Owners Equity

Owners Equity - represents the amount owed to the owners by the company. It is calculated by subtracting Liabilities from each side of the accounting operation. Owners Equity also represents the net asset of the company.

Ownership - Is the exclusive right to posses, use, enjoy, and dispose of property.

Equity - Is the owners' contribution to the business. It is represents the noncurrent obligations of the entity to the owners,. Because equity equals the amount of assets remaining after subtracting liabilities, equity is sometimes called net assets. (The term 'net' indicates that at least one amount has been subtracted from another to reach this final amount.) Equity comes from two primary sources investments by owners and earnings. An unincorporated business (sole proprietorship or partnership) will be illustrated first. Equity is equal to the owners' investments plus net income, less any withdrawals and net losses.

Capital - The owners' current investment, or equity, in the assets of a business.

Drawing Account - A temporary capital account, set in the name of the sole proprietor or a partner, from which he or she can withdraw money or other assets in anticipation of profit.