Net assets
Net assets are total assets less total liabilities. In a statement of financial position this residual equals equity. The amount is an accounting measure at the reporting date, not necessarily the cash that owners could obtain by selling the business. Changes in net assets can arise from profit or loss, other comprehensive income, owner contributions and distributions.
Worked example
Assets of $250,000 less current liabilities of $40,000 and non-current liabilities of $60,000 give net assets of $150,000. If these are a sole trader’s only balances, the capital account should also be $150,000.
Common mistake
Deduct all liabilities when calculating net assets. Deducting only current liabilities instead produces a common measure of capital employed.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: net asset value