ALE.16 Equity Accounts

Equity is the net total value of the owner’s interest in the business. If there is only one owner then all of the equity in the business belongs to the one owner. If there is more than one owner then the total equity is the sum of each of their total interests in the business.  

Owners investments increase owners equity. Owners draws decrease owners equity. 

The term “Retained Earnings” is properly only used by corporations, but Quickbooks uses it for all types of businesses to represent total equity. The exact proper names of equity accounts changes depending on the legal form of ownership: 

Sole Proprietorship

Beginning Owners Equity

Owners Contributions

Owners Draws

Ending Owners Equity

Partnership

Beginning Partners Capital

Partners Contributions

Partners Draws

Ending Partners Capital

LLC

Beginning Members Capital

Members Contributions

Members Draws

Ending Members Capital

S-Corporations 

Retained Earnings

Shareholder Contributions

Shareholder Distributions

Special Tax Basis Accounts