Write short notes on the following: 2. Types of capital

Write short notes on the following:

2. Types of capital

Capital can be classified into the following categories:

i. On the basis of ownership:

a. Private capital - It is owned by private individuals or institutes.

b. Public capital - It is owned by the government or a society.

ii. On the basis of mobility:

a. Sunk capital - It is the capital which is used only for a specific purpose. For instance, washing machines, which are used only for the specific purpose of washing clothes.

b. Floating capital - It is the capital which is used for a variety of purposes. For example - electricity.

iii. On the basis of nature:

a. Real capital - It is the capital which is used in the production of other goods. For example, capital assets like buildings, machinery, raw materials etc.

b. Money capital - It is the capital which is in the form of money. This capital is used to purchase real capital.

iv. On the basis of durability:

a. Fixed capital - It refers to the capital which is used in the process of production repeatedly.



b. Working capital - It refers to the capital which is used in the process of production only once.

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