I am trying to read and understand the balance sheet and have questions about it.
what is equity
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bXyZhlX-Sr3QjyacfA8pyY
11/02/09 12:11pm PST
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raywhite28
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11/02/09 12:17pm PST
Equity is what you own in the business.
Assets is what the business owns.
Liabilities are what the business owes.
The difference is Equity. If the Assets are more than the liabilities that'sgood.
Hope this helps. If so please mark solved, if not please ask more questions. Thanks!
Mimbreno
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11/02/09 1:18pm PST
The basic accounting equation is Assets = Liabilities+Capital (Equity). Debt to Equity ratios of 1 to 2 are a sign of a healthy business.
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Michelle Long CPA
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11/03/09 6:16am PST
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Equity includes owner's draws and contributions (or common stock) to the business. It also includes Retained Earnings--the lifetime net income or net loss of the business.
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