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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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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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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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!...

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Cheers Tim!

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

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I slacked off during high school. This is one of the main reasons, why I can't cope up with my college accounting lectures and tests. I haven't got the basics of accounting down hence the crisis. Then one day I stumbled upon this channel and mark my words, this is one of the best things that ever happened to me in my entire life.

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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’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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[@AccountingStuff]

Cheers Yair, glad you enjoyed it!

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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!!!!!

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

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[@AccountingStuff]

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

[@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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Great to hear it's clicking for you

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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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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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Thanks for your suggestion!

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Good luck with your studies :)

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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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i wanna know more about the entities types and what are the differences

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

[@AccountingStuff]

Cheers Sebastian!

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Why I didn't find your channel back in uni years when I was so struggling with Accounting????? Why I paid buttloads of money to a university that couldn't explain EQUITY clearly in 10 mins and instead, took me almost 3 years??????? lol All I want to say is THANK YOU JAMES!!! Your explanation is the clearest I have ever seen in my life!!

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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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Cheers Caleb!!

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

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Great to hear you're finding these useful :)

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Thanks Oscar, hope you find them useful :)

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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.

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

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Cheers!

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

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

[@AccountingStuff]

No worries Sherree!

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

[@AccountingStuff]

Cheers!

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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.

[@AccountingStuff]

Nice one! Best of luck with it all :)

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

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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!

[@shefalibisht00]

Loved how you explained EQUITY in such an articulate way!

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

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

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

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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!

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

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

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Cheers, I'm happy to help :)

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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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Studying for a test and this channel breaks these accounting terms THE BEST. Thank you so much!

[@AccountingStuff]

Good luck in your test!

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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!

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Thanks Taylar, and good luck for your test!!

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You do such a great job of giving understanding

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

[@AccountingStuff]

Thanks Lousie, hope it helps!

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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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I appreciate the time and effort you put into the video, the content is amazing, simple and concise. I've been reading those textbooks and still couldn't get my mind straight with all the terms, thank you again!

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No worries!

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

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Cheers Daria!

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

[@junioreli]

I just started my accounting classes and due to my professor sending me a wrong file telling me my classes where online at a different date, I missed my actual first accounting class. I was lost on what equity meant, my professor did not explained it this way on my second class this week which I did went.. I was soooo confused. Not anymore thanks to this video. I appreciate it. You have a new follower now, and gave it a like. THANK YOU

[@AccountingStuff]

Great to have you on board! I'm glad to hear it's making sense :)

[@asalburieva9635]

maaann love how u explained everything was clearly than my lectures thank youuu

[@AccountingStuff]

Cheers Asal!

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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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[@AccountingStuff]

No problem, I'm happy to help :)

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Awesome explanation you made accounting an interesting subject. ❤️ Thank you