Nonprofits and "retained earnings"

Paul Danaher · 2006-05-09T13:58:29+00:00

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?