Acca financial Accounting (FA) Study Text ac ca (FA)

Capital structure and finance costs 

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KAPLAN PUBLISHING

 

1 Overview 

 

 

 

Introduction 

 

This chapter focusses upon the capital structure of limited liability 

companies. In particular, it defines and classifies debt and equity, 

including the different equity components.  

Much of the content of this chapter is new. However, it is an important 

foundation for your future ACCA studies, in particular for both Financial 

Reporting and Strategic Business Reporting. 

2 

The capital structure of a limited liability company 

All companies have to be financed, regardless of the type of company that they 

are. Without financing of any sort the business would not be able to begin 

trading; they would not be able to purchase raw materials, recruit staff, 

advertise products, or even put fuel in their vehicles. 

Finance is provided by the capital invested in the business. 

Capital is something that on its own has little or no use but can be employed in 

the generation of wealth. 

 

 

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