A. Expense
B. Liability
C. financial assets
D. All of them
What Is Capital?
Capital is a term for financial assets, such as funds held in deposit accounts and/or funds obtained from special financing sources. Capital can also be associated with capital assets of a company that requires significant amounts of capital to finance or expand.
Capital can be held through financial assets or raised from debt or equity financing. Businesses will typically focus on three types of business capital: working capital, equity capital, and debt capital. In general, business capital is a core part of running a business and financing capital intensive assets.
Capital assets are assets of a business found on either the current or long-term portion of the balance sheet. Capital assets can include cash, cash equivalents, and marketable securities as well as manufacturing equipment, production facilities, and storage facilities.
It’s is liability towards share holders not an asset.
For businesses, a capital asset is an asset with a useful life longer than a year that is not intended for sale in the regular course of the business’s operation. So it’s not liability please cofirm it.
It’s a liability towards share holders not an asset.
For business capital is is Liability as its belongs to owner and business needs to pay it back to the owner. Kindly Correct
100% agreed
According to separate entire concept owner and business are two different persons, capital invested by the owner is a liability for business.
correct Ans is asset
thanks to all u r all right..
Ohh thank you
This is wrong ans
What is correct answer?
Capital is liability of the business. You can confirm it in the Balance Sheet. Capital is always on Liabilities side. It never appeared on Asset side.
Capital belong to the equity side
Answer is Assets
i think so capital is the liability of business
This is neither asset nor liability, because a liability is a present obligation to deliver cash or cash equivalent to someone, in case of capital there is no obligation to pay cash or cash equivalent to the owners of the company.
actually students are confusing the asset side of the liability, the asset side of the capital which was paid by the owner in the form of cash or other asset to the company is totally different thing. there are two sides of a transaction and here we are talking about the credit side of the transaction which is capital or equity and it is neither asset nor liability. thanks
For business it is liability
In conformity with GAAP Principle of “Separate Entity” The Investing capital of the owner is a liability for the business. The business has to pay that amount. You can also confirm it by passing the general entry. Capital must be credited at the time of investment because capital is a liability for the business.
It’s liability
it is liability payable to owner by business. and therefore placed in opposite side of Assets in BS.
Liability is correct answer, capital is a liability because the business is obliged to repay its owner.
As the capital appears in the liability side so it is liability.
Capital is a liability towards the business. So correct answer is “liability”
Capital is a liability because the business is obliged to repay its owner.
The answer is still not clear as to which one is correct. Seniors kindly mentioned the correct answer with the source.
What I understand is that the correct answer is an asset, not a liability. Because if you read a question, it says “For a business” not for “the Shareholders”.
For businesses, Capital is an asset and vice versa for the owners, the capital is a liability for the business.
Please correct if I am wrong!
The correct ans is liability as business is liable to payback to owner so it’s liability for business
For a Business Capital is a Liability.
For a Shareholder / Owner it is an Asset as his Investment in Business.
For example Mr. A invests Rs:10M Cash in his Business,
from the Business view point financial affect of said transaction on balance sheet is:
10M Cash – Asset Side
10M Capital – Liability Side (as Owner’s Equity)
Share capital is shown on Equity & Liabilities side of balance sheet in company`s accounts.
So as per my understanding, the word Capital is a Liability term for a business.
The correct ans is liability as business is liable to payback to owner so it’s liability for business
Kindly have a look on balance sheet to see where “Capital Account ” is shown??? Of courae you will see it on liabilities side, hence Capital is a liability for a business according to double entry system of book keeping….
liabilities are divided into two categories one is internal liabilities and other is the external liabilities and capital is treated as external liabilities according to the business entity concept business has separate entity from the owner . when some one invest the money into the business its just like a person give loan to some one other .
when business start entry will be passed as
cash account
to capital account
the explanation of the entry is cash is Dr because cash come into the business and the liabilities of the business increase then capital Cr
so its its financial asset why asset will be CR please guide
liabilities classified into two type one is internal liability and other is external liability and capital is treated as internal liability .accourding to the business entity concept busuness has seprate entity from his owner .the same situation when some one get loan from some person as it is the busines get loan from owner and at the time of liqudation of the business .business refund money to owner.more ever according to the rules of accounting when asset increase its will be Dr and then liabilities increase its will b Cr .so when business start the entry pass
cash Account
To capital Accont
can any one expalin using which rule financial asset Cr. when its increase
Capital first financial asset for business after then to convert liability for business to pay this liability
i think For the business the capital is (Liability)
Because business can be run over capital.
Capital is the part of EQUITY not asset or liability
Capital is a fixed liability for the business and an asset for shareholders. According to american approach capital falls in accounts of proprietorship and according to british approach it is a personal account, instead of using the name of owners or shareholders capital account is created in the business.
The Correct answer is: Capital refers to the assets and money companies require to fund their standard operations and generate revenue