What is the definition of capital account?


It seems that it's a virtual term. It is not a bank account. It is the net result of gains-losses. And it seems that there are two types of such accounts – the llc's, and members'. The account should be recorded, but the record is not "the account", it is a record thereof.

Is this correct?

EDIT: (Since I got two answers referring me to Wikipedia.)
I've seen the Wikipedia entry before posting my question. It tells us that this is included in something else and also the number of these. It does not tell us if this is a bank account or a file (whether paper or computer) or just a number.

LLC Definitions Legal

asked Feb 3 '12 at 08:04
90 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans

3 Answers


Here is the definition of Capital Account From Wikipedia. It is virtual, and there is one for each partner.

answered Feb 3 '12 at 10:24
Mhoran Psprep
644 points


Capital account is an accounting/bookkeeping term. It is used to represent an owner's equity in the business. It is not a bank account.

With respect to an LLC, you will set up a capital account on your LLC's books for each member.

A member's capital account represents the current value of that member's percentage of ownership interest. It is the total of a member's contributions to the LLC, adjusted by his share of profits or losses in the LLC.

Side note: Please don't take this the wrong way, I'm only trying to help. You have asked a couple of fairly basic questions recently. I think you would benefit a lot from reading a basic book on starting a business. I suggest picking up a copy of Legal Guide for Starting & Running a Small Business. Also, take a look at my answer here with more recommendations on getting started. But don't spend all of your time reading. At some point you need to actually start doing.

answered Feb 6 '12 at 05:42
Zuly Gonzalez
9,194 points
  • No problem. Thanks for your answers as well as the advice. – Startup1 12 years ago


In financial accounting, the capital account is one of the accounts in
shareholders' equity. Sole proprietorships have a single capital
account in the owner's equity. Partnerships maintain a capital account
for each of the partners.

From Wikipedia Do not know what is the reference to virtual here. What has been mentioned is NOT correct. Capital account is a very important account and concept in financial account. What exactly is the question? I feel given the quality of this board, the question should be more serious and proper.
answered Feb 4 '12 at 00:41
Natwar Lath
294 points
  • Lack the number of reputation to vote down the question. – Natwar Lath 12 years ago
  • Why break your answer to an answer and a comment? As for your answer – see edited question. – Startup1 12 years ago

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LLC Definitions Legal