Which item is included in shareholders' funds?

• A. Share capital
• B. Bank loan
• C. Trade payables
• D. Inventory

Answer: (A)

Shareholders' funds represent the owners' claim on the company after all liabilities have been accounted for. It’s the equity portion of the balance sheet, built from what shareholders have contributed and the profits kept in the business, such as share capital and retained earnings. Share capital is the money invested by shareholders and is therefore included in shareholders' funds. The other options are not part of shareholders' funds: a bank loan is a liability to repay; trade payables are amounts owed to suppliers (liabilities); inventory is an asset the company owns. So the item included in shareholders' funds is share capital.