Nonprofits and "retained earnings"

I've read the manuals and help screens and checked various articles on QB's treatment of "retained earnings" for nonprofits, but at the end of the day I
still have a dumb question. I'm looking at "total liabilities and equity" and under "current liabilities" I see a credit line which has been drawn down. Further down there's a substantial negative entry for "retained earnings", reduced by "net income". Now, my understanding of this substantial negative figure is that it represents cumulated net losses for preceding years. These would explain the substantial outstanding revolving loan. Is this interpretation accurate? And how on earth do I explain to my financially even-more-unversed colleagues that the "total equity" doesn't really reduce "total liabilities" at all?
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Your post makes absolutley no sense.

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Allan Martin wrote:

Are you familiar with the issue of QB's treatment of "retained earnings" in nonprofits?
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What issue is that?

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Allan Martin wrote:

...
Then my question isn't directed at you.
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Every question on this newgroup is directed to me. You post is still jibber wackey.

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Allan Martin wrote:

Actually, it all falls into place if I simply look at the negative "retained earnings" as negative net worth.
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Yes
And
The accounting equation: Assets=Liabilities+Equity should do it.
or Assets-Liabilities = Equity
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True but this does not address "the issue of QB's treatment of "retained earnings" in nonprofits?".

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but this does not address "the issue of QB's treatment of "retained

I think that involves something simple, like changing the name of that account to something more appropriate.
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Allan Martin wrote:

...
"Retained earnings" don't mean anything in a nonprofit, but that's the name of the account you're stuck with, and that's what appears in the balance sheet printout. Perhaps the best answer is to export to Excel and rename the entry "cumulated net surplus/deficit". (Another suggestion made by various people is to call the entry "Net assets", but that looks weird under "Equity", and doesn't help when the figure's negative anyway.) There are some other tricky aspects to this in QB versions before 2005 Nonprofit, as you can't access the account directly, and retrospective adjustments to other entries by a nonprofit bookkeeper can really confuse things.
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This account can be renamed to anything you want.

You can't access it as a register, but you can post to it and view activity in the balance sheet report. If you are using classes to track funds then fund accounts can be set up to move their balances from retained earnings to the fund accounts (long term liabilities) so retained earnings need never have a balance.

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David Smith wrote:

...
Oh. The bookkeeper said we couldn't do this in QB 03.

This is a trifle complicated, since the nonprofit is an annual arts festival, so a lot of the usual fund accounts don't apply. The deficit from the first couple of years is being carried forward as a revolving loan (credit line), which appears as a current liability.
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Lists/Chart of Accounts/Right click on Retained Earning/Select Edit/ change the name to what you want.
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David Smith wrote:

The usual sequence - okay. She said the program requires that name (like the "Unposted items" account).
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If the program lets you change the name then changing it certainly will not affect how the account operates. You can change every aspect of this account except the TYPE. How can there be "unposted items" in Quickbooks? Maybe she means "unallocated items" when classes are used.
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David Smith wrote:

...
Stupid slip of the fingers - I meant "Undeposited items".
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Same goes for that account too. Although QB creates it you can treat it as described above.
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Are you using a Windows version, or Mac? If Windows, does "'03" mean "v. 3" or "2003"?
Certainly the last 10 Windows versions have allowed changing the names of Retained Earnings and Undeposited Funds as others have already described. Mac versions are different in many respects, and I'm uncertain about this capability in Windows versions more than 10 years old.
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