CAPITAL ACCOUNT Meaning and
Definition
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A capital account refers to a component of a country's balance of payments statement that tracks changes in its international financial assets and liabilities. It provides a record of all in- and outflows of capital from a country during a specific period. The capital account measures the net financial flows of investments and lending between a country and the rest of the world.
The capital account records two main types of transactions: capital transfers and the acquisition or disposal of non-financial assets. Capital transfers involve the transfer of ownership of assets, gifts, inheritances, or payments of certain taxes. In this context, the capital account captures non-recurring capital flows that do not affect a country's net worth.
Additionally, the capital account covers the purchase or sale of non-financial assets, such as land, buildings, and equipment, between residents and non-residents. These transactions are recorded as unilateral transfers, as there is no consideration or expected repayment involved.
The capital account is closely linked with the current account, which records the trade in goods and services, as both accounts constitute the overall balance of payments. A surplus in the capital account indicates that a country is receiving more capital inflows than outflows, while a deficit implies the opposite. These capital flows have significant implications for a country's economic stability, foreign exchange reserves, and overall financial well-being.
Common Misspellings for CAPITAL ACCOUNT
- xapital account
- vapital account
- fapital account
- dapital account
- czpital account
- cspital account
- cwpital account
- cqpital account
- caoital account
- calital account
- ca-ital account
- ca0ital account
- caputal account
- capjtal account
- capktal account
- capotal account
- cap9tal account
- cap8tal account
- capiral account
Etymology of CAPITAL ACCOUNT
The word "capital" comes from the Latin word "capitālis", which translates to "of the head" or "chief". It originally referred to the head or top portion of something, and later came to signify importance, resources, or wealth. The word "account" stems from the Latin word "computare", meaning "to calculate" or "to reckon".
When combined, the term "capital account" refers to an account that records the flow of capital or wealth between countries in the field of economics. It is used to track investments, financial assets, and liabilities, representing the overall net worth of a nation, its residents, or a specific entity.
Similar spelling words for CAPITAL ACCOUNT
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