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What is equity in accounting?

Author:
Harold Averkamp, CPA, MBA

Definitions and Examples of Equity

Equity has several definitions that pertain to accounting:

  • Equity can indicate an ownership interest in a business, such as stockholders’ equity or owner’s equity.
  • Equity can mean the combination of liabilities and owner’s equity. For example, the basic accounting equation Assets = Liabilities + Owner’s Equity can be restated to be Assets = Equities.
  • Equity can mean an owner’s interest in a personal asset. For example, the owner of a $200,000 house that has a mortgage loan of $75,000 is said to have $125,000 of equity in the house.
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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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