2 NATURE OF CAPITAL AND INCOME [Cuap. V

{ There are thus two valuations of the capital of a company,
 — the bookkeeper’s and the market’s. The latter is
bi apt to be the truer of the two, although it must be remem-1
 bered that each of them is merely an appraisement. We
| see, therefore, that the balance of a company’s books which
is so carefully worked out to the last cent, and which has
so imposing an appearance of accuracy, may be in reality
very wide of the mark.
§ 4

Not only is there a discrepancy between the market estimate
 of the present capital of a company and the bookkeeper’s
 entries, but the original capital paid in to the
company may itself have been quite different from the
1 nominal capitalization, for the stock may have been sold
i below or above par. We see, then, that the “capital” of a
person or firm has four separate meanings: — the nominal
“capitalization”; the actual original “paid-in capital”;
the present accumulated capital, or “capital, surplus, and
undivided profits” as given by the bookkeeper; and the
market estimate of the same, 7.e. the “value of the shares.”
These and the other senses of capital are given in the
kd following scheme, which displays the various uses of the
i term “capital.”

capital-instruments

Capital-goods { capital-property

Capital assets and liabilities

 

 

 

in general
[ nominal capitali-Capital-value
 original | zation
capital | actual paid-up
{ capital
net capital + fas recorded in

the company’s
books, consistpresent
 ing of capital,
capital surplus, and undivided
 profits
market value of
the shares