Equity represents the difference between a business's total assets and its liabilities, indicating ownership interest and net worth for business owners. It is significant as it reflects the owner's claim on the assets after debts are settled and can increase with asset value growth. Equity consists of capital from share sales and retained earnings, and readers are advised to seek professional advice for practical applications of this information.

1. WHAT IS EQUITY
– LEIGH BARKER

2. INTRODUCTION
Equity is basically the difference between the value of all assets
owned and the cost of any associated liabilities. Within the context
of accounting, while the term equity is applied in numerous ways
it generally refers to an ownership interest in a business.

3. Equity represents what the business owes to its owners
which is a reflection of the capital remaining in a business
after all the assets of the entity are used to pay off the
liabilities of the business.
EQUITY = ASSETS – LIABILITIES

4. GREAT SIGNIFICANCE TO A BUSINESS
OWNER
Equity is of great significance to a business owner as it represents
that portion of the total assets of the company that the owner owns
which may also be referred to as net worth. For example, if an
owner purchased cafe worth $500,000 with a $400,000 loan and
$100,000 in cash then the owner has acquired an asset of $500,000
but only has $100,000 of equity.

5. VALUE OF EQUITY
Equity will increase as the value of assets increase. These increase
may be derived from such items as the value of the property owned,
income streams, shares, client base plus any other asset that can
increase in value.

6. In a balance sheet equity will generally comprise two components
being
(1) capital received from the sale of company shares
OR
(2) retained earnings which are profits not distributed to owners or
shareholders
TWO COMPONENTS

7. LEIGH BARKER ACCOUNTANT
Prepared by Leigh Barker Accountant at MWC Group, Tangible
Assets, Portfolio Finance, Gordon and West Pennant Hills. Note
that all content of this blog is general in nature and anyone
intending to apply the information to practical circumstances
should seek professional advice to independently verify their
interpretation and the information’s applicability to their
particular circumstance.

8. VISIT LEIGH BARKER’S BLOG
https://leighbarkerblog.wordpress.com/