Why is capital necessary in business?

Correct answer: To arrange materials and tools

Direct answer: Option C, arranging materials and tools. Capital is money or other financial resources used to start and operate a business. It can help buy raw materials, tools, machines, packaging and stock, and may also pay wages, rent or transport. The reasoning is: a business needs resources, resources often require payment, and capital provides that purchasing power. Option C is correct because materials and equipment are basic operating requirements. Option A is wrong because confusing customers damages the business. Option B is wrong because capital should support transparent work, not hide it. Option D is wrong because capital helps decisions and operations; it does not exist to stop every decision. Capital is not the only resource—skills, labour, time and planning also matter—but it is an important one. Memory cue: capital helps buy and run.