Question

Write any three points of difference between owner's fund and borrowed fund.

Answer 1

(i) Owner's fund is the internal sources of finance whereas borrowed fund is the external sources of finance.

(ii) Owner's fund remains invested in the business till the business exist and is to be paid back to the lenders on the maturity period.

(iii) Owner's fund does not create any change on the assets of the business whereas the borrowed funds may create change on the assets of the company.