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What is Equity ?

In accounting and finance, equity is the difference between the value of theassets/interest and the cost of theliabilities of something owned. For example, if someone owns a car worth $15,000 but owes $5,000 on that car, the car represents $10,000 equity. Equity can be negative if liability exceeds assets.

In an accounting context, shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the equity of a company as divided among individual shareholders of common orpreferred stock. Accounting shareholders are the cheapest risk bearers as they deal with the public.[1]Negative shareholders' equity is often referred to as a (positive) shareholders' deficit.

For the purposes of liquidation duringbankruptcy, ownership equity is the portion of a business's equity which remains for the owners after all liabilities have been paid and all other creditors have been reimbursed

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