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What would be the banks total liabilities and capital if owner's capital were half the size of other liabilities?
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What is difference between capital and liability?
"Capital" is the amount of resources provided by the owner, while liabilities are the amount of resources provided by the owner AND other people. Assets = Capital + Liabilities
What is the difference between capital and liability?
"Capital" is the amount of resources provided by the owner, while liabilities are the amount of resources provided by the owner AND other people. Assets = Capital + Liabilities
Method of calculating MPBF?
MPFB METHOD—Used for AboveRs. 5 crores of WC finance.—Working Capital Gap is computed=Current Assets less Other Current Liabilities.(Other Current Liabilities does not include working capital loans from other banks )Less 25% of the Current assets is the margin that borrower has to bringORActual margin in the borrower's balance sheet(Whichever is more of the two)
Is capital a debit or credit?
Capital is liability for business and like all other liabilities capital also has credit balance.
Advantages of share capital?
Share capital is cheap source of capital as it requires to be paid in last after payment of all other liabilities as well.
Which organizational form best enables the owners of the firm to monitor the actions of other owners of the same firm?
The organizational form which best enables the owners of the firm to monitor the actions of other owners of the same firm is a general partnership. All the liabilities of the partners are unlimited.
Why are the assets of a business equal to the capital plus liabilities?
Basic accounting equation = assets = liabilities + capitalit is so because capital as well as other liabilities have to be paid by the business at the dissolution time of business and at dissolution time or liquidation time business must have assets equal to liabilities plus owner's equity to pay all liabilities of business without going insolvent otherwise business will become insolvant and somebody will not get all it's liabilities completely cleared at the time of liquidation of business.
What is ordinary share capital?
Ordinary share capital is that type of share capital which receives share in profit in last or after all other third parties liabilities as well as preference share holders.
Does paid-in-capital carry a debit or credit balance?
Paid in capital is the liability for business and like all other liabilities it also has credit balance as normal balance
What is working capital gap?
In order to reduce the dependence of businesses on banks for working capital, ceiling on bank credit to individual firms has been prescribed. Accordingly, businesses have to compute the current assets requirement on the basis of stipulations as to size. So, flabby inventory, speculative inventory cannot be carried on with bank finance. Normal current liabilities, other than bank finance, are also worked out considering industry and geographical features and factors. Working capital gap is the excess of current assets as per stipulations over normal current liabilities (other than bank assistance). Bank assistance for working capital shall be based on the working capital gap, instead of the current assets need of a business. This type of financing assistance by banks was introduced on the basis of recommendations of Tandon Committee
Does Capital Stock go on Income Statement?
capital stock is liability for business and like all other liabilities it is also shown under liability section of balance sheet.
Business need capital from owners?
Yes or they could have shareholders and or other investors!!!
