What Is A Capital Resource? (with Picture)

Capital resources are understood to include assets that are utilized in the process of producing goods or services as part of a business operation. While the range of assets that can be included in this category is very broad, it is important to note that not all assets are capital resources. There are a few basic qualifications that govern what assets can properly be referred to by this term.

One of the basic criteria for an asset to be considered a capital resource relates to the long-term use of the asset in the production of goods and services. In general, it will be anticipated to aid in the creation of products for an extended period of time. Manufacturing machinery is an excellent example, as is the support equipment that is used to keep the machinery in good working order. In fact, the building that houses the machinery will also qualify as a capital resource.

This type of resource can also be defined as something that aids in the storage of the finished goods, pending their sale and shipment to customers. For this reason, a warehouse will be considered a capital resource, especially if the manufacturer owns the space. Support structures that aid in the force or power needed to drive the machines used in production may also be included. Dams that help to generate power for the factory operation also meet the basic criteria.

One important asset that is usually not considered a capital resource is cold hard cash. Money, in just about any form, cannot be considered part of this category. This is because currency is the medium that allows for the acquisition of a capital resource, rather than being the resource proper. While money is necessary to the function of any business, currency does not directly result in production of goods and services. In addition, money cannot be used to provide force or power to the machinery that actually produces the finished products.