Real-Life Math -- Solution
You add together the total liabilities and the total net worth:
2,033
+ 6,607 = 8,640
There is a problem. This
figure does not match the total assets.
Assets = Liabilities
+ Net Worth
9,090 = 8,640
This is not correct.
The sheet is not balanced.
When you point this out to the company president,
he makes a quick phone call. It turns out there was a mistake in the liabilities
section. The figure for accounts payable should have been 721 instead of 271.
You
add up the liabilities section again with the new figure.
Liabilities
Accounts Payable | 721 |
Income Taxes Payable | 355 |
Unearned Revenue | 1,407 |
721 + 355 + 1,407 = 2,483
The new
figure for total liabilities is 2,483.
You recalculate the total net
worth and total liabilities.
2,483 + 6,607 = $9,090
This
matches the total assets. While it was probably an honest mistake, you tell
your client later that you're reluctant to recommend merging with a company
that has such shoddy bookkeeping.