Examples of Owners Equity
by Catherine
(Cebu, Philippines)
Q:Give examples of owners equity...
A: Okay, the two most common forms of owner's equity are:
- Capital: The most common form of equity. Capital applies to a sole proprietorship. It is the most common term for when an owner invests in his or her business.
- Reserves: This is the other most common form of equity. Reserves are simply profits that you are keeping in the business. Whereas with capital the owner is putting his own assets (usually money) into the business, with reserves the business is generating a profit and that profit is kept in a separate account to "capital." The account it is kept in is usually called accumulated profits.
Hope that helps!
Good luck with your studies!
Best,
Michael Celender
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