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 motive. 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 short-term are usually portfolio investment.

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capital to a country represents an inflow of foreign capital and there is a corresponding outflow when such funds are withdrawn.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 debit.