Question

Which of the following is shown under the heading “Shareholders’ Funds” in the Balance Sheet of a company?

• A. Trade Payables
• B. Short-term Borrowings
• C. Reserves and Surplus
• D. Outstanding Expenses

Hint:

Remember: \[ \text{Shareholders’ Funds} = \text{Share Capital} + \text{Reserves and Surplus} \]

Answer 1

The Correct Option is C

Concept: According to Schedule III of the Companies Act, Shareholders’ Funds represent the amount invested by owners and accumulated profits retained in the business. Main components of Shareholders’ Funds are:
• Share Capital
• Reserves and Surplus
• Money received against share warrants

Step 1: Understanding Shareholders’ Funds.
Shareholders’ Funds appear on the liabilities side of the Balance Sheet because they represent owners’ claim on business assets.

Step 2: Analyzing the options.

• Trade Payables are Current Liabilities.
• Short-term Borrowings are Current Liabilities.
• Reserves and Surplus are part of Shareholders’ Funds.
• Outstanding Expenses are Current Liabilities.

Step 3: Selecting the correct answer.
Only: \[ \text{Reserves and Surplus} \] belongs to Shareholders’ Funds. Hence correct option is: \[ \boxed{(C)} \]