Which of the following is NOT a source of borrowed funds?

Retained earnings

The correct answer is option 3- Retained earnings.

Retained earnings is not a source of borrowed funds. It is an owner fund.

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.