Net position
is the difference between an entity’s assets plus deferred outflows of resources and its liabilities plus deferred inflows of resources (NCES). Net assets
, on the other hand, are the difference between an entity’s total assets and its total liabilities (Ramsey County).
Key Facts
- Definition:
- Net position: The difference between an entity’s assets plus deferred outflows of resources and its liabilities plus deferred inflows of resources.
- Net assets: The difference between an entity’s total assets and its total liabilities.
- Components:
- Net position: It consists of three components: net investment in capital assets, restricted net position, and unrestricted net position.
- Net assets: It represents the total value of an entity’s assets after deducting its liabilities.
- Focus:
- Net position: It focuses on the accessibility of the underlying assets and includes both restricted and unrestricted components.
- Net assets: It represents the overall value of an entity’s assets and does not differentiate between restricted and unrestricted resources.
- Calculation:
- Net position: It is calculated by subtracting liabilities and deferred inflows of resources from assets and deferred outflows of resources.
- Net assets: It are calculated by subtracting total liabilities from total assets.
- Reporting:
- Net position: It is reported in the government-wide financial statements, with separate categories for net investment in capital assets, restricted, and unrestricted components.
- Net assets: It is reported in the financial statements of various entities, such as corporations, non-profit organizations, and government agencies.
Components
Net position
consists of three components: net investment in capital assets, restricted net position, and unrestricted net position (NCES). Net assets
represent the total value of an entity’s assets after deducting its liabilities and do not differentiate between restricted and unrestricted resources (Ramsey County).
Focus
Net position
focuses on the accessibility of the underlying assets and includes both restricted and unrestricted components (NCES). Net assets
represent the overall value of an entity’s assets and do not differentiate between restricted and unrestricted resources (Ramsey County).
Calculation
Net position
is calculated by subtracting liabilities and deferred inflows of resources from assets and deferred outflows of resources (NCES). Net assets
are calculated by subtracting total liabilities from total assets (Ramsey County).
Reporting
Net position
is reported in the government-wide financial statements, with separate categories for net investment in capital assets, restricted, and unrestricted components (NCES). Net assets
are reported in the financial statements of various entities, such as corporations, non-profit organizations, and government agencies (Washington State Auditor’s Office).
Conclusion
Net position
and net assets
are two distinct concepts with different definitions, components, focus, calculation methods, and reporting requirements. Net position is specific to government entities and provides a detailed analysis of the accessibility of assets, while net assets represent the overall value of an entity’s assets after deducting its liabilities.
Sources
- Financial Accounting for Local and State School Systems: 2014 Edition – Chapter 5: Financial Reporting — Fund Balance/Net Assets
- Statement of Net Position | Ramsey County
- Net Position | Office of the Washington State Auditor
FAQs
What is net position?
Net position is the difference between an entity’s assets plus deferred outflows of resources and its liabilities plus deferred inflows of resources. It focuses on the accessibility of the underlying assets and includes both restricted and unrestricted components.
What are the components of net position?
Net position consists of three components: net investment in capital assets, restricted net position, and unrestricted net position.
What is the difference between net position and net assets?
Net assets represent the total value of an entity’s assets after deducting its liabilities. Unlike net position, net assets do not differentiate between restricted and unrestricted resources.
How is net position calculated?
Net position is calculated by subtracting liabilities and deferred inflows of resources from assets and deferred outflows of resources.
How is net assets calculated?
Net assets are calculated by subtracting total liabilities from total assets.
Where is net position reported?
Net position is reported in the government-wide financial statements, with separate categories for net investment in capital assets, restricted, and unrestricted components.
Where are net assets reported?
Net assets are reported in the financial statements of various entities, such as corporations, non-profit organizations, and government agencies.
Why is it important to understand the difference between net position and net assets?
Understanding the difference between net position and net assets is important because these concepts provide different insights into an entity’s financial health. Net position focuses on the accessibility of assets and is particularly relevant for government entities, while net assets represent the overall value of an entity’s assets and are used by various types of organizations.