What term refers to funds raised by selling ownership shares to investors?

• A. Capital
• B. Share Capital
• C. Revenue
• D. Debentures

Answer: (B)

Think about how a business raises money by selling ownership to investors. When shares are sold, the investors gain ownership in the company and the funds received are recorded as share capital. This is a form of equity financing, not a loan, and it increases the company’s owners’ equity on the balance sheet. It’s different from revenue, which is money earned from the company’s operations, and from debentures, which are a type of debt that must be repaid with interest. While capital is a broad word for money available to the business, the precise term for funds raised specifically by selling ownership shares is share capital because it directly represents owners’ stake in the company.