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Basics / August 16, 2021

Owner’s Equity

The equation of equity is as follows: Owner Equity = Assets – liability The owner or the sole proprietor of a business makes investments, earns some profit on it, and withdraws some money out of it for his personal use called drawings. We may write this transaction as follows: Investment (capital) ± Profit or Loss […]

By · August 16, 2021 · 1 min read

The equation of equity is as follows:

Owner Equity = Assets – liability

The owner or the sole proprietor of a business makes investments, earns some profit on it, and withdraws some money out of it for his personal use called drawings. We may write this transaction as follows:

Investment (capital) ± Profit or Loss – drawings = Owner’s Equity