Which term represents the net asset value after subtracting debts from assets?

Which term represents the net asset value after subtracting debts from assets?

• A. Balance Due
• B. Warranty
• C. Capital
• D. Billing Date

Answer: (C)

Capital represents the net value of what the business owns after it has paid its debts. On a balance sheet, assets minus liabilities equals the owner’s equity, which is the capital—the residual claim of the owners on the business’s assets. For example, with 500k in assets and 300k in liabilities, the capital is 200k. This is different from a balance due (money customers owe), a warranty (a product guarantee), or a billing date (when an invoice is issued).

Capital represents the net value of what the business owns after it has paid its debts. On a balance sheet, assets minus liabilities equals the owner’s equity, which is the capital—the residual claim of the owners on the business’s assets. For example, with 500k in assets and 300k in liabilities, the capital is 200k. This is different from a balance due (money customers owe), a warranty (a product guarantee), or a billing date (when an invoice is issued).