Question

Which of the following would be an example of capital for a computer software firm?

(i) the firm's computer programmers
(ii) the wages the firm pays to its computer programmers
(iii) computer equipment
a. (i) only
b. (ii) only
c. (iii) only
d. (i) and (iii) only

Answer 1

The correct answer is c. (iii) only - computer equipment.

Step-by-step explanation:

Long-term assets, which undergo deprecation over time and are used to generate profit are defined as capital. Physical assets like machines, computers, phones, printers, buildings, furniture, cash, gold, cars or any kind of objects needed for the company to function and make a profit fall under the category of capital.

Software is not a physical asset that is why it can not be identified as capital.