Capital Goods: Definition & Examples

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Current Liabilities: Definition & Examples

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
Your next lesson will play in 10 seconds
  • 0:03 What Are Capital Goods?
  • 0:14 Conceptual Framework
  • 1:17 The Balance Sheet
  • 1:43 Examples
  • 1:56 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Speed Speed

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Shawn Grimsley

Shawn has a masters of public administration, JD, and a BA in political science.

Capital goods are essential for the business activities of many companies. In this lesson, you'll learn what capital goods are and how they fit into the overall picture of a company.

What are Capital Goods?

Capital goods are goods used by businesses to produce goods and services used by consumers. Capital goods are usually considered fixed goods that are not easily converted into cash.

Conceptual Framework

Capital goods are one of the three basic factors of production, which facilitate the creation of goods and services. In other words, they are the inputs you use to create outputs called products or services. The other two basic factors of production include labor and land. Unlike land and natural resources, capital goods consist of things that are created by people. You can use capital goods to help transform other goods and resources into other products or you can use them to increase the efficiency of your production process. It's important to remember that you do not buy capital goods to sell to customers (that's called inventory).

Long-term capital assets can usually be depreciated. Depreciation is where you expense a portion of the cost of the capital good over a period of time. Depreciation is used to offset income and can reduce tax obligations. Depreciation is reported on your profit and loss statement.

To unlock this lesson you must be a Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use

Become a member and start learning now.
Become a Member  Back
What teachers are saying about
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account