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Owner’s equity represents the residual claims of the owners to the assets of the business and sometimes is referred to as net assets or net worth....
Three basic transactions account for most of the changes that occur in shareholder’s equity: sale of stock to investors, recognition of periodic net income or loss...
Assets are financed both by debt and equity. “Equity“ represents the “net assets“ of a corporation. This concept can be compared to owning a house (asset)...