Net Assets
What Does Net Assets Mean?
Net assets is the difference between assets and liabilities and is a term used by non-profit organisations instead of owner’s equity or stockholder’s equity.
![na1](https://seeaccountingnow.online/wp-content/uploads/2021/06/na1.jpg)
How it Works
A business will have assets.
![na2](https://seeaccountingnow.online/wp-content/uploads/2021/06/na2.jpg)
These are things the business owns—or money owed to the business.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/na3.jpg)
A business will also have liabilities.
![na4](https://seeaccountingnow.online/wp-content/uploads/2021/06/na4.jpg)
This is money owed to others.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/na5.jpg)
The difference between assets and liabilities is known as net assets.
![na6](https://seeaccountingnow.online/wp-content/uploads/2021/06/na6.jpg)
Net assets equals equity.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/na7.jpg)
This is how much money the business owes to the owners or stockholders.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/na8.jpg)
Theoretically, assets should show how much the business could recoup if assets were sold and customer debts were paid.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/na9.jpg)
Liabilities show what is owed to others.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/na10.jpg)
Net assets shows what is left over—or net worth.
![na11](https://seeaccountingnow.online/wp-content/uploads/2021/06/na11.jpg)
© R.J. Hickman 2020