Tuesday, 22 September, 2009

What’s left for the alley cat

Mummy’s grocery purchases = Family’s meal + alley cat’s dinner. This implies mummy cares for the cat (though she cannot keep her at home).

Alley cat’s dinner = Mummy’s grocery purchases - Family’s meal. Most probably, the poor feline has to fend for herself.

Makes sense?

Then why do we keep writing Assets = Liabilities + Equity when it is actually Assets – Liabilities = Equity.

The first, at least if you were a student of science, makes you expect something like a law of nature (e.g., the laws of conservation of energy and mass), impossible to violate and the fountain of much knowledge and progress.

The second tells you what businesses do, and clears weeks’ of confusion.  

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