Financial Terms: Financial Capital
What is financial capital?
Financial capital refers to the monetary capital invested by an enterprise owner in an enterprise. Its value is expressed in terms of the quantity of money. therefore The same as the net assets in traditional accounting.
The corresponding physical capital refers to the physical assets of the enterprise, reflecting the actual production capacity or operation of the enterprise.
ability
And the production and operation capacity of an enterprise is usually expressed in terms of the quantity of products or services produced by a certain period of time.
financial capital maintenance
Under the condition of continuous inflation, capital preservation generates two kinds of capital preservation, namely financial capital preservation and physical capital.
Preservation
。
According to the concept of financial capital preservation, only the amount of net assets at the end of the current period of the enterprise deducts the investment of the current owners and the allocation to the owners, and the excess amount is the current income when the amount of the initial net assets exceeds the current period.
The measurement attribute of financial capital preservation is generally based on historical cost. The unit of measurement can be used in both nominal and fixed currency (i.e. general purchasing power) currency.
However, the adoption of historical cost / nominal currency accounting is the practice of traditional accounting. It does not consider the effect of price rise on capital purchasing power. Only the amount of depreciated original capital is preserved, and the recognized profits represent the increase of nominal money capital in this period. Using historical cost / constant currency accounting, the influence of inflation on capital purchasing power is considered, and the purchasing power of the original capital is maintained. The confirmed profit represents the increase of purchasing power in this period.
- Related reading
- Industry Overview | India Will Launch An E-Commerce Platform Bharat Craft, Specializing In Handicrafts, Textiles And Other Products.
- Industry Overview | Vietnam'S Textile And Clothing Production And Export Are Facing Difficulties.
- Industry Overview | The First Provincial-Level Functional Textile Inspection Agency In Northwest China Unveiled
- Industry Overview | The Fifteenth Asian Textile Conference And The Ninth China Textile Annual Conference Are About To Open.
- Industry Overview | The World Cloth Merchants Conference Will Be Held At The End Of September To Boost The High Quality Development Of Keqiao Textile Industry.
- Industry Overview | Textile Industry Focuses On Promoting Integration Of Two Technologies
- Industry Overview | China Textile Material Copyright Protection Forum Will Be Held From September 27Th To 28.
- Industry Overview | The World'S Beautiful Fashion And Business Trip Boosts Jimo'S Clothing World.
- Pregnant baby | Baby Tree Denies Layoff Rumors Share Prices Have Dropped 4%
- Daily headlines | The Opening Of The World Cloth Merchants Conference Is Awaited.
- Basic Accounting Knowledge: Financial Settlement Center
- Financial Terms: Financial Planning
- Financial Terms: Comparative Analysis
- What Is Risk Control?
- Financial Terms: Financial Evaluation
- What Is Financial Activity?
- ASOS, 2011 Spring And Summer Women'S Wear.
- LUKU Is Committed To Building A Fashionable Clothing Brand With Military Leisure.
- AQOUNSENTON Leads The Business Fashion Trend In 2011
- Many Female Stars Teach You A Wonderful Match Of Down Jacket.