Capital Account

The capital account is one of the two component parts of the nation’s balance payments. The second part is the current account. Capital account demonstrates the country’s capital expenditure and income in a summary.

The overflow in the capital account I caused by the money flowing into the country. Respectively, the capital account deficit shows the money leaving the country (the increased county’s ownership of foreign assets).

In practice, the capital account consists of all transactions made the business subjects in the country with the subjects from around the world. These transactions are presented as imports and exports of goods, monetary assets and services, and rollover.

The term is also used in accounting to define as a net worth of a business at a definite moment, aka the shareholder’s equity.

In the USA there is the Bureau of Economic Analysis that measures the capital account transactions. Since these transactions are large and irregular they aren’t usually seen in the BEA’s reports. When these transactions are visible the BEA puts them in the capital account.

Capital account also includes the international transfer of property ownership. E.g. a U.S. company purchases a foreign trademark or a U.S. oil company acquires the drilling rights in a location overseas.