Which term describes money invested by shareholders on the balance sheet?

• A. Capital (balance sheets)
• B. Net Assets
• C. Current Liabilities
• D. Net Current Assets/Working Capital

Answer: (A)

On a balance sheet, the money put in by the owners is recorded as capital. This represents the funds shareholders have invested in the business and sits in the equity section of the balance sheet. It changes when owners inject more money or when profits are retained or distributed. It’s not current liabilities (short-term debts) or net current assets/working capital (the difference between current assets and current liabilities); it also isn’t the general net assets concept, which is assets minus liabilities. So the term for shareholder-provided funds is capital.