Capital account

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The capital account is one of two primary components of the balance of payments, the other being the current account.

The capital account records all transactions between a domestic and foreign resident that involves a change of ownership of an asset. It is the net result of public and private international investment flowing in and out of a country. This includes foreign direct investment, plus changes in holdings of stocks, bonds, loans, bank accounts, and currencies.

By convention, resident acquiring a domestic asset (a capital inflow). A capital account debit is recorded if a transaction leads to a domestic resident acquiring a foreign asset (a capital outflow). This convention ensures that the sum of the current and capital account balances is always zero.

Along with transactions pertaining to non-financial and non-produced assets, the capital account may also include debt forgiveness, the transfer of goods and financial assets by migrants leaving or entering a country ,. the transfer of ownership on fixed assets, the transfer of funds received to the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, patents, copyrights, royalties, and uninsured damage to fixed assets. (http://www.investopedia.com/articles/03/070203.asp).