Which term describes the owner's own money invested in the business?

Which term describes the owner's own money invested in the business?

• A. Mortgages
• B. Owner's capital
• C. Net current assets
• D. Total cash inflow

Answer: (B)

The term that describes the owner's own money invested in the business is owner's capital. Owner’s capital refers to the financial resources that the owner contributes to the business from their personal funds. This investment can be used for various purposes, such as purchasing inventory, covering operational costs, or investing in assets. It is considered a fundamental part of a business's financing structure, as it not only shows the owner's commitment but also provides a cushion for the business during its startup and operational phases. Other terms mentioned do not accurately describe this concept. Mortgages refer to loans secured by real estate, which does not reflect the owner's personal investment. Net current assets are a measure of a business's liquidity and do not indicate ownership contributions. Total cash inflow represents the cash coming into the business from various operations, which can include both owner’s capital and earnings but does not specifically refer to the owner’s investment. Thus, owner's capital is the precise term for the owner's own monetary contribution to the business.

The term that describes the owner's own money invested in the business is owner's capital. Owner’s capital refers to the financial resources that the owner contributes to the business from their personal funds. This investment can be used for various purposes, such as purchasing inventory, covering operational costs, or investing in assets. It is considered a fundamental part of a business's financing structure, as it not only shows the owner's commitment but also provides a cushion for the business during its startup and operational phases.

Other terms mentioned do not accurately describe this concept. Mortgages refer to loans secured by real estate, which does not reflect the owner's personal investment. Net current assets are a measure of a business's liquidity and do not indicate ownership contributions. Total cash inflow represents the cash coming into the business from various operations, which can include both owner’s capital and earnings but does not specifically refer to the owner’s investment. Thus, owner's capital is the precise term for the owner's own monetary contribution to the business.