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Forms of Capital

5 August, 2015 - 14:41

As the above example indicated, "capital" in the world of Accounting, can take many forms. We can state the following all-encompassing definition: Any debt of a company, with or without interest, that is not paid in cash or otherwise settled, at the moment it is recorded in the Accounting Books, becomes capital given to the company.

Essentially then, "capital given to a company" is the amount that the company must return to its creditors. And we record as "capital" even temporarily unpaid debt. For example, suppose that from the payroll of a certain month, you have deducted from the employees' salary a payroll tax that you should pay to the State. If this payment, according to the relevant laws, must be executed three months after the month to which it originates, then for these three months, the state has given to you an amount of capital equal to the Payroll tax amount.