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What is the meaning of equity?

Equity is used in accounting in several ways. Often the word equity is used when referring to an ownership interest in a business. Examples include stockholders' equity or owner's equity.

Occasionally, equity is used to mean the combination of liabilities and owner's equity. For example, some restate the basic accounting equation Assets = Liabilities + Owner's Equity to become Assets = Equities.

Equity is also used to indicate an owner's interest in a personal asset. The owner of a $200,000 house that has an $80,000 mortgage loan is said to have $120,000 of equity in the house.

Outside of accounting, the word equity is also used to indicate fairness or justice.