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Question

What are the 2 types of equity?


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Solution

The two types of equity are stockholders equity and owner’s equity. These two terms are interchangeably used.

  • Stockholders equity: the total amount of assets that are remaining after paying all debts and liabilities is called shareholder’s equity.
  • Owner’s equity: it is the right of the owner to possess the business assets after providing all the expenses and liabilities from the assets.

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