Everyone wants equity in a company. Equity is what the shareholders or owners in a business are owed after all liabilities are paid. A simple example is your company sells $1,000 worth of items and you paid $600 for the items. The remaining $400 would eventually end up in the equity account. The legal structure of the business will determine which equity accounts are used. These may include owner's capital, owner's draw for a sole proprietorship or capital stock, common stock, and preferred stock for a corporation.
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