BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Owners Equity Formula The formula for owner’s equity is: Owner’s Equity = Assets – Liabilities. Assets, liabilities and subsequently the owner’s equity can be derived from a balance sheet.

Detailed explanation-2: -You can calculate it by deducting all liabilities from the total value of an asset: (Equity = Assets – Liabilities). In accounting, the company’s total equity value is the sum of owners equity-the value of the assets contributed by the owner(s)-and the total income that the company earns and retains.

Detailed explanation-3: -How Is Equity Calculated? Equity is equal to total assets minus its total liabilities. These figures can all be found on a company’s balance sheet for a company. For a homeowner, equity would be the value of the home less any outstanding mortgage debt or liens.

Detailed explanation-4: -Owner’s equity examples Example 1: If you own a car worth $20, 000 but you owe $5, 000 against it, your owner’s equity is $15, 000. Example 2: If you buy a house for $500, 000 and pay $100, 000 toward the loan, and have belongings worth $65, 000, your liabilities are around $400, 000. Your owner’s equity is $165, 000.