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Accounting




Residual Interest


The owners’ rights in an entity’s assets after deducting all its liabilities. Residual interest reflects the amount of equity (owners’ equity) in an entity: the claims of existing owners on the assets of the entity after the deduction of its liabilities, as can inferred from the accounting equation (basic accounting equation):

Equity = assets – liabilities

By definition, an equity instrument is a contract or contractual arrangement that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The residual interest in a business entity belongs to the common stockholders (holders of common stock/ ordinary shares).

Residual interest is also known as owners’ residual interest.



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Accounting is the language of business, everywhere, worldwide. It is the means by which virtually every business communicates information about its operations, irrespective of size, scale, objectives, ...
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