ABSTRACT
Capital is that portion of wealth which is set aside for the production of additional wealth. The capital of a business, therefore, is the whole or a part of the assets of the business, and, of course, appears on the active or debit side of its balance sheet. In active business capital must be employed—must be combined with skill and industry to produce more wealth. Businesses, and consequently their accounting methods, vary as to the manner in which capital is used. To bridge over the time between selling and collecting, additional capital is required, usually known as “working capital,” but which might be more appropriately styled “waiting capital.” All investment is made with a view to revenue, which is the share of the earnings given for the use of capital. This takes three forms: interest, rent and dividends — the former two corresponding to strict investment, and the latter to participation.
