Sec. 3] CAPITAL SUMMATION 93

X’s BUSINESS
Assets Liabilities
Miscellaneous + « o $50,000 Due to others . . . $40,000
Due to X wow ee 10.000

$50,000 $50,000

 

 

X's Self
Assets
Due from “X’s business” . . $10,000

In the second account there is no counterbalancing
liability. For real persons, then, assets and liabilities are
not equal. If they were, the summation of their balance
sheets would yield simply zero! If we would avoid this
absurdity, we must either omit the capital-balance from
the liabilities side, or if for the moment we place it there,
we must, as in the above example, carry it forward to the
opposite side of another account, which amounts to the
same thing in the end. :

§3

With this preliminary explanation, let us now introduce
into our summation the capital accounts of the railroad
whose stocks and bonds are included among the assets of
persons X, Y, and Z. For simplicity, we shall suppose that
these three persons are the only persons interested in the
road. The balance sheet of the railroad company will
accordingly appear as follows: —

Rartroap Co.
Assets Liabilities
Railway . . . . . $50,000 Bonds (heldbyZ). . $20,000
Capital stock
(held by X) $20,000
(held by Y) 10,000 30,000

 

 

 

$50,000 $50,000

Now if we combine this sheet with the preceding we
shall see that its inclusion does not affect the results