Owner’s Equity VS Retained Earnings
What is the difference between Owner’s Equity and Retained Earnings? Here we study the difference between these Accounting Terms. Owner’s Equity Definition And Meaning It is the amount which is invested by the sole proprietor in the business. So, any amount contributed by the owner to the business in form of Cash or Goods is treated as the rights of the owner and business is separate legal entity so the business has to pay this amount to owner before closing down. Although, the Sole Proprietorship business will close down automatically when the owner dies, so there is no chance to close it manually. Retained Earnings Definition And Meaning These are the profits which are retained in the business for future purposes, e.g., in case of crisis, for further investments purposes, etc. The company needs money from time to time to invest in the business or in case of cri...