What is Capital? Meaning
Different subjects similar Book-keeping, organisation of blogspot.com//search?q=what-is-commerce-meaning-and-importance">commerce (O.C) as well as secretarial practise (S.P) inwards commerce, economics, etc., signal dissimilar pregnant of the term Capital.
blogspot.com//search?q=what-is-commerce-meaning-and-importance">business.
In commerce subjects similar O.C as well as S.P, upper-case missive of the alphabet way finance or company's capital.
But, inwards economics, upper-case missive of the alphabet is that business office of wealth which is used for production.
But hither consider pregnant of term upper-case missive of the alphabet from economical dot of view.
Relations of Capital
The give-and-take Capital is related amongst the next iii terms, viz.,
- Wealth,
- Money, and
- Income.
The relation of upper-case missive of the alphabet amongst wealth, coin as well as income is explained below:-
1. Relation amongst Wealth:-
Capital is that business office of wealth which is used for production. So, wealth is a wide concept as well as upper-case missive of the alphabet is a narrowed concept.
Relation of Capital as well as Wealth is explained amongst the assistance of next picture.
blogspot.com//search?q=what-is-commerce-meaning-and-importance">investment of blogspot.com//search?q=what-is-commerce-meaning-and-importance">money inwards business. But inwards economic science coin becomes upper-case missive of the alphabet exclusively when it is used to purchase existent upper-case missive of the alphabet goods similar plant, machinery, etc. When coin is used to purchase upper-case missive of the alphabet goods, it becomes Money Capital. Please regard the movie given above.
But coin inwards the hands of consumers to purchase consumer goods or coin hoarded doesn't constitute capital. Money past times itself is non a element of production, simply when it acquires stock of existent upper-case missive of the alphabet goods, it becomes a element of production. For production nosotros ask existent upper-case missive of the alphabet as well as coin upper-case missive of the alphabet simply coin upper-case missive of the alphabet acquires existent capital.
3. Relation amongst Income:-
Capital generates income. So, upper-case missive of the alphabet is a rootage as well as income is a result. E.g. fridge is a upper-case missive of the alphabet for a ice-cream parlour owner. But, profits which he gets out of his trouble organisation is his income.
So, Capital is a FUND concept as well as Income is a FLOW concept.
Features of Capital
The characteristics or features of upper-case missive of the alphabet are:-
- Man-made Factor : Capital is non a gift of nature. So it is non a principal or natural factor, it is made past times human inwards upper-case missive of the alphabet goods industry. It is secondary equally good equally an artificial element of production.
- Productive Factor : Capital helps inwards increasing grade of productivity as well as speed of production.
- Elastic Supply : Supply of upper-case missive of the alphabet depends upon upper-case missive of the alphabet formation process. Capital formation depends upon savings as well as investment. By accelerating upper-case missive of the alphabet formation, upper-case missive of the alphabet provide tin live increased. But it is a long term process.
- Durable : Capital is non perishable similar labour. It has a long life acre of report to periodical depreciation.
- Easy Mobility : Movement of upper-case missive of the alphabet from ane house to approximately other is easily possible.
- Is a Wealth : Since upper-case missive of the alphabet has all features of wealth viz. utility, scarcity, transferability as well as externality, upper-case missive of the alphabet is a wealth simply wealth doesn't necessarily move capital.
- Derived demand : As a element of production, upper-case missive of the alphabet has a derived need to gain finished goods which select a direct demand. e.g. need for raw cotton fiber is derived from need for cotton fiber cloth.
- Round almost production : Capital goods doesn't satisfy our wants directly. But resources should live diverted towards production of upper-case missive of the alphabet goods first. And thereafter such produced hateful tin live used to gain consumer goods having direct demand.
- Social Cost : Resources select option uses. Either they tin live set to production of upper-case missive of the alphabet goods or consumer goods. When resources are used for producing upper-case missive of the alphabet goods, it way social club has sacrificed enjoyment of consumer goods. This is called social cost.
Types of Capital
The forms, classification or types of upper-case missive of the alphabet are:-
- Fixed capital : It refers to durable upper-case missive of the alphabet goods which are used inwards production ane time again as well as ane time again till they apparel out. Machinery, tools, way of transport, mill building, etc are fixed capital. Fixed upper-case missive of the alphabet does non hateful fixed inwards location. Since the coin invested inwards such upper-case missive of the alphabet goods is fixed for a long period, it is called Fixed Capital.
- Working capital : Working upper-case missive of the alphabet or variable upper-case missive of the alphabet is referred to the unmarried utilisation produced goods similar raw materials. They are used straight as well as exclusively ane time inwards production. They larn converted into finished goods. Money pass on them is fully recovered when goods made out of them are sold inwards the market.
- Circulating capital : It is referred to the coin upper-case missive of the alphabet used inwards purchasing raw materials. Usually the term working upper-case missive of the alphabet as well as circulating upper-case missive of the alphabet are used synonymously.
- Sunk capital : Capital goods which select exclusively a specific utilisation inwards producing a detail commodity are called Sunk capital. E.g. Influenza A virus subtype H5N1 textile weaving machine tin live used exclusively inwards textile mill. It cannot live used elsewhere. It is sunk capital.
- Floating capital : Capital goods which are capable of having approximately option uses are called floating capital. For e.g. electricity, fuel, carry vehicles, etc are the floating upper-case missive of the alphabet which tin live used anywhere.
- Money capital : Money upper-case missive of the alphabet way the coin funds available amongst the corporation for purchasing diverse types of upper-case missive of the alphabet goods, raw stuff or for structure of mill building, etc. it is also called liquid capital. At the start the coin upper-case missive of the alphabet is required for ii purposes ane for acquiring fixed assets i.e. fixed upper-case missive of the alphabet goods as well as approximately other for purchasing raw materials, payment of reward as well as coming together for sure electrical flow expenses i.e. working capital.
- Real capital : On the other hand, existent upper-case missive of the alphabet is referred to the upper-case missive of the alphabet goods other than coin such equally machinery, mill buildings, semi-finished goods, raw materials, carry equipments, etc.
- Private capital : All the physical assets (other than land), equally good equally investments, which select income to an private are called private capital.
- Social capital : All the assets owned past times a community equally a whole inwards the cast of non-commercial assets are called social upper-case missive of the alphabet e.g. roads, world parks, hospitals, etc.
- National capital : Capital owned past times the whole nation is called national capital. It comprises private equally good equally world capital. National upper-case missive of the alphabet is that business office of national wealth which is employed inwards the reproduction of additional wealth.
- International capital : Assets owned past times international organizations similar UN, WTO, World Bank, etc., constitutes an International Capital.
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