What Does Equity ACTUALLY Mean?

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Discover what Equity means in Accounting. This episode is part of a series exploring Accounting Basics. To see the whole playlist check out the link below. In this Accounting tutorial you’ll find the definition of Equity in Accounting. You'll also learn how Equity is made up of Capital Contributions, Retained Earnings and Withdrawals. And as if that wasn't enough, you'll also find the link between the Income Statement and the Balance Sheet in the context of the expanded Accounting Equation.
⏱️TIMESTAMPS
00:00 - Intro
01:35 - Equity definition #1
02:37 - Equity definition #2
04:37 - How to structure your business?
04:44 - Sole Proprietor
04:50 - Partnership
04:43 - Corporation
05:29 - Capital Contributions Explained
07:27 - Retained Earnings Explained
08:52 - Withdrawals Explained
09:39 - How the Expanded Accounting Equation works
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#accounting #accountingbasics #accountingstuff

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I hate accounting, I like accounting when explained like this... wow.

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Agree! That's why I tried Course this then next BSIT

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''let me know in the comments if you want to hear more about it'' -ARE YOU KINNDING? I WANT TO HEAR MORE ABOUT EVERYTHING! YOU ARE THE BEST EVER! Please dont ever stop teaching us what you know! these videos are so good! never thought i would enjoy accounting this much! Thank you!!!!

[@AccountingStuff]

Haha, thanks for the kind words!! Glad to hear that you are enjoying the videos. I don't plan on stopping any time soon!

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Ditto!

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I love this man, he taught me in 10 minutes what I couldn’t learn in several lectures! Thanks James, god bless you

[@AccountingStuff]

No problem Marie, happy to hear that it's making sense

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So true

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Hallelujah!

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Amen

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For real. I've been researching this all day, and nowhere else was it broken down this clearly.

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samee

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I wish these videos were around during my first semester of college. You do a much better job explaining these topics than my fundamentals professor did. Well done!...

[@AccountingStuff]

Cheers Tim!

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Fortunately i am watching this in my first semester!! 😆

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Sorry to hear that you've been having a tough time at college. I hope it all gets easier for you. I'm here to help, so if you have any questions please let me know

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I completely fucked up my life too, now we'll never be able to catch up.

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@@waterfoker8558it’s weird aye, how we just all of a sudden… realise

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I have a masters degree and you helped me learn this better than my teachers did

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I’ve always had trouble with equity, I usually just forget. This video has made me realize how easy is to understand equity. I love it.

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Great to hear that it's making sense for you!

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This is probably the best video on financial literacy in all youtube. It makes things so clear ! Thanks a lot for your great work.

[@AccountingStuff]

Cheers Yair, glad you enjoyed it!

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[@AccountingStuff]

Thanks that is kind of you to say!

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Teaching is an art, and that art is in you. Mr. Artist. A huge support and respect.

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You can see all the effort that he puts into his videos!! It's so neat and organized!! Thank you James! :)

[@AccountingStuff]

I try :)

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Now you are what I call a great teacher!! Things are ever so clear now, even the text books don't explain stuff this way...thank God for you James!!!!!

[@AccountingStuff]

Thanks you are too kind! Happy to hear things are clear for you

[@deeznuggs6757]

For those who still don't get the accounting equation Think of Assets as 20 Liabilities 10 Equity 10 You just need to balance them to 20=20 no matter what you do. This is all there is to it, you only need to understand what accounts fall in each category.

[@donnychau4]

is it bad to have more assets then liabilities and equity? Is it does go over, what happens?

[@StXGaMeRalli]

@@donnychau4 You will never have more assets because assets = liabilities + equity

[@campbellblk7484]

Well thanks for simplifying it. Still not sure what equity means but I’m close to figuring it out.

[@maxmacciolli2556]

@@campbellblk7484 equity is the shareholders’ claims on an entity’s assets

[@whatuwantfromme3421]

@@campbellblk7484(Equity is made up of Retained Earnings (profits) and Capital contributions from owners (aka money owners put into their business. And there is different words for capitbal contributions depending on the business type. Owners equity, Partner contributions, Shareholders Equity). So Assets = Liabilities + Equity (Capital Contributions & Retained Earnings) And equity is considered "what you owe to the owners" because of the fact that the owners are the ones making investments into the business/company so that it can become profitable in the future. And Retained earnings is labeled as "what you owe to the owners" because since the owners are the ones taking their own money and investing it into the business, some of the retained earnings (profits) need to be paid to them. Because thats basically what investing is. You put money up to help someone, and then you get profit back when they make profit. So thats why retained earnings is considered "what you owe to owners"

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[@AccountingStuff]

Hey Mahmoud, thanks for your feedback. It's motivating to know the videos are making a difference. I don't plan on stopping anytime soon.

