What Is the Umbrella of Equity in Bookkeeping?

Accountants consider a variety of things when keeping financial books for companies and other organizations. The notion of an umbrella of equity arises from various business concepts and financial and accounting terms. In some instances, the umbrella of equity overlaps with bookkeeping methods and practices. Understanding what this term means requires not just defining it but relating its various uses to the idea of bookkeeping.

Umbrella of Equity

The term umbrella of equity, which appears more commonly as equity umbrella, holds a relatively broad definition. In business terms, an umbrella refers to a general categorization under which something falls. A brand umbrella, for instance, constitutes all products of a brand. An equity umbrella, therefore, describes an equity structure. Loosely defined, equity constitutes the capital of a company or organization. The term also refers to securities issued by companies as a form of financing.

Owner's Equity Umbrella

An owner’s equity umbrella applies to sole proprietorships, which are businesses -- usually small ones -- that a single person owns. For bookkeeping purposes, the umbrella of equity for a sole proprietorship consists of expenses, revenues and drawing. Expenses constitute all money spent on a business by its owner or through company accounts. Revenue constitutes all money generated by the business, which belongs to the sole owner. Drawing occurs when a proprietor takes money or assets from a business for personal reasons. These three things represent separate items in a financial statement, though combined make up the owner’s equity umbrella of a statement.

Private Equity Umbrella

The private equity umbrella applies to companies with investors, usually publicly traded companies issuing stock. All capital invested in a company through private investors falls under the private equity umbrella. This includes private investors who purchase stock and private venture capital investments. The term owners’ equity differs from things falling under the private equity umbrella regarding publicly traded companies. Owners’ equity constitutes all assets of a building belonging to investors, while the private equity umbrella contains raw figures of invested capital or statistics regarding issued or available shares of equity. Everything under the private equity umbrella appears in financial bookkeeping, though in a number of places, depending upon the investor and nature of the investment.

Other Equity Umbrellas

Various other equity umbrellas exist, though these umbrellas rarely, if ever, affect the process of financial bookkeeping. A national umbrella of equity constitutes all the equity available in that country. The Canadian umbrella of equity, for instances, includes all the equity funds and shares -- securities, commodities and funds like mutual and hedge funds -- available in Canada. Technically, any reference can refer to a group of equity or funding as existing under an equity umbrella, as umbrella constitutes a generic term used for grouping.