Is capital always a liability?

Question

I know I should be able to find the answer in other places but I can't seem to. So could you tell me please to is are capital accounts always a liability?

Answer 1

Favourite answer

Capital is an asset

Answer 2

Capital is never a liability

Answer 3

Capital is an asset. The lack of capital is a liability.

Answer 4

The accounting equation is, "Assets = Capital + Liabilities."

It can be stated other ways. "Capital = Assets - Liabilities."

That's where the "balance" in Balance Sheets comes in.

If you understand what "equity" is in a house, you understand the most basic of how a balance sheet works. If you have a house you bought for $100,000, put down $20,000, and took out a mortgage for $80,000, your balance sheet would look like (assuming no other assets or liabilities):

Assets: $100,000

Liabilities: $80,000

Capital (sometimes referred to as "equity") $20,000

ie, Assets = Capital + Liabilities

Answer 5

Capital is not a liability account. It's an equity account.

Answer 6

Capital has a credit balance but that does not mean that it is a Liability.

Answer 7

Read your assignment. Capital, in general, is not a liability. If a company takes on liability to raise capital, then in a way the capital is a liability, but not really. You need to understand the points your instructor is making and learn in class.