Accounting Dictionary

Equity

Assets- liabilities.

It is the amount of the business you actually own after all the creditors are paid off. John’s business has one asset, a $200,000 house with a $150,000 mortgage. If John sold the house( his asset) and paid the bank the $150,000 he owes them (his liability) he would have $50,000 left for himself. The $50,000 is his equity.

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