Equity

Equity is the residual interest in an entity’s assets after deducting its liabilities. It can include contributed capital, accumulated profits or losses, and current-period results.

Equity is not the bank balance and is not necessarily positive. Owner contributions are not revenue; loans create liabilities rather than equity.

Odoo uses equity account classifications and incorporates the financial result into Balance Sheet reporting. Revenue and expense accounts contribute to Profit and Loss rather than being ordinary individual asset or liability rows.

Opening equity must reflect the actual starting position. Report labels and allocation of earnings depend on localization, report configuration, and closing procedures.