Practicing Success
Considering the facts related to capital structure, which among them forms the part of owner's fund s? (A) Equity Share Capital (B) Preferences Share Capital (C) Debentures (D) Reserves and Surplus (E) Public deposits Choose the correct answer from the options given below : |
(A), (B) and (C) only (A), (B) and (D) only (C) and (E) only (A) and (E) only |
(A), (B) and (D) only |
The correct answer is option (2) : (A), (B) and (D) only (A) Equity Share Capital: Equity share capital represents the ownership stake of the shareholders in a company. When individuals or entities invest in a company by purchasing its equity shares, they become the owners of the company and contribute to its capital. The funds raised through equity share capital belong to the owners and form part of the owner's funds. (B) Preferences Share Capital: Preference share capital is another form of ownership capital. Preference shareholders have a preferential right to receive dividends and repayment of capital in case of liquidation. Like equity share capital, preference share capital represents the ownership stake of the shareholders and forms part of the owner's funds On the other hand, where the company issues debt instruments to raise capital from investors. Public deposits are also a form of borrowed funds, where the company ac(C) Debentures and (E) Public deposits are not part of owner's funds. Debentures are a form of borrowed funds, cepts deposits from the public for a specified period. Therefore, the correct answer is option (2) (A), (B) and (D) only, as these options represent sources of funds that form part of the owner's funds. |