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Simple English definitions for legal terms
capital transaction
Read a random definition: journal entry
A quick definition of capital transaction:
Capital transaction: A capital transaction is when someone buys, sells, or trades something that is worth a lot of money. This thing is called a capital asset. It could be a house, a car, or even a business. When you do a capital transaction, you are making a big financial decision that could have a big impact on your money.
A more thorough explanation:
A capital transaction is when someone buys, sells, or trades a capital asset. A capital asset is something that a person or business owns that is used to make money, like a building or a piece of equipment.
- Buying a new office building
- Selling a piece of machinery
- Trading a truck for a forklift
These examples show how a capital transaction involves the exchange of a capital asset. When a business buys a new office building, they are exchanging money for a new asset that they can use to make money in the future. When they sell a piece of machinery, they are exchanging that asset for money. And when they trade a truck for a forklift, they are exchanging one asset for another that they believe will be more useful to them.