Question

Classify the following items as either financial capital or physical capital.

a. A computer server owned by an information-processing company

b. $\mathrm{\$}100,000$set aside in an account to purchase a computer server

c. Funds raised through a bond offer to expand plant and equipment

d. A warehouse owned by a shipping company

Short answer

(a) A computer server is a piece of physical capital.

(b) The extra money spent on a computer server could be considered financial capital.

(c) A Financial capital is money raised through a bond offering to boost a company's operations.

(d) Physical capital is a warehouse.

Step-by-step solution

Given Information (part a)

Different sorts of assets exist, with physical and financial capital being the most common. Physical capital is a tangible substance that can be handled in person, whereas financial capital refers to the legal ownership of assets such as physical capital.

This is the statement that was made.

We must determine whether the sentence refers to financial or physical capital.

Explanation (part a)

(a) A computer is an input that helps the company manufacture products. As a result, a computer server is considered tangible property..

Given Information( part b)

Physical and financial capital are the two most common types of assets. Physical capital is a tangible substance that can be handled in person, while financial capital refers to the legal ownership of assets such as physical capital.

The assertion made.

We need to figure out if the sentence is about financial or physical capital.

Explanation (part b)

(b) Because it is used to purchase capital to develop products and services, the extra money spent on a computer server might be termed financial capital.

Given Information (part c)

Different sorts of assets exist, with physical and financial capital being the most common. Physical capital is a tangible substance that can be handled in person, whereas financial capital refers to the legal ownership of assets such as physical capital.

The following is the statement:

We must determine whether the sentence refers to financial or physical capital.

Explanation (part c)

(c) The money will go toward expanding the plant and equipment that will help in the creation of goods and services. As a result, financial capital refers to funds raised through a bond offering to expand a company's operations.

Given Information (part d)

Different sorts of assets exist, with physical and financial capital being the most common. Physical capital is a tangible substance that can be handled in person, whereas financial capital refers to the legal ownership of assets such as physical capital.

The following is the statement:

We must determine whether the sentence refers to financial or physical capital.

Explanation (part d)

(d) Because it is used in the shipping company's manufacturing process, a warehouse is considered physical capital.