Capital
Funds invested in business; financial resources.
Formula
Capital = Owner's Equity + Borrowed Funds
Real World
When Elon Musk co-founded Tesla in 2004, initial capital came from personal investment and venture capital funding, used to purchase equipment and fund early R&D operations.
Exam Focus
Distinguish between capital as a source of finance and its use — examiners reward answers that address both sides of the capital equation.
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