Equity is what the business owes to its owners. Equity is derived by deducting total liabilities from the total assets. It therefore represents the residual interest in the business that belongs to the owners.
Equity is usually presented in the statement of financial position under the following categories:
Share capital represents the amount invested by the owners in the entity
Retained Earnings comprises the total net profit or loss retained in the business after distribution to the owners in the form of dividends.
Revaluation Reserve contains the net surplus of any upward revaluation of property, plant and equipment recognized directly in equity.