Capital Income Flashcards
What is a loan?
a thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
What is a mortgage?
a mortgage is a type of loan you can use to buy or refinance a home. Mortgages are also referred to as “mortgage loans.” Mortgages are a way to buy a home without having all the cash upfront.
It is a form of a long term investment or loan, for something of high value, that could not be possibly paid in a short amount of time, but could be payed over a long period of time
They have fixed or variable interest rates
What are shares/shareholders?
Shares represent ownership of a company. When an individual buys shares in your company, they become one of its owners. Shareholders choose who runs a company and are involved in making key decisions, such as whether a business should be sold.
What is Owners Capital?
Owners Capital is also referred to as Shareholders Equity. It is the money business owners (if it is a sole proprietorship or partnership) or shareholders (if it is a corporation) have invested in their businesses.
Owner’s equity is calculated by adding up all of the business assets and deducting all of its liabilities.
Owners equity and capital are the same thing
Debentures
In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest.
What is Capital Income?
Capital income is the money invested by the owners or other investors that is used to set up a business or buy additional equipment. It tends to be used to buy things that will stay in the business for a medium-to-long period of time – for example, premises, vehicles or equipment. These are called fixed assets . When setting up a business, capital income might also be used to buy opening stock, but, as the business develops, stock should be paid for by sales income. The sources of capital income available to business owners are influenced by the type of business.
