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Capital is asset of the company. But why does it appear in
Liability side of the balance sheet.
- 19 Answers
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Answer / ma10kumar
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 ? | 83 Yes | 0 No |
Answer / brijesh
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 ? | 41 Yes | 1 No |
Answer / arun kumar.m
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 ? | 14 Yes | 0 No |
Answer / rakesh kadiri
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 ? | 17 Yes | 14 No |
Answer / aparna reddy
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 ? | 3 Yes | 1 No |
Answer / raunak bhadani
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 ? | 2 Yes | 0 No |
Answer / abdul gafoor
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 ? | 2 Yes | 1 No |
Answer / sandipan chakraborty
Because as per the entity concept the capital is liable to
paid back.
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / rocky
If we think with business entity concept it's true because
the capital that invested by owner for co. it will payable
for the company to their shareholders or owner of the co.
If we think co. point of view, it's true.
| Is This Answer Correct ? | 0 Yes | 0 No |
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