Ownership

Ownership and Equity

Ownership = Is the exclusive tight to posses, use, enjoy, and dispose of property.

Equity = Is the owners' contributions to the business.

Equity represents the noncurrent obligations of the entity to the owners. Because equity equals the amount of assets remaining after subtracting liabilities, equity is sometimes called net assets. (The term "net" indicates that at least one amount has been subtracted from another to reach this final amount)

Equity comes from two primary sources: investments by owners and earnings.
An unincorporated business (sole proprietorship or partnership) will be illustrated first.

Equity is equal to the owners' investments plus net income, less any withdrawals and losses.

Capital = The owner's current investment, or equity, in the assets of a business.

Drawing Account = A temporary capital account, set up in the name of the sole proprietorship or a partner, form which he or she can withdraw money or other assets in anticipation of profit.