Accounting word of the week

Today we are looking at the word Owners’ Equity.

Owners’ Equity means the interest of the business owners in the assets of the business represented by capital contributions and retained earnings. It is part of the balance sheet equation of Assets = Liabilities + Owners’ Equity.

In essence, Owners' Equity is the amount of money that the business owner has invested into the business minus any money that the owner has taken out of the business what is known as a draw. This does not include a salary.

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