16. Recording Owners’ Equity
When describing different types of accounts, the phrase net worth is often applied to the sum of a company’s equity accounts. If you add up all the value of the company’s assets (items the company owns) and then subtract the company’s liabilities (amounts owed to others), you are left with the net worth of the company, or its equity.
Although you can take a shortcut and determine net worth by subtracting liabilities from assets, for a true understanding of net worth you need to examine the actual accounts that make up the equity section of your company’s balance ...
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