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owner’s equity = assets – liabilities For example, if a company with five equal-share owners has $1.2 million in assets but owes $485,000 on a term loan and $120,000 for a semi-truck it ...
Assets Liabilities Equity Explanation 1 + 6,000 + 6,000 Issuing capital stock for cash or other assets 2 + 10,000 + 10,000 Buying assets by borrowing money (taking a loan from a bank or simply buying on credit) 3 − 900 − 900 Selling assets for cash to pay off liabilities: both assets and liabilities are reduced 4 + 1,000 + 400 + 600
Stockholders' equity refers to the assets of a company that remain available to shareholders after all liabilities have been paid. This number can be positive or negative. Positive stockholder ...
The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities. [4] Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity.
Businesses summarize their equity in a financial statement known as the balance sheet (or statement of net position) which shows the total assets, the specific equity balances, and the total liabilities and equity (or deficit). Various types of equity can appear on a balance sheet, depending on the form and purpose of the business entity.
Intangible assets, net 37 176 Total assets $ 157,533 $ 151,663 Liabilities and stockholders' equity Current liabilities Accounts payable and other accrued expenses $ 7,654 $ 10,573 Accrued development expense 2,440 3,037 Accrued compensation and benefits 1,357 200 Other accrued liabilities 299 385 Total current liabilities 11,750 14,195 Other ...
A stockholders' deficit does not mean that stockholders owe money to the corporation as they own only its net assets and are not accountable for its liabilities, though it is one of the definitions of insolvency. This means that the value of the assets of the company must rise above its liabilities before the stockholders hold positive equity ...
Reported assets, liabilities, equity, income and expenses are directly related to an organization's financial position. Financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently."