Which source of capital refers to money generated from sales?

Which source of capital refers to money generated from sales?

• A. Debt
• B. Equity
• C. Profit
• D. Investments

Answer: (C)

The source of capital that refers to money generated from sales is profit. Profit represents the earnings a company realizes after subtracting all its costs and expenses from its total revenue, which primarily comes from sales. When a business sells goods or services, the revenue earned contributes to the overall profit. This profit can then be reinvested back into the business or distributed to stakeholders. In contrast, debt refers to borrowed funds that a company must repay, equity pertains to capital raised through the sale of shares in the business, and investments generally refer to capital placed in a company by external parties in hopes of generating a return. While each of these can contribute to a company’s overall capital structure, it is the profits generated from sales that directly reflect the operational success of the business.

The source of capital that refers to money generated from sales is profit. Profit represents the earnings a company realizes after subtracting all its costs and expenses from its total revenue, which primarily comes from sales. When a business sells goods or services, the revenue earned contributes to the overall profit. This profit can then be reinvested back into the business or distributed to stakeholders.

In contrast, debt refers to borrowed funds that a company must repay, equity pertains to capital raised through the sale of shares in the business, and investments generally refer to capital placed in a company by external parties in hopes of generating a return. While each of these can contribute to a company’s overall capital structure, it is the profits generated from sales that directly reflect the operational success of the business.