Sources Of Capital

Meaning

A.      THE ACCOUNTANT POINT OF VIEW

          Accountants define capital as the original fund or money with which a person used to start a business. He considers capital as synonymous with money. Capital in this wise is the owner’s equity assets over liabilities.

B.       THE ECONOMIST POINT OF VIEW

          Economists must define capital as the resources or wealth made by men that are used for producing further wealth.

C.      THE LAYMAN’S UNDERSTANDING

          To the layman, capital is the total amount of money for running a business.

SOURCES OF CAPITAL

A.      SOLE PROPRIETORSHIP

          The sole proprietor can obtain his capital from the following sources.

          i.        Personal savings

          ii.       Loan from friends

          iii.      Trade credit

          iv.      Loan and overdraft from bank

          v.       Grants/Loans from government.

B.       THE PARTNERSHIP

          i.        Loan and overdraft

          ii.       Trade credit

iii.      Personal contributions from partners.