I am from Engineering background and studying finance for GE Analytics.
Wanted to know in layman :D terms how would you define Owners Equity with a suitable example :confused:

Owner's Equity is total assets minus total liabilities.

For a company, it's also called net worth, shareholders' equity or net assets.

If Rick is going to give such wonderful answers, what do I need to post for?

Ah, I know.


The basic accounting formula is:

ASSETS = Liabilities = Owner's Equity

Assets are things like cash, car, house, debts that people owe you.

Liabilities are things like your phone bill, or loans people have made to you.

Owner's Equity is what you are worth once you pay all of your liabilities. So Assets – Liabilities = Owner's Equity