Assets, liabilities, and owner’s equity are the three main components of a business. Assets are items of economic value owned by a company, such as cash, accounts receivable, inventory, buildings, equipment, and investments. Liabilities are obligations or debts owed by a company to another party. These include accounts payable, wages payable, interest payable, taxes payable, and loans payable. Owner’s Equity is the difference between what the company owns (assets) and what it owes (liabilities), representing the current financial stake of the owners in their business. The formula for calculating owner’s equity is: Assets – Liabilities = Owner’s Equity. By understanding these three core elements of a business, you can gain insight into how it runs and performs financially!