different statuses.

Then compare investor capital with the corresponding class and fund books using the same date, currency and gross/net basis. Check both class-level totals and the fund-level total. Finally, confirm the intended capital statement uses those ledger balances; an operational subscription value may use a different basis.

Use Fees & Capital Allocations for roll-forward, recipient, class and equity tie-outs, and Accounting Review & Close for the period review. A missing capital transaction needs investigation of its owning process; a commitment or cash link alone does not create the accounting balance.