Element Three: Equity Definition Equity or net assets is the residual interest in the assets of an entity that remains after deducting its liabilities. In a business enterprise, the equity is the ownership interest. In a not-for- profit organization, which has no ownership interest in the same sense as a business enterprise, net assets are divided into three classes ba on the presence or absence of donor-imposed restrictions-permanently restricted, temporarily restricted, and unrestricted net assets. Your Rewritten Definition: Element Four: Investments Definition: Investments by owners are increases in equity of a particular business enterprise resulting from transfers to it from other entities of something valuable to obtain or increase ownership interests (or equity) in it. Assets are most commonly received as investments by owners, but that which is received may also include services or satisfaction or conversion of liabilities of the enterprise. Your Rewritten Definition