Fund Structure
What is Capital Account?
A capital account is an LP's running ledger within a fund — tracking their paid-in contributions, allocated income and losses, and cumulative distributions. It represents the LP's economic interest in the partnership.
Each LP has a capital account in the fund's books that records: (1) contributions (capital calls paid), (2) allocated share of income, gains, and losses, and (3) distributions received. The balance represents the LP's remaining interest in the fund.
Profit and loss are allocated to LP capital accounts based on the partnership agreement, usually pro-rata to each LP's commitment. The capital account balance is not the same as market value — it reflects accounting allocations, not necessarily fair value.
Related Terms