Accounting glossary
What is equity?
What is left of the business for its owners after liabilities are subtracted from assets: contributed capital plus retained earnings. Equity is the balance sheet's bottom line — and the year-end close is what rolls each year's profit into it.
Example
Assets of $161,000 less liabilities of $56,000 leaves $105,000 of equity — the owner's residual claim on the business.
Equity grows through retained profit and owner contributions, and shrinks through losses and drawings.
In SeroBooks
Year-end close posts the retained-earnings roll automatically. Year-end close →
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