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