Capitalization Rules in English Quick Guide & Examples

By Imran Khan | Bookkeeping | No Comments

With the passage of time, some words originally derived from proper nouns have taken on a life, and authority, of their own and no longer require capitalization. In languages where inflected forms of a word may have extra letters at the start, the capitalized letter may be the initial of the root form rather than the inflected form. In most languages that use diacritics, these are treated the same way in uppercase whether the text is capitalized or all-uppercase. Capitalization refers to a few different things across business. In accounting, capitalization refers to long-term assets with future benefit.

• Based on initial forecasts, business owners may project how much financing they need to ensure profitability and sustainability until the company can be self-sustaining.
• In most languages that use diacritics, these are treated the same way in uppercase whether the text is capitalized or all-uppercase.
• When the quote is a fragment incorporated into your own sentence, the first word is not capitalized.
• Capitalization is the writing of a word with its first letter in uppercase and the remaining letters in lowercase.
• Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader.

To capitalize assets is an important piece of modern financial accounting and is necessary to run a business. However, financial statements can be manipulated—for example, when a cost is expensed instead of capitalized. If this occurs, current income will be understated while it will be inflated in future periods over which additional depreciation should have been charged. In accounting, capitalization is an accounting rule used to recognize a cash outlay as an asset on the balance sheet rather than an expense on the income statement. In finance, capitalization is a quantitative assessment of a firm’s capital structure.

Meaning of capitalize on something in English

In some cases, capitalization is also required for the first word in a quotation and the first word after a colon. Capitalize the names of specific course titles, but not general academic subjects. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only.

• In accounting, typically a purchase is recorded in the time accounting period in which it was bought.
• It is possible to be overcapitalized or undercapitalized.
• When trying to discern what a capitalized cost is, it’s first important to make the distinction between what is defined as a cost and an expense in the world of accounting.
• However, the four seasons are common nouns and therefore not capitalized unless they appear as part of a proper noun.

In general, capitalizing expenses is beneficial as companies acquiring new assets with long-term lifespans can amortize or depreciate the costs. Leases over twelve months must be capitalized as an asset and recorded as a liability on the lessee’s books. Days of the week (e.g., Wednesday), months of the year (e.g., August), and holidays and festivals (e.g., Christmas, Ramadan) are capitalized. However, the four seasons are common nouns and therefore not capitalized unless they appear as part of a proper noun. A proper noun is the specific name of a person, place, organization, or thing. All proper nouns (as well as adjectives derived from them) should be capitalized.

The dialytika (diaeresis) should also always be used in all-uppercase words (even in cases where they are not needed when writing in lowercase, e.g. ΑΫΛΟΣ — άυλος). Examples of the separable affixes may be found in List of family name affixes.[b] Noun phrases are in this context treated as if they were nouns. So the general rule that nouns-as-names are capitalized in principle applies to compound names and noun-phrases-as-names as well. There are, however, exceptions to this rule that differ by language community. Conventional writing systems (orthographies) for different languages have different conventions for capitalization, for example, the capitalization of titles.

Most writers don’t capitalize common nouns that simply describe the products (pizza, soap, hotel), but it’s not always easy to determine where a brand name ends. There is Time magazine but also the New York Times Magazine. No one would argue with Coca-Cola or Pepsi Cola, but a case could be made for Royal Crown cola. Other languages may capitalize the initial letter of the orthographic word, even if it is not present in the base, as with definite nouns in Maltese that start with certain consonant clusters. For example, l-Istati Uniti (the United States) capitalize the epenthetic I, even though the base form of the word — without the definite article — is stati. However, in the polytonic orthography used for Greek prior to 1982, accents were omitted in all-uppercase words, but kept as part of an uppercase initial (written before rather than above the letter).

Compound names

For example, the month August versus the adjective august. There are strict regulatory guidelines and best practices for capitalizing assets and expenses. Capitalization may also refer to the concept of converting some idea into a business or investment. In finance, capitalization is a quantitative assessment of a firm’s capital structure. When used this way, it sometimes also means to monetize. When the quote is a fragment incorporated into your own sentence, the first word is not capitalized.

A cost on any transaction is the amount of money used in exchange for an asset. The accumulated depreciation balance sheet contra account is the cumulative total of depreciation expense recorded on the income statements from the asset’s acquisition until the time indicated on the balance sheet. Depreciation is an expense recorded on the income statement; it is not to be confused with “accumulated depreciation,” which is a balance sheet contra account. The income statement depreciation expense is the amount of depreciation expensed for the period indicated on the income statement. When a small company starts, it must create a capitalization strategy that outlines how the company will use its scarce resources to start operations. Based on initial forecasts, business owners may project how much financing they need to ensure profitability and sustainability until the company can be self-sustaining.

The process is used for the purchase of fixed assets that have a long usable life, such as equipment or vehicles. In finance, capitalization is also an assessment of a company’s capital structure. In finance, capitalization is the company’s capital structure.

Capitalization of multi-word place names, institutions, and titles of works

In addition, assets on the balance sheet will be overstated. In accounting, the matching principle requires companies to record expenses in the same accounting period in which the related revenue is incurred. For example, office supplies are generally expensed in the period when they are incurred since they are expected to be consumed within a short period of time. However, some larger office equipment may provide a benefit to the business over more than one accounting period. Alternatively, you can choose to use sentence case, which means you only capitalize the first word and proper nouns, as in a normal sentence. When a colon introduces a list or any phrase that is not a complete sentence, do not capitalize the first word (unless it is a proper noun).

Accounting

It is the book value cost of capital, or the total of a company’s long-term debt, stock, and retained earnings. A company that is said to be undercapitalized does not have the capital to finance all obligations. Overcapitalization occurs when outside capital is determined to be unnecessary as profits were high enough and earnings were underestimated. Because long-term types of expenditures assets are costly, expensing the cost over future periods reduces significant fluctuations in income, especially for small firms. Many lenders require companies to maintain a specific debt-to-equity ratio. If large long-term assets were expensed immediately, it could compromise the required ratio for existing loans or could prevent firms from receiving new loans.

My Accounting Course  is a world-class educational resource developed by experts to simplify accounting, finance, & investment analysis topics, so students and professionals can learn and propel their careers. We strongly encourage students to use sources in their work. You can cite our article (APA Style) or take a deep dive into the articles below. Monarchy, aristocracy, and democracy are forms of government classified according to which people have the authority to rule.

Origin of capitalize

The market value of capital depends on the price of the company’s stock. It is calculated by multiplying the price of the company’s stock by the number of equity shares outstanding in the market. If the total number of shares outstanding is 1 billion, and the stock is currently priced at $10, the market capitalization is $10 billion. The value of the asset that will be assigned is either its fair market value or the present value of the lease payments, whichever is less. Also, the amount of principal owed is recorded as a liability on the balance sheet. The process of writing off an asset over its useful life is referred to as depreciation, which is used for fixed assets, such as equipment.