92 NATURE OF CAPITAL AND INCOME [Cuap, VI 
The totals are the same by both methods, but the method 
of balances shows the share of this total capital which is 
owned by each individual, while the method of couples shows 
the various items of capital-goods of which this total is com- 
posed, namely, residence, personal effects, farm and railroad 
shares and bonds. 
§2 
It is well to note here the distinction between the ac- 
counting of real persons and of fictitious persons. For 
a real person, the assets may be and usually are in excess 
of the liabilities, and the difference is the capital-balance 
of that person. This capital is not to be regarded as a 
liability, but as a balance or difference between the lia- 
bilities and the assets. For a fictitious person, on the 
other hand, as for instance a corporation or partnership, 
the liabilities are always exactly equal to the assets; 
for the balancing item called capital is as truly an 
obligation from the fictitious person to the real stock- 
holders, as any of the other liabilities. A fictitious 
person, in fact, is a mere bookkeeping dummy, hold- 
ing certain assets and owing all of them out again to 
real persons. Bookkeepers, it is true, apply the same 
methods in both cases, but they do so by regarding the 
accounts even of a real person as relating to a fictitious 
entity for bookkeeping purposes. One’s business self and 
one’s real self are separated. Thus if X’s business shows a 
balance in X's favor of $10,000, he enters this as a 
liability item in his business accounts and considers his 
“business” as owing him this sum. There is no objection 
to such a procedure. But we must remember that when 
we say that “X’s business” owes X $10,000, we imply that 
the real X in his own accounts holds a claim of that 
amount against his “business.” In other words, we are 
compelled, in order to be consistent, to open a separate 
account for X and carry forward the $10,000 balance 
to the opposite side, thus: —