Capital is asset of the company. But why does it appear in Liability side

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Question

Capital is asset of the company. But why does it appear in 
Liability side of the balance sheet.

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Answer Posted By

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 1

capital is asset to the company as and when liquidity is 
required it will be available to use it but why it appears 
in the liability means at the time of the formation of the 
company initial investment has to be made by the director 
of the company so at the time of formation of the company 
at any cost it should be liability to the company so it 
would appear in the liability side of balance sheet.

Is This Answer Correct ?

12 Yes

9 No

Rakesh Kadiri

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 2

Balance Sheet is prepared from the company's stand point. 
From the company's perspective, the capital provider is a 
different person and therefore whatever money that (s)he is 
investing in business (called Capital) should be returned 
back to him/her. As it is a obligation to the company to 
repay the amount, Capital comes under the Liability side.

- Ma10kumar, Chennai.

Is This Answer Correct ?

50 Yes

0 No

Ma10kumar

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 3

according to companies law 1956 -company is a artificial 
judicial person who is saparete from its members.Capital is 
actually the assets of the members (called shareholders) so 
members captal is liability for the company because  it is 
a obligation to the company to 
repay the amount,so Capital comes under the Liability side.

Is This Answer Correct ?

23 Yes

0 No

Brijesh

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 4

IF I am a Founder of Co. & I had intially invested 1 Lac 
Rs. & then after certain years Turnover cross 1 Crores but 
then my intial investment with the co. now if co. presently 
became Ltd. co. & now any kind of share holder investment 
is an assets, but my intial cont.for co. is a liability 
which i can claim or as per co.law we can put provision for 
this capital so its shown atliability side in B/S.

Is This Answer Correct ?

2 Yes

3 No

Rahul Gandhi

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 5

According to the Business Entity Concept Owner is separated 
from the Business activities, so that capital is invested 
by the owner(Founder) in business point of view capital is 
liability for business Firm and Owner's point of view 
Capital is Asset(investsment).

Is This Answer Correct ?

6 Yes

0 No

Arun Kumar.m

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 6

CAPITAL IS THE INITIAL INVESTMENT BROUGHT FROM PUBLIC WHO
BECOME SHAREHOLDERS AFTER PURCHASING SHARES IN THE FORM OF
UNITS.THESE SHAREHOLDERS CONTRIBUTE FUNDS/MONEY TO THE
COMPANY WHICH BECOMES CAPITAL TO COMPANY.
AND THE COMPANY OWES TO ITS SHAREHOLDERS FOR THE MONEY THEY
HAVE FUNDED.
AS IT IS OWING ,THIS BECOMES AN OBLIGATION TO PAY FOR
COMPANY TO SHAREHOLDERS.ANY OBLIGATION TO PAY IS LIABILITY
HENCE WE TREAT CAPITAL AS LIABILITY

Is This Answer Correct ?

1 Yes

1 No

Aparna Reddy

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 7

capital not an asset capital is liability of the company.
beacause capital indradused owner (proparitor) .copmpany 
liayable of owner.  the main consept of accounting   
business entity consept (owner and business is sepperate)

owner main aim of profit the goal acheved he indradused 
capital company very liayable of capital

Is This Answer Correct ?

1 Yes

1 No

Abdul Gafoor

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 8

CAPITAL IS NOT AT ALL ASSTE ITS A LIABILITY, THE QUESTION 
IS WRONG.............


.......S.B.M

Is This Answer Correct ?

0 Yes

1 No

Siddu

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 9

because of business entity concept

Is This Answer Correct ?

0 Yes

0 No

Kiran

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 10

balance sheet in prepared from the company point of 
view.and the capital contributed by the share holder is not 
the company capital so the company is obliged to pay its 
share holder thats why it appear on the liability side of 
balance sheet

Is This Answer Correct ?

0 Yes

0 No

Raunak Bhadani

Re: Capital is asset of the company. But why does it appear in Liability side of the balance sheet.

Answer
# 11

CAPITAL IS NOT AT ALL ASSTE ITS A LIABILITY, THE QUESTION 
IS WRONG.............


capital is a company liability

Is This Answer Correct ?

0 Yes

0 No

Dharmendar Singh Rawat

Question	Asked @	Answers
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