In accounting, equity has specific meanings depending on context. Most commonly, it refers to the difference between an entity’s assets (the value of total assets) and liabilities (the value of total liabilities):

Equity = total assets – total liabilities

Equity refers to a entity’s book value, which is the difference between total assets and total liabilities as presented on the balance sheet (statement of financial position). Therefore, an entity’s financial position is manifested in the amount of equity it has.

Equity is also referred to as the owners’ equity, as it’s the value that owners (shareholders, equity holders) of an entity has left over after liabilities are deducted from assets for a specific period or at a given point in time.

Equity is that part of capital that is financed or contributed by owners and has specific characteristics such as its reflection of the entire value of an entity as a going concern, assuming it remains in business in perpetuity.

Equity may also denote the interest or ownership share of a stakeholder in an arrangement (such as an investment account) held by an entity.