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
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