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I took \$1000 from my friend James and \$500 from Bond.
While walking to the shops I lost \$1000 so now I only have \$500.
I did some shopping, spending \$300 so now I have \$200 left.
I gave \$100 back to James and \$100 back to Bond.

Now my liabilities are \$900 for James and \$400 for Bond, so my total liabilities are \$1300.

Total liabilities + Shopping = \$1300 + \$300 = \$1600, but I only borrowed \$1500.
Where did the extra \$100 come from?

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Dollar signs have special significance here. You can turn that off by sticking a backslash in front, as in \$. I fixed it for you. See the LaTeX section in the editing help page. – Harald Hanche-Olsen Nov 9 '12 at 10:08

Total liabilities + shoping = Liability to James + Liability to Bond + Borrowed from Bond $- 200$

= Borrowed from James $- 100$ + Borrowed from Bond $-100$ + Borrowed from Bond $- 200$

=Borrowed from James + Borrowed from Bond + Borrowed from Bond $- 400$

= Borrowed from James + Borrowed from Bond + $100$

= Total Borrowed money + $100$

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That $\$1300$ already includes the $\$300$, along with the $\$1000$ you lost--that was your net loss of money for the day--you don't need to add it again.

The $\$900$ and the $\$400$ you still owe is just another way of reaching the same number.

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Total liabilities =$\$900+\$400=\$1300$(this is addition to your fund, so is your credit which you need to repay)

Expenses=loss+shopping=$\$1000+\$300=\$1300$ (this has gone out from your fund).

So, in essence, we need to subtract shopping from liabilities , not add shopping with liabilities.

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To what purpose are you adding Total Liabilities with expenses?

You borrowed initial 1500 , returned 200 , thus your total liabilities =1300.

Your expenses are 300 (shopping) + 1000 (lost) = 1300

Thus Total Liabilities == Expenses : 1500-200 == 300 + 1000

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ANSWER : - enter image description here

The answer is contained in the PNG file attached.

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Why do you add the shopping money to the liabilities? Is see no reason to do that, you should add the amount of 200 to that, since that is what you gave back...
The 300 shopping money is part of the liabilities since you spent it.

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You borrowed \$$1500$ of which \$$1000$ you lost, \$$300$ you spend and \$$200$ you gave back. Your liabilities \$$1300$ are the \$$1000$ you lost and \$$300$ you spend.

Your liabilities \$$1300$ include the \$$300$ shopping. If you add them you dont get the borrowed money.

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