Ownership Capital is also known as:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Equity
Option (1) Debt — Incorrect. Debt is borrowed money. It is a borrowed fund, not the owners’ money.
Option (2) Equity — Correct. Sources of funds are of two kinds: owners’ funds and borrowed funds. Owners’ funds are referred to as equity, and borrowed funds as debt.
Option (3) Loan — Incorrect. A loan is money borrowed from banks or other institutions. It is a borrowed fund.
Option (4) Mortgage — Incorrect. A mortgage is a loan given against security of an asset. It is a borrowed fund.
NCERT (2026-27 Edition): “Capital Structure … On the basis of ownership, the sources of business finance can be broadly classified into two categories viz., ‘owners’ funds’ and ‘borrowed funds’. Owners’ funds consist of equity share capital, preference share capital and reserves and surpluses or retained earnings. Borrowed funds can be in the form of loans, debentures, public deposits etc. These may be borrowed from banks, other financial institutions, debentureholders and public. Capital structure refers to the mix between owners and borrowed funds. These shall be referred as equity and debt in the subsequent text. …” |