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This has to be the best explanation of equity on the Internet. Thank you, James.

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Cheers mate!

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Amazing how confusing it can be until someone explains it so clearly and simply as you do!

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Thanks for your kind words! All the best with your studies

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Thanks Antoine, I have many more planned for the future!

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I took giant notess.. thank you so much.. you are such a great teacher.. i was so confused between capital and equity..best channel

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3:16, great explanation of why the word "equity" is so connected with "ownership". I very much appreciate your work!

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Cheers Sebastian!

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Thanks for your kind words!

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Thank you. The video explained "equity" so much better than an accounting professor I had back in college. This provided a clear picture! Pressed the like button.

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Thanks mate, that is kind of you to say! Some of the small things take the longest time to edit but I'm glad to hear that you're enjoying them

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Wow why wasn’t I taught like this? It seems so captivating and fun. Would love to see more and more topics of accounting. Thanks james!

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That was an absolutely wonderful conclusion, you tied everything together so well. Marvelously done, my man.

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Not only are you an amazing teacher but the production quality of your videos is incredible, thank you so much for making this content. I'm paying £9,000 for uni but I'm watching your videos instead of my pre recorded lectures because they're so much better.

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Cheers Caleb!!

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Excellent way of putting many hard-to-grab financial terms into perspective. Thank you!

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You are an amazing teacher! I was having so much trouble and I greatly appreciate your time you have put into these videos!

[@AccountingStuff]

Thanks Rosa! Sorry to hear that you've been have a rough time with accounting. Hope it's beginning to click for you

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thank you so so much for this! truly feel like i understand so much better now! i like how you break down the definitions bit by bit, and then piece it all together again by looking at the whole picture :) thanks and keep making these vids!

[@AccountingStuff]

No worries, you're very welcome. It sounds like Equity is clicking for you which is great to hear!

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Thank you so much, I kept reading and watching vids about equity and could not understand it. You simplified it perfectly

[@AccountingStuff]

No problem Andres! Hope it's making sense for you

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[@AccountingStuff]

Thanks Oscar, hope you find them useful :)

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This video is the best explanation of equity EVER!!! Very well done! Thank you!

[@AccountingStuff]

Cheers!

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Watched 4 of your videos already and so far I can say, "You are amazing!!!" Thank you for this video

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Cheers Aira! I'm happy you're finding them helpful :)

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Just started financial accounting this semester and will have management accounting too next month and your videos are lifesavers. I am really enjoying accounting thanks to you, as I never thought I could wrap my head around debits and credits. Thanks a lot, James and keep up with the awesome work!

[@AccountingStuff]

Thanks, I am happy to help! All the best with your financial accounting course. Hope you crush it!!

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A very supreme coverage of the concept. Thanks for existing.

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Thanks a lot James for the simple easy illustration which you did a great effort in it . 🙏

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This is best video on equity and balance sheet. For a somewhat novice like me, you are a saviour. I learned a lot more over a short time span in comparison to hours I spent in the previous days trying to get my head around it. Also, this will be the only video I need to rewatch whenever I need a quick recap.

[@AccountingStuff]

Thanks Don, I'm glad to hear that you're finding the vid useful!

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You are the best. Thanks for sharing your gift of explaining difficulty stuff in a simpler and understandable way with us. Much appreciated.

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You did such a great job simplifying these terms and because of that, you helped me a lot! Thank you, James!

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You are truly a gifted teacher and storyteller. Thanks James for sharing your expertise.

[@AccountingStuff]

No worries Sherree!

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Thank you again mate. You are an awosome human being just for apploading these videos:). And you are probably the first KZbinr that genarious enough to reply ALL THE COMMENTS.

[@AccountingStuff]

Cheers Emre! Haha, it's no problem. I love to chat with my subscribers!

[@shefalibisht00]

Loved how you explained EQUITY in such an articulate way!

