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Equity is a term used in accounting, real estate, investing, and startup financing. In accounting, equity is the book value of shareholder capital found on the balance sheet. It represents the difference between assets and liabilities, showing what is owned by the business owner. For example, if a company owns a $1 million machine financed through a bank loan of $800,000 and $200,000 of shareholder capital, equity equals $200,000. This equation helps understand the company's financial health and what is owed versus what is owned.