<P> In accounting, equity (or owner's equity) is the difference between the value of the assets and the value of the liabilities of something owned . It is governed by the following equation: </P> <Dl> <Dd> Equity = Assets − Liabilities (\ displaystyle (\ text (Equity)) = (\ text (Assets)) - (\ text (Liabilities))) </Dd> </Dl> <Dd> Equity = Assets − Liabilities (\ displaystyle (\ text (Equity)) = (\ text (Assets)) - (\ text (Liabilities))) </Dd> <P> For example, if someone owns a car worth $15,000 (an asset), but owes $5,000 on a loan against that car (a liability), the car represents $10,000 of equity . Equity can be negative if liabilities exceeds assets . Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the equity of a company as divided among shareholders of common or preferred stock . Negative shareholders' equity is often referred to as a shareholders' deficit . </P>

What factors cause the net assets of an entity to change