Which term describes equity provided by family members, reinvestment of retained earnings, lease agreements and loans?

Which term describes equity provided by family members, reinvestment of retained earnings, lease agreements and loans?

• A. Capital
• B. Input Cost
• C. Income
• D. None of the Above

Answer: (A)

Capital describes the funds that keep a business running and growing. It includes money put into the business by owners or family members (equity), funds kept in the business by reinvesting profits (retained earnings), and external financing like loans and lease agreements that provide cash or equipment. Together, these sources create the capital base for purchasing assets, paying operating costs, and expanding production. In contrast, input cost refers to what you spend on necessities to operate, income is money earned from sales, and none of the above wouldn’t fit because capital best encompasses these financing sources.

Capital describes the funds that keep a business running and growing. It includes money put into the business by owners or family members (equity), funds kept in the business by reinvesting profits (retained earnings), and external financing like loans and lease agreements that provide cash or equipment. Together, these sources create the capital base for purchasing assets, paying operating costs, and expanding production. In contrast, input cost refers to what you spend on necessities to operate, income is money earned from sales, and none of the above wouldn’t fit because capital best encompasses these financing sources.