What is the result when you subtract liabilities from assets?
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Q:

What is the result when you subtract liabilities from assets?

A:

Quick Answer

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.

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Full Answer

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.

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