Final answer:
The net assets of a business equal total assets minus total stockholder's equity, reflecting the company's residual interest in its assets after all liabilities are deducted. This figure represents the financial health and value of the company and ensures the balance sheet balances.
Step-by-step explanation:
The net assets of a business are equal to the total assets minus total stockholder's equity. In accounting, this concept is reflected on a balance sheet, an essential financial statement used to track a company's financial position. A bank's balance sheet provides a clear example, where the assets include cash reserves, loans made to customers, and securities, while liabilities are primarily composed of customer deposits. The net worth or bank capital, which is equivalent to stockholder's equity in a non-bank business, is calculated by subtracting total liabilities from total assets. Hence, in a bank's T-account, assets must always equal liabilities plus net worth to balance.
It is crucial to understand that the net assets of a business represent the residual interest in the assets of the company after deducting liabilities. When the content loaded the net assets of a business are calculated, it provides valuable information to investors, management, and other stakeholders regarding the financial health and value of the company.