Own funds are the part of the assets of the company that belongs to the owners. It is the part of resources belonging to the company or the company's own financing. The higher the equity of a company, it will have a better image in front of banks and creditors.
Formerly known as a synonym for equity, but now equity is considered an item within equity in the situation balanceof the General Accounting Plan.
Own funds can be divided into different items which are the following:
- Social capital: it is formed by the contributions made by the partners of the company. They can be money, or not money.
- Retained earnings or reserves: these are the profits of the company that are not used to distribute dividends between shareholders, but are reinvested.
- Grants and donations: funds that can be received from public or private institutions.
- Adjustments for change in value: changes in the value of assets belonging to the company
General accounting plan