Finance / July 9, 2018 / Hattie Munoz
Equity is the value of the business left to its owners after the business has paid all liabilities. Sometimes, there are different classes of ownership units, such as common stock and preferred stock. Total equity is what is left over after you subtract the value of all the liabilities of a company from the value of all of its assets. Equity is reported on a company's balance sheet.
The accounting equation or balance sheet equation forms the building blocks for the entire double entry accounting system. It shows that every asset owned by the company is equal to the claims (liabilities and equity) against the asset. The accounting equation looks like this. Asset = Liabilities + Equity.
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