What represents the value of a business calculated as total assets minus long-term liabilities?

• A. Net assets
• B. Capital employed
• C. Shareholders' equity
• D. Current assets

Answer: (A)

Net assets show the value remaining in the business after accounting for long‑term obligations. The idea is to start with all resources (total assets) and remove the long‑term claims against them (long‑term liabilities). What’s left represents the residual value funded by owners and other sources after long‑term debt obligations are considered, which is the net position of the business.

For example, if total assets are 1,000,000 and long‑term liabilities are 400,000, the calculation leaves 600,000 as net assets. This figure helps indicate the amount of assets that belong to the owners after long‑term debt is accounted for, and it aligns with how the term is used in many business contexts.

Capital employed would use current liabilities instead of long‑term liabilities, changing what’s subtracted. Shareholders’ equity equals assets minus all liabilities, not just long‑term ones, so it isn’t the same calculation. Current assets are just a subset of assets and don’t reflect the net position.