Borrowed Capital: The money which is borrowed by a company from outsiders for a specified period of time with a promise to repay the amount with interest over it is known as borrowed capital. For example, long term debts, bonds payable, debentures, etc. Owned Capital: The money from the equity stockholders and reserves of the company is termed as owned capital. Owned capital is repaid only in case winding up of the company. The president of a plastics company was quoted in a business journal as stating, .We haven’t had a dollar of interest-paying debt in over 10 years. Not many companies can say that.. As a stockholder in the company, how would you feel about its policy of not taking on debt?

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Chapter 14, Problem 7Q

To determine

Borrowed Capital:

The money which is borrowed by a company from outsiders for a specified period of time with a promise to repay the amount with interest over it is known as borrowed capital.

For example, long term debts, bonds payable, debentures, etc.

Owned Capital:

The money from the equity stockholders and reserves of the company is termed as owned capital. Owned capital is repaid only in case winding up of the company.

The president of a plastics company was quoted in a business journal as stating, .We haven’t had a dollar of interest-paying debt in over 10 years. Not many companies can say that.. As a stockholder in the company, how would you feel about its policy of not taking on debt?

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