What Is the Result When You Subtract Liabilities From Assets?

What Is the Result When You Subtract Liabilities From Assets?

What Is the Result When You Subtract Liabilities From Assets?

Subtracting a company's liabilities from its assets results in the business's net worth, also called owner's equity, according to Entrepreneur magazine. Assets, liabilities and net worth are listed on a company's balance sheet.

A balance sheet first lists current assets, which includes cash on hand, accounts receivable, supplies and inventory, Entrepreneur explains. Next, the balance sheet lists long-term assets, including capital and plant, investments and miscellaneous assets. Current assets and long-term assets are added to arrive at the company's total assets. Next, the balance sheet, also called a financial statement, lists current liabilities, which include accounts payable, accrued liabilities and taxes. Long-term liabilities, including mortgage payable and notes payable, are listed. The statement arrives at total liabilities by adding total long-term liabilities to current liabilities. Finally, total liabilities are subtracted from total assets to calculate the company's net worth.