Sunday, May 6, 2012

Owner's Equity Elements

Equity is the residual claim against the assets of the business after the total liabilities are deducted.

Alternative terms of Equity:
  • Owner's Capital - for sole proprietorship
  • Partner's Capital - for partnership
  • Owner's Equity or Shareholder's Equity - for corporation

The components of Equity are as follows:
  • Capital contribution of owners (initial and additional)
  • Withdrawal by owners
  • Net Income or Loss
  • Prior Period Adjustments

Normal Balance : Credit
Equity accounts have a normal credit balances.

Researched by :


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