From ACT Wiki
Financial reporting - balance sheet.
Net assets are equal to Total assets MINUS Total liabilities.
- Example: net assets calculation
- Other assets are 70.
- Cash is 30.
- Total assets = Other assets + Cash = 70 + 30
- Total assets = 100
- Debt is (40)
- Other liabilities are (10)
- Total liabilities = Debt + Other liabilities = (40) + (10)
- Total liabilities = (50)
- Total assets - Total liabilities = 100 - 50
- Net assets = 50
Net assets are also equal to the book value of equity, also known as shareholders' funds.
The book value of total equity is equal to the book value of the company's net assets.
These two items in a balance sheet always balance - so long as there are no errors.
This is what is meant by a balance sheet "balancing".