Grade 11 Exam > Grade 11 Questions > Money obtained by issue of shares is known as...
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Money obtained by issue of shares is known as ___________
- a)Debts
- b)Loans
- c)Reserve Funds
- d)Share Capital
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Money obtained by issue of shares is known as ___________a)Debtsb)Loan...
The correct answer is D: Share Capital.
Explanation:
Money obtained by the issue of shares is known as share capital. Share capital represents the funds raised by a company through the sale of its shares to investors. This capital serves as a permanent source of financing for the company's operations and investments.
Here is a detailed explanation of the options:
A: Debts
- Debts refer to borrowed funds that need to be repaid with interest.
- Unlike debts, share capital does not have to be repaid to shareholders.
B: Loans
- Loans are also borrowed funds that need to be repaid with interest.
- Share capital is not a loan and does not require repayment to shareholders.
C: Reserve Funds
- Reserve funds are a portion of a company's profits that are set aside for future use.
- Share capital and reserve funds are different concepts. Share capital represents the initial funds raised, while reserve funds are accumulated from profits.
D: Share Capital
- Share capital represents the funds raised by a company through the sale of its shares to investors.
- It is a permanent source of financing for the company and does not have to be repaid.
In conclusion, money obtained by the issue of shares is known as share capital, which distinguishes it from debts, loans, and reserve funds.
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Money obtained by issue of shares is known as ___________a)Debtsb)Loansc)Reserve Fundsd)Share CapitalCorrect answer is option 'D'. Can you explain this answer?
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