The term equity is used in accounting in a number of ways. Often the word equity is used when referring to an ownership interest in a business, including, for example, equity.
Occasionally, the term equity is used to mean a combination of a company’s liabilities and assets. For example, some revise the basic accounting equation Asset = Liabilities + Equity to Asset = Equity.
In finance, the term equity indicates a share of the capital stock of a company.
Equity also refers to an owner’s interest in a personal asset. The owner of a house of 200,000 euros who has a mortgage loan of 80,000 euros has an equity in the property of 120,000 euros.
Outside the realm of accounting, the word equity is also used to mean fairness or justice.
