Why capital shown liability sides in Balance sheet?

Question

Accepted Answer

Capital is shown on the liability side of the balance sheet because it represents the amount owed to the owners or shareholders of the company.

Capital is considered a liability because it represents the company's obligation to repay the owners or shareholders their investment in the business.
It is shown on the liability side to indicate that it is a claim against the company's assets by the owners.
Capital can be in the form of contributed capital (such as common stock) or retained earnings.
For example, if a company has $100,000 in capital, it means that the owners have invested $100,000 in the business and the company owes them that amount.
Capital is distinct from liabilities such as loans or accounts payable, which represent obligations to external parties.

Accepted Answer

Capital is shown on the liability side of the balance sheet because it represents the amount owed to the owners or shareholders of the company.

Capital is considered a liability because it represents the company's obligation to repay the owners or shareholders their investment in the business.

It is shown on the liability side to indicate that it is a claim against the company's assets by the owners.

Capital can be in the form of contributed capital (such as common stock) or retained earnings.

For example, if a company has $100,000 in capital, it means that the owners have invested $100,000 in the business and the company owes them that amount.

Capital is distinct from liabilities such as loans or accounts payable, which represent obligations to external parties.

Why capital shown liability sides in Balance sheet?

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