Explanation:

n simple word, capital means that amount or asset which is invested in business by businessman or owner of business. When the business is closed, after paying outside creditors, balance amount will be his capital which he can obtain.

When a person starts any business or profession, he brings some money in cash and some other assets like building, furniture and machinery. These will be his capital. Suppose, you want to start your accounting tuition center in your town, for this you have started it with $ 2000 dollars. You are using also your room for tuition work. So, your $ 2000 and your room will be the capital of your profession and it will be shown in the liability side of your profession’s balance sheet.