Equity
Equity is the owners' residual claim on a business — what remains of total assets once all liabilities are settled, also called net assets.
Also known asowner's equity · net assets
See it move
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The split-bar chart represents total assets of €200,000 as a single bar divided into two stacked segments: liabilities of €135,000 (creditors' claims) and equity of €65,000 (owners' residual claim). The relationship expressed is Equity = Assets − Liabilities; creditors are satisfied first, and equity holders receive only what remains. The note clarifies that equity is a legal residual claim on the business, not a reserve of spare cash.
Where it fits
SubjectFinancial AccountingCoreTopicThe Accounting Equation & Its ElementsCore
The formula
LaTeX
Variables
- Total assets (€)
- Total liabilities (€)
Rearrangement of the accounting equation; equals net assets or owner's equity