Accounting Equity
Accounting equity refers to the residual interest in the assets of an entity after deducting liabilities. It represents the ownership interest of the shareholders in a company. Equity is typically divided into two main components: contributed capital, which includes the funds contributed by shareholders in exchange for ownership stakes, and retained earnings, which are the accumulated profits of the business that have not been distributed to shareholders. Equity is a key element of a company's financial position and is an important indicator of its financial health and stability.