Owners' funds refer to the capital contributed by the owners of the company. These funds are an important source of financing for a business and can be obtained from various sources. Two important sources of owners' funds are:

1. Retained earnings: Retained earnings are the portion of a company's profits that are reinvested back into the business rather than distributed to the owners as dividends. When a company generates profits, it can choose to retain a portion of those earnings to finance its operations and growth. Retained earnings are considered an internal source of financing as they are generated from the company's own operations. This source of funds is particularly important for established companies that have a track record of profitability. By retaining earnings, companies can strengthen their financial position and fund future expansion or investment plans without relying on external sources of financing.

2. Issue of equity shares: Equity shares represent ownership in a company and are issued to investors in exchange for capital. When a company needs additional funds, it can issue new equity shares to raise capital from the owners or external investors. This is known as equity financing. By issuing equity shares, the company can increase its owners' funds and use the proceeds for various purposes such as funding expansion, paying off debts, or investing in new projects. Equity financing allows the company to share the risks and rewards with the shareholders, as they become part owners of the business.

Benefits of retained earnings and issue of equity shares as sources of owners' funds:

- Retained earnings are a cost-effective source of financing as they do not involve any interest or dividend payments.
- Retained earnings are based on the company's internal profitability, indicating the financial health and stability of the business.
- Issue of equity shares allows the company to raise capital without incurring debt obligations or interest payments.
- Equity shareholders have a residual claim on the company's assets and earnings, providing them with a potential for capital appreciation and dividends.
- By utilizing retained earnings and issuing equity shares, the company can strengthen its capital structure and improve its ability to attract external financing if needed.

In conclusion, retained earnings and the issue of equity shares are two important sources of owners' funds. Retained earnings provide internal financing generated from the company's profits, while the issue of equity shares allows the company to raise capital from owners or external investors. These sources of funds contribute to the financial stability and growth of the business.