What does it mean to have owners equity in a business?

Having owner's equity in a business refers to the financial interest that the owner has in the assets of the business after all liabilities have been subtracted. It represents the residual interest in the assets of the business; essentially, it is the portion of the business that is owned free and clear of any debts.

Owner's equity is crucial because it reflects the net worth of the business from the owner's perspective. It can change over time due to various factors such as profits or losses generated by the business, additional investments by the owner, or distributions made to the owner. This financial stake is a fundamental aspect of ownership, indicating the owner's claim to the business's value and assets after all obligations have been met.

In contrast, the other options refer to different financial concepts: expenses incurred represent the costs associated with running the business; loans taken out denote liabilities that the business must repay; and income generated from sales refers to revenue, which is distinct from equity as it does not account for the debts of the business.