Definition Definition

Owner’s equity

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. The remainder is the owner’s claim on the assets the owner’s equity is often referred to as residual equity.

      Owner's Equity= Total Assets - Total Liabilities

Owner’s equity claims of owners, partners, and shareholders against the firm’s assets; the excess of assets over tall liabilities.

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