What is Equity?
- janetldeardorff
- Feb 12
- 1 min read
Updated: Feb 22
Assets = Liabilities + Equity
The balance sheet equation can be rewritten depending on the answer you need
Assets are things that a business owns or that generate revenue
Liabilities are debts the business owes to another entity.
It’s important to remember that liabilities such as loans can help owners finance their companies
So, what is Equity?
Equity is an investment. The money you have left over after you subtract liabilities from your assets.
A good way to understand this:
A house is an asset, A mortgage is a liability, & Equity is ownership value
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