Capital Maintenance Concepts

Avoid Ramming Into Costly & Unnecessary Mistakes Which Could Ruin Your Company Read On To Find Out More. Capital maintenance is a crucial step to take if you want your business to be successful in the long run. It is an accounting concept based on the principle that income is only recognized after capital has been maintained, or in another scenario, when there is a full recovery of costs.

Capital maintenance is attained if the amount of a company's capital at the end of a period is unchanged from that at the beginning of the period. Any excess amount is thus treated as profit. Companies with efficient budget planning have been proven to be more stable in terms of a crisis as compared to those without.