Differentiate between capital account and current account.

The major differences between capital account and current account are as follows −

Capital Account

• These are accounts related to capital investments and expenditures of a country to another.

• It measures inflow and outflow of capital in economy.

• It evaluates country net investment position.

• Impacts foreign assets and liabilities of a country.

• Deals with source and utilisation of capital.

Current Account

• These are accounts related to trade of goods and services of a country.

• It measures inflow and outflow of goods and services in the economy.

• Merchandise trade, services, income receipts and unilateral transfers are key components.

• It evaluates trade surplus/trade deficit of a country.

• Impacts on net income and output of a country.

• Deals with receipts and disbursements in cash and non-capital items.