What is "capital account"

n. 1 (context accounting English) An account in the net worth section of the balance sheet of an entity such as sole proprietorships and partnerships. In this context, the "capital account" (or, in cases of more than one owner, the "sum of all individual capital accounts") is the residual difference between total assets minus total liabilities, or the "net worth" of the entity. The term should not be confused with similar terms such as "working capital," "capital asset," "capital expenditure," and "capital lease." 2 In corporations "capital '''stock''' accounts" are roughly equivalent to capital accounts except corporations may include other capital accounts such as "retained earnings" which are not individually owned by the shareholders. 3 (context economics English) An account that records all transactions between domestic and foreign residents that involve a change of ownership of an asset. It is the net result of public and private international investment flowing in and out of a country.

1. n. (economics) that part of the balance of payments recording a nation's outflow and inflow of financial securities

2. (finance) an account of the net value of a business at a specified date

In macroeconomics and international finance, the capital account (also known as the financial account) is one of two primary components of the balance of payments, the other being the current account. Whereas the current account reflects a nation's net income, the capital account reflects net change in ownership of national assets.

A surplus in the capital account means money is flowing into the country, but unlike a surplus in the current account, the inbound flows effectively represent borrowings or sales of assets rather than payment for work. A deficit in the capital account means money is flowing out of the country, and it suggests the nation is increasing its ownership of foreign assets.

The term "capital account" is used with a narrower meaning by the International Monetary Fund (IMF) and affiliated sources. The IMF splits what the rest of the world calls the capital account into two top-level divisions: financial account and capital account, with by far the bulk of the transactions being recorded in its financial account.

In financial accounting, the capital account is one of the accounts in shareholders' equity. Sole proprietorships have a single capital account in the owner's equity. Partnerships maintain a capital account for each of the partners.