What Are the Different Types of Assets Considered Capital Resources?

H. Terry

For an asset to be considered a capital resource, it must be directly involved in the production, storage, or transportation of goods. Capital resources are assets that are owned and can be reused by a company over an extended period of time. Money as well as human and natural resources are thus excluded from this category.

For an asset to be considered a capital resource, it must be directly involved in the production, storage, or transportation of goods.
For an asset to be considered a capital resource, it must be directly involved in the production, storage, or transportation of goods.

In some other contexts, the word capital is strongly associated with money. While money, sometimes called financial capital, can be used to purchase important capital resources it cannot itself be counted as a capital resource. This is because money can be used only once — after it is spent, it is gone. It is not directly involved in the long-term creation, storage or transportation of goods.

The factory in which a product is produced, the storage facilities where its kept and the buildings where a service is provided can be considered capital resources.
The factory in which a product is produced, the storage facilities where its kept and the buildings where a service is provided can be considered capital resources.

Human workers and their skills are commonly categorized as human resources. As with financial resources, human resources can help a company attain capital resources but are themselves not a part of this group. Since human beings cannot be property, they cannot be viewed as a capital resource.

Natural resources, such as oil or water, can typically only be used a finite number of times in the creation of income and, thus, cannot be categorized as capital resources. Earth and clay used in the production of bricks are also natural resources. The land, however, from which the natural resources are obtained is a continuously serviceable property and directly relevant to income-generation. It is, therefore, seen as a capital resource.

Other common examples of capital resources include machines, tools, and equipment. Power generators or maintenance equipment needed to keep product-producing machines operational are also capital resources. The factories or plants in which a product is produced, the storage facilities in which inventory is kept, and the buildings wherein a service is provided can also be included in this class of resources.

Capital resources do not necessarily need to be large objects, nor stationary ones. Fax machines, artists' easels or a gym's free weights could all be counted among an organization's capital resources if immediately pertinent to its continued productivity and income; likewise, necessary means of transportation, such as trucks or ships, can also belong to this category of resource. It also is important to note that assets are normally only defined as capital resources when they are the property of a company. If a company rents an asset for a short time, then it is not considered reusable and, thus, does not fully meet the defining criteria for capital resource.

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