What is the money contributed by shareholders to a company called?

What is the money contributed by shareholders to a company called?

• A. Working capital
• B. Capital reserves
• C. Venture capital
• D. Share capital

Answer: (D)

Share capital is the money shareholders invest in the company in exchange for shares. This money becomes part of the company’s equity and is used to fund operations and growth as the business raises funds from owners. Working capital, by contrast, relates to the firm’s day‑to‑day liquidity—current assets minus current liabilities—and isn’t funds contributed by shareholders. Capital reserves are funds built up from profits or other adjustments that are kept for future use, not the immediate paid‑in capital from shareholders. Venture capital refers to external funding from specialist investors, not money contributed by existing shareholders. So the amount contributed by shareholders is share capital.

Share capital is the money shareholders invest in the company in exchange for shares. This money becomes part of the company’s equity and is used to fund operations and growth as the business raises funds from owners. Working capital, by contrast, relates to the firm’s day‑to‑day liquidity—current assets minus current liabilities—and isn’t funds contributed by shareholders. Capital reserves are funds built up from profits or other adjustments that are kept for future use, not the immediate paid‑in capital from shareholders. Venture capital refers to external funding from specialist investors, not money contributed by existing shareholders. So the amount contributed by shareholders is share capital.