# Is capital always a liability?

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?

Relevance
• Rick B
Lv 7
3 years ago

Capital is an asset

• ?
Lv 7
3 years ago

Capital is never a liability

• Anonymous
3 years ago

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

• Anonymous
3 years ago

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

• ?
Lv 7
3 years ago

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

• 3 years ago

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

• Greg
Lv 7
3 years ago

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.