Net Assets is one of the least understood parts of the Form 990-EZ, particularly for non-accountants. Even when the rest of the return is largely correct, net assets is often misstated.
The reason for this is that the net assets calculated on page 1 of the return (line 21) often does not match net assets that appears on the balance sheet (line 27). When a difference occurs, the preparer needs to figure out where the difference comes from. Understanding where net assets comes from and how it is calculated is key to reconciling these two line items.
In the video above I give an extremely basic explanation of net assets, directed at a preparer who has little or no knowledge of the concept.
Because of the need for a balance sheet, preparing a corporate or nonprofit return can be challenging to anyone not familiar with the double-entry system of accounting. This is why I generally do not recommend non-accountants prepare this type of return. At the very least, you should have your Form 990-EZ reviewed by a professional before filing it with the IRS.