Difference Between Liabilities And Owner’s Equity
In order to make the difference between Liabilities And Owner’s Equity or Equity or Capital i n case of Sole Proprietorship or Part nership Busi nesses , firstly, you must know about the term Equity which means that there are two types of rights or claims to the assets of the business of the company. Rights of Owners to the assets of the business are Internal sources of finance to the business and known as Owner Equity like Capital invested in the business and Rights of Outsiders are External sources of finance to the business and called Liabilities like Loan from Banks, financial institutions, etc. Now come to our main topic. There are some main differences between Liabilities and Owner 's Equity 1. Liabilities are the rights of Outsiders while Owner Equity or simply Equity is the rights of the shareholders of the company. I n case of Sole Proprietorship, it is the amou nt i nvested by the ow ner i n the busi ness to start it or t...