Business Studies, asked by apoorva002, 3 months ago

after completing the studies, priyanka decided to start her own business of handmade chocolates. After analysing all the pros and cons., she came to a conclusion that the total funds required are rs. 12,00,000. she had rs 2,00,000 in her saving bank account. as these finds were sufficient to approved within a month. on the basis of given case , answer the following:

i) categorise the two types of funds on the basis of ownership?

ii) out of the two sources of funds, which one is the permanent source of finance?

iii) Which source of funds require legal obligation to pay interest at a fixed rate at a regular interval?


Answers

Answered by steffiaspinno
4

(i) Owner's fund and Borrowed fund

The two types of funds classified based on ownership are Owner's fund and borrowed fund. Owner's funds are the funds that are the owner's capital and are procured by the owner. The Borrowed fund is the fund that is raised by borrowing finance in form of loans or other borrowings.

(ii) Owner's fund.

Out of the two sources of finance, the Owner's fund is the permanent source of finance because there is no liability of paying interest and there is no risk of repayment as long as the company exists.

(iii) Borrowed fund.

The Borrowed fund includes loans and borrowings that are given on decided interest rates so there is a legal obligation to pay interest at a fixed rate at a regular interval.

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