Asked by: Samatha Vanaclochaasked in category: General Last Updated: 12th April, 2020
What is the difference between fixed capital and circulating capital?
Herein, what is difference between working capital and fixed capital?
Fixed capital refers to the investment of the enterprise in long term assets of the company. Working capital means the capital invested in the current assets of the company. Durable goods whose useful life is more than one accounting period. Used to buy non-current assets for business.
Furthermore, what is the character of fixed capital? Fixed capital is capital invested in fixed assets. In other words, it is capital used for purchasing fixed assets. Tangible fixed assets includes land, building, plant, machinery, etc. Intangible fixed assets includes patents, copyrights, goodwill, so on.
One may also ask, why is working capital also called circulating capital?
Working capital is also called a circulating capital or revolving capital. That is the money/capital which circulates in various forms of current assets in a continued manner. Thus, the amount always keeps on circulating or revolving from cash to current assets and back again to cash.
What is fixed capital in economics class 9?
Fixed capital is also called a "fixed investment" and encompasses assets that are used continuously during the business's operation, according to the Business Dictionary. For example, the equipment used to produce merchandise would constitute fixed capital because it is not depleted with each use.