In which account are physical assets such as buildings and factories recorded?

Physical assets such as buildings and factories are recorded in the capital account. The capital account is part of a company's balance sheet and reflects the long-term investments in assets that are used in the business operations. These assets are not expected to be converted into cash within a year and are essential for the company's functioning and revenue generation.

The capital account captures the ownership of these physical assets, which are often referred to as fixed or non-current assets. This includes property, plant, and equipment, which are crucial for producing goods or providing services. Recognizing these assets in the capital account emphasizes the long-term nature of these investments and their importance in the overall financial structure of a business.

In contrast, the current account pertains to assets and liabilities that are expected to be settled within a year, thus not including long-term physical assets. The financial account typically deals with transactions involving financial assets and liabilities rather than tangible physical assets. The exchange account does not correspond to any standard classification of accounting accounts related to physical assets, which further clarifies why the capital account is the correct classification for such assets.