What is capital in accounting?
Capital refers to the financial resources a business uses to operate and grow. It includes funds invested by owners as well as retained earnings within the business.
Why is capital important?
Capital supports daily operations, investment in assets, and business expansion. Without sufficient capital, a business struggles to meet obligations or scale.
What are types of capital?
Common types include:
• Working capital for day to day operations
• Equity capital from owners or investors
• Debt capital from loans
How is capital different from revenue?
Capital represents funds available to run the business. Revenue represents income generated from selling goods or services.
How do businesses increase capital?
Businesses increase capital through profits, investment, or borrowing.