Question

The source of fixed capital is not

• A. Issue of debentures
• B. Issue of shares
• C. Creditors
• D. Loan from Industrial Finance Corporation of India

Hint:

Remember: Fixed capital sources are long-term; creditors are short-term only.

Answer 1

The Correct Option is C

Step 1: Meaning of fixed capital.
Fixed capital refers to funds used for acquiring long-term assets like land, buildings, machinery, and plants.
Step 2: Sources of fixed capital.
- Issue of shares and debentures provide long-term capital.
- Loans from industrial finance corporations also supply fixed capital.
Step 3: Why creditors are not a source.
Creditors are short-term liabilities and provide current liabilities, not long-term funds.
Step 4: Option analysis.
- (A) Issue of debentures: Correct source.
- (B) Issue of shares: Correct source.
- (C) Creditors: Wrong, not a fixed capital source.
- (D) Loan from IFCI: Correct source.
Step 5: Conclusion.
Creditors are not considered a source of fixed capital.