Difference between equity and capital

Difference between equity and capital

Capital and equity term are normally interchangeable used therefore some time equity capital term is also used in place of equity or capital. Equity and capital represent the investment made by the equity holder of shareholder to receive the dividend. However there is slight difference between these two terms.

Capital

Capital is basically an original investment made be the equity holder and amount of that capital always appear under the heading of issued or paid up capital. Capital is credited for new investment and cash or bank is credited.

Equity

Equity is basically a residual interest means that capital plus accumulated profit or less accumulated loss. Equity figure give an idea that how much amount will be distributed among the equity holder in case of liquidation. Equity is more like a disclosure of the net investment.

Example of equity and Capital

	$
Equity
Issued Capital 100,000 @ 10	1,000,000
Accumulated Loss	(250,000)
	750,000