Capital Account:

The capital account deals with long and short-term capital movement.These capital movements are referred to as autonomous because they take place for business or profit.

Long-term capital movements are overseas investments in shares or long-term securities or from the establishment of factories in foreign countries or the reporting country.

The movement of capital to a country represents an inflow of foreign capital and there is a corresponding outflow when such funds are withdrawn.An inflow of funds represents credit while an outflow represents debt.