BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Owner’s Equity is defined as the proportion of the total value of a company’s assets that can be claimed by its owners (sole proprietorship or partnership) and by its shareholders (if it is a corporation). It is calculated by deducting all liabilities from the total value of an asset (Equity = Assets – Liabilities).

Detailed explanation-2: -The ownership claim on total assets is owner’s equity. It is equal to total assets minus total liabilities. Here is why: the assets of a business are claimed by either creditors or owners. To find out what belongs to owners, we subtract the creditors’ claims (the liabilities) from assets.

Detailed explanation-3: -Assets are what a company owns, such as equipment, buildings, and inventory. Claims on assets include liabilities and owners’ equity. Liabilities are what a company owes, such as notes payable, trade accounts payable and bonds. Owner’s equity represents the claims of owners against the business.

Detailed explanation-4: -Owners’ equity is known as shareholders’ equity if the legal entity of a business is a corporation. It is also known as net worth, net assets, or shareholders’ funds.