Definition of Net Assets
Net assets is defined as total assets minus total liabilities.
Examples of Net Assets
In a sole proprietorship the amount of net assets is reported as owner’s equity.
In a corporation the amount of net assets is reported as stockholders’ equity.
In a not-for-profit (NFP) organization, the net amount of its total assets minus total liabilities is actually reported as net assets in its statement of financial position.
The net assets section for the NFP organization is divided into two major classifications:
- net assets without donor restrictions
- net assets with donor restrictions