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I'm so glad that I found this page. You have really thorough information. Thank you.

[@AccountingStuff]

No worries, hope the videos are helping you out!

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This is by far the best explaination So far, it will help me teach my students

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your entire channel has saved me, if I ever become something in the world of finance, so much of it will be owed to you fr

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The best explanation of equity I`ve seen here on youtube, thank you! I`m applying for a support analyst position in a fintech and I`ve been learning about equity and other terminologies related to the business this week, I´ll watch all your videos related to this topic now, you saved me! XD

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Omg a BIG thank you for your videos!! They are helping me so much!!

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This channel is great! I am currently taking accounting at uni and have a test in 2 hours... I'm excited to see your channel progress at the same time as my class!

[@AccountingStuff]

Thanks Taylar, and good luck for your test!!

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You always save me before any interviews thanks so much ❤️

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This was awesome! Came here to get a better understanding of equity as we just went from sole proprietor to partnership. What I got out of it was a way better general understanding on all the elements! Thanks again!

[@AccountingStuff]

No worries, glad it's making sense :)

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Thanks for the video. Your 11 min video just cleared up a concept I struggled with for a long time. THanks!

[@AccountingStuff]

No worries Gregory! Glad it's making sense

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I never thought i would enjoy accounting this much! Thank you!!! You're literally good to explain (:

[@AccountingStuff]

Cheers Daria!

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Over 30 years since I did accounting as part of my degree. Wish you'd have been about then! I finally understand it. Brilliant!

[@AccountingStuff]

Great to hear it's clicking for you

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Mind blown on how simply this was explained and easy to understand compared to the last 50 hr long videos that left me even MORE confused 😊😂....thanks brother

[@AccountingStuff]

No problem, glad to hear that the video helped!

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Thank you so much for the one by one explanation. The equity is the hardest part of my job. Thanks again for your help!!!!

[@AccountingStuff]

No problem!

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Exponentially better than my teacher's explanation. Thank you so much.

[@AccountingStuff]

Thanks! All the best

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[@AccountingStuff]

Thanks Alodia, I'm working on a bunch more at the moment

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You are the best, when it comes to proper explanations!!!

[@AccountingStuff]

Thanks! Glad you found it useful :)

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You are a genius man! I had been reading and re-reading 25 pages of my basic accounting chapter! Damn, you made it so clear in 1 video! Thank you tons!

[@AccountingStuff]

No worries, glad to hear it's making sense!

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What a brilliant teacher! Thanks for bringing light to this topic.

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Thanks Lousie, hope it helps!

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just in my first year of finaces and this channel is absolutely life saving!!! Thanks for your amazing videos

[@AccountingStuff]

No problem, all the best with your studies!

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You do such a great job of giving understanding

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I was struggling with accountancy in my university. Today I came through this channel. U explained me better than my qualified professor. Thanks james. You are doing an excellent work. Keep it up 👍

[@AccountingStuff]

Thanks Mohammed, I'm sorry to hear that you're having a tough time at uni. Best of luck with it all!

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I can't thank you enough for this video, all this time I thought drawings and dividends are different things, and I actually didn't really understand what a dividend is, but thanks to you, I get it now!

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Nice one Vina, glad to hear that it's clicking!

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Good luck in your test!

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Cheers, I'm happy to help :)

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Cheers Asal!

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Thanks awesome to hear!

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Cheers David, great to hear that you're enjoying the vids

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I cannot express how helpful this was, thank you!

[@AccountingStuff]

You're very welcome :)

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I took both financial accounting and managerial accounting, and I literally understand more of accounting from your videos. THANK YOU SO MUCH, i'm going to take intermediate accounting, so I'm refreshing my mind lol.

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Nice one! Best of luck with it all :)

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this really help and saved me a time in learning this topic. thank you !

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I like the content itself and the way you edit your video. Super helpful! Thank you so much for putting effort into this.

[@AccountingStuff]

Thanks Eileen, glad you enjoyed it :)

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amazing videos, I my Financial Management course I follow the book but to truly understand it and link everything together your videos are the key!! thank you

[@AccountingStuff]

Cheers Isabel! All the best with your course :)

[@helenashoy3597]

You helped me understand equity so well! Thank you!

[@AccountingStuff]

That's really great to hear, I'm glad it's making more sense now