Difference
between Equity and Capital
Equity and capital both
are interchangeable terms. Technically, there is slight difference between
equity and capital. The difference between equity and capital is being
explained below;
1. Capital
Capital is basically an
original investment made be the equity holder and amount of that capital always
appear under the heading of issued or paid up capital. Capital is credited for
new investment and cash or bank is credited.
2. Equity
Equity represents the
residual interest of the share holder in the entity. Residual interest is calculated
by deducting liabilities from the total assets. This is the amount equity
holder will receive on liquidation. Alternatively equity is running capital
i.e. paid up capital plus profit or minus loss.
Example
of equity and Capital
$
|
|
Equity
|
|
Issued Capital 100,000 @ 10
|
1,000,000
|
Accumulated Loss
|
(350,000)
|
650,000
|
|
