Multiple choice

Which of the following is/are borrowed source of funds?

  1. Retained earnings

  2. Debentures

  3. Fixed deposit in bank

  4. Credit balance in Profit and Loss account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Debentures are borrowed source of funds. Debentures acknowledge that the debt is owned to the company or the loan is given to the company. The debenture holders are the creditors of the company, i.e. outside party. Debenture indicates that the money is borrowed from the debenture holders.

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