Main equity accounts

Net worth o Net equity is the name given to the total value of the assets of a business after you have discounted all your debts (liabilities). This amount includes any initial contribution from its founding partners that is not listed as a liability, as well as the accumulated results or any other variation that may affect them.

Instead, hedging operations Cash flows or other similar that remain to be allocated in debits and credits, will not be considered part of the net worth. It is, in accounting terms, a patrimonial mass what has balance creditor and whose general calculation formula is the following:

Assets - Liabilities = Equity

Thus, accounts that represent an increase in net worth will be considered Profits, while those that suppose its decrease will be considered losses.

Traditionally, the net worth is made up of the following accounts, divided according to their origin:

Main equity accounts

1. Contributions from the owners. This is the initial capital contributed by the owners, also called initial equity.
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2. Profit reserves. The amount that is not distributed once the fiscal year is closed, either by company provisions, legal provisions or by the will of the partners. According to its origin and motivation They can be legal reserves (mandatory), statutory reserves or optional reserves.
3. Unallocated results. Accumulated gains or losses without a specific allocation, which may be used for capital increase, dividend, withholding as reserved profit (in case there are no legal commitments that prevent it) or it can continue pending assignment. Together with earnings reserves, they constitute retained earnings.
4. Capital reserves. Formed by issue premiums, that is, the premium that an issuing entity imposes on the placement of the company's shares. These capital reserves do not come from results.

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