Owner equity

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OWNER'S EQUITY, as a whole, is what the business owes the owner. It consists of different categories of accounts, each of which serve a special purpose. The business owes the owner for any monies they invest in the business. The business also owes the owner for any profit it makes. The owner must absorb any loss the business suffers. In order to know if and how the business makes profit or suffers losses, it is necessary to keep the different revenues and different expenses separate for a period of time. This helps the management of the business analyze the results of ...