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| Name | What Is Owners Equity? | Basic Accounting Terms | Simply Explained With Example |
| Video Uploader | Video From Educational Stewards |
| Upload Date | This Video Uploaded At 28-11-2021 18:20:28 |
| Video Discription | What is owners equity. Basic accounting terms simply explained with example. Owner's equity is the measure of a company's net worth and is calculated by subtracting total liabilities from total assets. Also called shareholder's equity or book value. Learn what is owners equity, how owners equity is calculated, and the meaning of owners equity. Watch this video to learn about shareholders equity. . . . In the previous video I told you about a balance sheet now don’t worry I am not here to explain a balance sheet its just for you to understand how equity works and how it mixes up with the assets and liabilities because these three are the main components of a balance sheet. As we know assets are what the company owns, liabilities are what the company owes to someone and owners equity is the residual value of a company’s assets after deducting all its liabilities. Did you not understand let me make it clear. When a company takes a loan from someone means a liability it does not go around spending all the money on lavish items rather they purchase assets for themselves that can generate profits for them. So if a company is borrowing money from someone else they must also be investing their own money that amount of money is called owners equity. So if we come back to the definition “equity is the residual value of a company’s assets after deducting all its liabilities”. A company’s value depends on its assets so if we subtract all the liabilities from the asset section the residual value or the remaining balance/amount in the assets is called equity that a business owner truly owns hence owners equity. Lets make it more clear with an example If A company Has $100 worth of assets and $40 in liabilities then 100-40= $60 is the owners part in the assets that is Assets – Liabilities = Owners Equity. Watch my previous videos: What are Liabilities: https://youtu.be/RZR-PEq4fdU What are Assets: https://youtu.be/HSmPv1w7pak |
| Category | Education |
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