Equity = Ownership

One of the more confusing financial terms that many people run into is equity. This is true whether you are talking about your home or your business. The Accounting Solver offers a rather enlightening graphic, and points this out about equity and business ownership:
The basic accounting equation dictates: the more Liabilities, the less Equity, and vice versa. In other words, the more assets your creditors can have a claim on, the less is your actual ownership of the business.
This works in other areas of your finances as well. In your home, the equity, or ownership you have, is determined by …read more