What is a Change in Net Assets?

The change in net assets is the equivalent of the net profit figure on an income statement . It is used in the financial reporting of nonprofit entities. The measure reveals the change in assets derived from revenues , expenses , and any releases on the restrictions of assets during the period. A positive change indicates that a nonprofit entity is prudently managing its resources. It is one of the more closely-watched numbers in the financial statements of a nonprofit entity.

The change in net assets concept can also apply to a for-profit business, where it represents the change in assets minus liabilities over a measurement period. Stated differently, this is the change in equity over a period of time. An increase indicates that a business has either obtained more equity funding or increased its profits, while a decrease indicates the reverse situation.

Related AccountingTools Courses

Auditing Nonprofit Entities

Nonprofit Accounting