sole proprietorship
This query is : Resolved
08 September 2017
how can calculate the net-worth.
08 September 2017
FA+CA-CL..........
25 July 2025
Net Worth = Assets – Liabilities
Where:
Assets = All resources owned by the business (cash, bank balance, inventory, machinery, receivables, investments, etc.)
Liabilities = All amounts owed by the business (loans, payables, outstanding bills, etc.)
Step-by-step:
List all Assets (at book value):
Cash in hand and bank
Accounts receivable (money customers owe you)
Inventory or stock (goods to sell)
Fixed assets (machinery, furniture, computers, vehicles)
Any investments or other valuables
List all Liabilities:
Loans taken
Creditors or unpaid bills
Outstanding expenses
Any other debts
Calculate Net Worth:
Net Worth
=
Total Assets
−
Total Liabilities
Net Worth=Total Assets−Total Liabilities
Example:
Particulars Amount (₹)
Cash in hand 50,000
Bank balance 1,00,000
Accounts receivable 2,00,000
Inventory 3,00,000
Fixed Assets (Machinery) 4,00,000
Total Assets 10,50,000
Loans 3,00,000
Creditors (payables) 1,50,000
Total Liabilities 4,50,000
Net Worth 6,00,000
Note:
Net worth represents the owner’s equity in the business.
For sole proprietorship, this is the capital invested + retained profits - drawings (owner’s withdrawals).
Where:
Assets = All resources owned by the business (cash, bank balance, inventory, machinery, receivables, investments, etc.)
Liabilities = All amounts owed by the business (loans, payables, outstanding bills, etc.)
Step-by-step:
List all Assets (at book value):
Cash in hand and bank
Accounts receivable (money customers owe you)
Inventory or stock (goods to sell)
Fixed assets (machinery, furniture, computers, vehicles)
Any investments or other valuables
List all Liabilities:
Loans taken
Creditors or unpaid bills
Outstanding expenses
Any other debts
Calculate Net Worth:
Net Worth
=
Total Assets
−
Total Liabilities
Net Worth=Total Assets−Total Liabilities
Example:
Particulars Amount (₹)
Cash in hand 50,000
Bank balance 1,00,000
Accounts receivable 2,00,000
Inventory 3,00,000
Fixed Assets (Machinery) 4,00,000
Total Assets 10,50,000
Loans 3,00,000
Creditors (payables) 1,50,000
Total Liabilities 4,50,000
Net Worth 6,00,000
Note:
Net worth represents the owner’s equity in the business.
For sole proprietorship, this is the capital invested + retained profits - drawings (owner’s withdrawals).
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