Net Assets
Net assets is the difference between total assets and total liabilities — it's what your business is worth on paper. For nonprofits, net assets replace the concept of equity or retained earnings.
Net Assets Definition
Net assets = Total Assets – Total Liabilities. It represents the residual value of your business after all debts are paid. In for-profit businesses, this is called equity or owner's equity. In nonprofits, it's called net assets.
Net Assets for Nonprofits
Nonprofits categorize net assets into two groups (per ASU 2016-14):
Why Net Assets Matter
How Net Assets Show Up in QuickBooks
On a QuickBooks balance sheet, net assets appear in the equity section. For nonprofits using QBO, you may need to customize the equity section to properly separate restricted and unrestricted net assets.
FAQ
Q: Are net assets the same as cash?
A: No. Net assets include all assets (cash, receivables, property, equipment) minus all liabilities. You can have high net assets but low cash if your value is tied up in property or receivables.
Related Terms
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Related Terms
A journal entry is a record of a financial transaction in the accounting system, showing the accounts debited and credited along with the amounts. Every journal entry must balance—total debits must equal total credits. Journal entries are the building blocks of double-entry bookkeeping and how trans
An owner's draw is money a business owner takes out of the business for personal use. It's not a salary or wage — it's a withdrawal from the owner's equity in the company.
Petty cash is a small amount of physical cash kept on hand for minor, everyday business expenses. Instead of writing a check or using a credit card for a $12 box of pens or a $7 parking fee, you pay from petty cash. It's tracked through a petty cash fund with receipts documenting every disbursement.
A payable (or "accounts payable") is money your business owes to vendors, suppliers, or service providers for goods or services you've received but haven't paid for yet. Payables are short-term liabilities — they're debts you're expected to settle within a set period, usually 30 to 90 days.
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