Work Smarter – Not Harder

Capital

The most important terms in time management

Back to Home page

What is capital?

Capital is normally referred to as the assets owned or needed by a company to provide their goods or services. When trying to define capital we refer to money, debts or the financial value of physical assets.

What is capital in accounting?

Your business needs a flow of money to operate but your capital is more durable and generates wealth through appreciation or dividends.

The meaning of capital can also be less tangible and include patents, software and brand names. These all have real value when doing your capital accounting.

What does capital mean in running a business?

For something to qualify for capital accounting it must provide an ongoing service to your business. If you invest in capital rather than taking money out for immediate consumption you help secure the future prosperity of your business.

What is a capital investment?

It might be your factory or office or a building with the potential to generate money to reinvest in production. When considering what is capital in accounting you need to be aware of depreciation on your tangible assets. Normal wear and tear is taken into account in financial statements and is usually offset against tax liabilities.

You can also buy or take over the debts of another business or individual. Repayments on this debt then become part of your capital accounting.

A capital account definition also needs to include equity based on investments with any dividend income being reinvested in your business.

C


Related words

E-Invoicing

What is e-invoicing? Everything’s going digital: so why shouldn’t your bills? E-invoicing is a form of electronic billing. In any situation that requires an invoice be issued, an e invoice will suffice.

Commercial Invoice E e-invoicing

Double Entry Bookkeeping

What is double entry bookkeeping? Double entry bookkeeping is a system of accounting where every transaction is reflected in two accounts: credit and debit. There are always two columns for transactions - one for debit entries and one for credit entries.

Billing software Bookkeeping D Double Entry Bookkeeping

Accounting Year

What is an Accounting Year? An accounting year is annual financial reporting period in which company organizes its financial data. It is useful when you are running a business. Potential shareholders analyze the company’s performance through its financial statements.

A Accounting system Accounting year

Accounting System

What is an Accounting System? An accounting system is a system that is employed in a company to organize financial information. It can be either manual or computerized. The main reason why you should be using an accounting system is to keep track of expenses, income, and other activities.

A Accounting system Accounting year Balance sheet

zistemo: the productivity booster for your business

No credit card required. Cancel anytime.