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?

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  • Rick B
    Lv 7
    3 years ago
    Favourite answer

    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

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  • ?
    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.

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