A capital lease is a contract that gives the lessee the right to temporarily use an asset.
A capital lease is treated as a purchase of an asset and an operating lease is treated as a real lease under generally accepted accounting principles (GAAP).
In a capital lease, the leased asset is treated for accounting purposes as if it were actually owned by the lessee and is shown in the balance sheet as such.
An operating lease does not confer any ownership of the leased asset and is treated differently from an accounting point of view.