What is Capital? Definition, and Types

What is Capital?

In accounting, capital refers to the financial resources a business uses to operate, grow, and generate profits.

It typically represents the owner’s investment in the business, including money they put in, assets they contribute, and any profits that are retained rather than paid out.

On a balance sheet, capital forms part of equity, showing the portion of the business that belongs to the owner after all liabilities are deducted.

Essentially, capital is the foundation that supports a company’s activities and reflects its long-term financial strength.

Types of Capital