Equity

Definition: Equity represents the residual interest in the assets of an entity after deducting all its liabilities. Also called stockholders' equity, sharehold…

Equity represents the residual interest in the assets of an entity after deducting all its liabilities. Also called stockholders' equity, shareholders' equity, or net assets, it includes contributed capital (common stock, additional paid-in capital), retained earnings, and accumulated other comprehensive income. Equity equals Assets minus Liabilities in the accounting equation. Equity accounts are increased by credits and decreased by debits. The statement of stockholders' equity reports changes in equity over a period.