Capital Account

Capital Account is an account showing the sums received and expended for the capital (properly, the fixed capital, see Capital) of a railway or other commercial enterprise. The capital account of a railway should show the sums received from shareholders, borrowed on debentures and otherwise, and the payments for land, works, rolling stock, stations, etc. Repairs should be paid out of revenue, while all extensions and additions to rolling stock, buildings, etc., should be charged to capital. But the distinction is often less precisely drawn. Some American railway companies, for instance, habitually devote part of their revenue to improvements; and on the other hand, the expenses of mere wear and tear have frequently been charged to capital account and covered by borrowing in order to swell the dividends for the half-year.