Editing Equity (finance) (section)

===Accounting===
In [[financial accounting]], the equity is derived by subtracting its liabilities from its assets. For a business as a whole, this value is sometimes referred to as '''total equity''',<ref>{{Cite web|title=How to calculate total equity|url=https://www.accountingtools.com/articles/how-to-calculate-total-equity.html|access-date=2021-02-03|website=AccountingTools|language=en-US}}</ref> to distinguish it from the equity of a single asset. The fundamental [[accounting equation]] requires that the total of liabilities and equity is equal to the total of all assets at the close of each accounting period. To satisfy this requirement, all events that affect total assets and total liabilities unequally must eventually be reported as changes in equity. Businesses summarize their equity in a [[financial statement]] known as the [[balance sheet]] (or statement of net position) which shows the total assets, the specific equity balances, and the total liabilities and equity (or deficit).

Various types of equity can appear on a balance sheet, depending on the form and purpose of the business entity. [[Preferred stock]], [[share capital]] (or capital stock) and [[capital surplus]] (or additional paid-in capital) reflect original contributions to the business from its investors or organizers. [[Treasury stock]] appears as a [[contra account|contra-equity]] balance (an offset to equity) that reflects the amount that the business has paid to [[stock repurchase|repurchase]] stock from shareholders. [[Retained earnings]] (or accumulated deficit) is the running total of the business's net income and losses, excluding any [[dividend]]s. In the [[United Kingdom]] and other countries that use its accounting methods, equity includes various [[Reserve (accounting)|reserve]] accounts that are used for particular reconciliations of the balance sheet.

Another financial statement, the [[statement of changes in equity]], details the changes in these equity accounts from one accounting period to the next. Several events can produce changes in a firm's equity.

* '''Capital investments''': Contributions of cash from outside the firm increase its base capital and capital surplus by the amount contributed.
* '''Accumulated results''': Income or losses may be accumulated in an equity account called "retained earnings" or "accumulated deficit", depending on its net balance.
* '''Unrealized investment results''': Changes in the value of securities that the firm owns, or foreign currency holdings, are accumulated in its equity.
* '''Dividends''': The firm reduces its retained earnings by the amount of cash payable to shareholders.
* '''Stock repurchases''': When the firm purchases shares into its own treasury, the amount paid for the stock is reflected in the treasury stock account.
* '''Liquidation''': A firm that liquidates with positive equity can distribute it to owners in one or several cash payments.