Capital Account Definition

Capital Account Definition - The Capital Account is one of three primary components of a country's Balance of Payments, the others being the Current Account and the Financial Account. Within these three categories are sub-divisions, each of which accounts for a different type of international monetary transaction. The capital account records all international capital transfers. These transfers may be the acquisition or disposal of non-financial assets, for example, a physical asset such as land, and non-produced assets, which are needed for production but have not been produced, like a mine used for the extraction of diamonds. The capital account is further broken down into monetary flows resulting from debt forgiveness, the transfer of goods, and financial assets by migrants leaving or entering a country. Additional transfers may include the transfer of ownership on fixed assets, the transfer of funds received for the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, and uninsured damage to fixed assets.