A company maintains the asset account, cash, on its books, while the bank maintains a reciprocal account which is a stockholders' equity account.
The equity account represents the financial ownership of a business and is shown on the balance sheet immediately after the liabilities account. There are different types of equity accounts that are aggregated to form equity. Almost all equity accounts have a credit balance. This means that a debit entry (to the left of account T) for an equity account means a decrease in the balance of that account, while a credit entry means the balance of the account is reduced account increased.
Equity, also known as net assets, is the amount remaining after paying the total liabilities of the business. In other words, total equity is calculated by subtracting the total assets of the business from its total liabilities. Equity is the amount of money contributed by the shareholders to start the business and keep the business running. Equity can also be built by withholding residual income, for example, if a company generates net income and does not pay shareholders, then equity will increase.
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