Question

difference between owners fund and borrowers funds​

Answer 1

Owners fund refers the funds invested by the company owners for its development. Examples include equity and preference share capitals and retained earnings. Borrowed fund refers to funds raised through borrowing and loans. These include loans from financial institutions.

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Answer 2

Answer:

Owner capital :

1. Meaning : Consist of the amount contributed by owners and their profit reinvested in business.

2. Permanent : It remains permanent invested.

3. Risk : It carries risk of business.

4. Control :Control rests with providers of owners capital.

5. Security : It does not require any asset as security.

6. reward : Reward is dividend.

7. Priority : Reward is paid after payment of interest on borrowed funds.

8. Nature of return : The rate of dividend may fluctuate year to year.

Borrowed capital :

1. Meaning : It includes funds available in the form of loans or credit

2. Permanent : It is not permanent source of investment.

3. Risk : The debts of company are secured.

4. Control : No control rests with providers of borrowed funds.

5. Security : It is backed by security of assets.

6. reward : Reward is interest.

7. Priority : Payment of interest gets priority over payment of dividend.

8. Nature of return : The rate of interest is fixed on funds.