Equity
Equity is what remains after subtracting liabilities from assets. In a sole proprietorship it is shown as Owner Capital, increased by investments and net income and decreased by drawings and net losses.
Example
Assets $13,250 − liabilities $350 = equity $12,900.
Learn and practice it
The five account types — Assets, liabilities, equity, revenue, and expenses — what each account type means, with clear examples and a classification drill.
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