Fixed assets + net current assets equals what?

Fixed assets + net current assets equals what?

• A. Net Assets
• B. Current Assets
• C. Net Current Assets/Working Capital
• D. Capital

Answer: (A)

Net assets show the value of what the business owns after liabilities are taken into account. Net current assets is current assets minus current liabilities. When you add fixed assets to net current assets, you’re combining the business’s long-term resources with its surplus after short-term obligations, which represents the overall asset position available to the owners. In a simple balance sheet (with no long-term liabilities), this total equates to net assets. For example, if fixed assets are 300 and net current assets are 100, the combination is 400, which is the net assets (the owners’ claim on the assets after liabilities).

Net assets show the value of what the business owns after liabilities are taken into account. Net current assets is current assets minus current liabilities. When you add fixed assets to net current assets, you’re combining the business’s long-term resources with its surplus after short-term obligations, which represents the overall asset position available to the owners. In a simple balance sheet (with no long-term liabilities), this total equates to net assets. For example, if fixed assets are 300 and net current assets are 100, the combination is 400, which is the net assets (the owners’ claim on the assets after liabilities).