Which of the following best describes equity?

Equity represents the owner's residual interest in the assets of a company after all liabilities have been settled. This means that equity reflects what owners actually own in a business, calculated as total assets minus total liabilities. This concept is crucial because it provides insights into the net worth of a business, showing how much value belongs to the shareholders.

In a financial context, equity can take various forms, including stock and retained earnings, and serves as a measure of the company's financial stability and health. It is an essential component of the accounting equation: Assets = Liabilities + Equity, highlighting its foundational role in understanding a firm's financial structure.

The other options, while related to financial concepts, do not accurately capture the definition of equity. For instance, total money a company owes pertains to liabilities rather than equity, and profit distribution and revenue generation address aspects of income and operations, rather than the ownership stake in assets.