Capital gains refers to profits gained from the sale of capital assets. Almost everything someone owns and uses for personal or investment purposes is a capital asset. This includes a home, personal-use items like household furnishings, vehicles, or intangibles such as stocks or bonds held as investments.
Capital investments can refer to a business’s acquisition of a capital asset or a type of loan by a financial institution in a business. In the latter, a financial institution, commonly a venture capital group, loans a business money in exchange for a promise of repayment or a share of the profits.
Capital stock, also known as authorized stock, refers to all common stock and preferred stock a corporation is legally allowed to issue.
Capitalization has different meanings, referring to the allocation of costs in tax and accounting contexts and to capital structures in the corporate context.
As opposed to an ordinary (or operating expense), which covers the day-to-day costs necessary to keep a business running, a capitalized expenditure is an expense that is made to 1) acquire an asset (whether tangible or intangible) that has a useful life longer than a year or 2) improve the useful life of an existing
Capitalized interest refers to accrued interest on an asset or loan that is not immediately reported on the company’s income statement as an expense like other interests.
Capitalized value is the current worth of an asset, usually real estate, based on a calculation of expected income from the asset over the course of its economic lifespan. Capitalized value is a useful tool for investors to decide whether an asset is a good investment.
A cash flow statement is a business' financial statement that measures how much cash is entering and leaving the entity throughout a specific accounting period.
Cash method of accounting is a method of accounting used by many individuals and some small businesses to record their liabilities and income. When using the cash method, transactions are recorded only when the payments have been made or received.
A cashier’s check is a bill of exchange, drawn by a bank upon itself (the bank is the debtor), payable to another person, showing the payee’s authorization to receive the amount represented on the check from the bank.
[Last reviewed in June of 2021 by the Wex Definitions Team]
