Definitions and Examples of Equity
Equity has several definitions that pertain to accounting:
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- 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.
