Equity
Code: 3000
👁 Views: 174
Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Credit |
Definition
Represents the owners' claim on the company's net assets after deducting all liabilities. This account includes all equity components such as capital, retained earnings, other comprehensive income, and reserves.
Sub-accounts
3100
Capital
3200
Shareholders Equity
3300
Retained Earnings
3500
Current Accounts
3600
Profit Distributions
3700
Reserves
📐 IFRS vs US GAAP Accounting Treatment
IFRS
IAS 1
Presentation of Financial Statements
US GAAP
ASC 505
Equity
❓ Frequently Asked Questions
Q: What are the main components of equity?
A: Paid-up capital, retained earnings, other comprehensive income, reserves, and treasury shares (negative).
Q: How do profits and losses affect equity?
A: Profits increase equity (through retained earnings), and losses decrease it.
Q: What is the difference between retained earnings and reserves?
A: Retained earnings are accumulated undistributed profits. Reserves are a portion of retained earnings allocated for a specific purpose (legal or voluntary).