Why the Numbers Must Balance

Imagine you are a recent graduate with a Bachelor of Science degree in Accounting and you are on your first big interview. The interviewer will ask you one question to test your knowledge of an accounting concept. Why the Numbers Must Balance – Seems like a very simple concept, and it is. In Physics we learned Newton’s third law: For every action, there is an equal and opposite reaction. In Economics, we learned about tradeoffs: the cost of something is what you give up to get it. Similarly in Accounting, one of the most useful concepts and tools is the Balance Sheet with its interdependent sections. The primary concept is the Accounting Equation: Assets = Liabilities + Equity. These sections must always be in balance. If Assets increase, then either Liabilities or Equity must also increase. If, as a result of our transactions, adjustments and reporting, this balance is being violated, then that is a problem that must be resolved.


Write a 500 word response to the question. We speak at 250 words per minute, so this would be equivalent to a two minute response to the question. In order to answer the question, you are required to:

  1. Research the concept to obtain additional information
  2. Answer the question based on your understanding of the concept
  3. In writing the paper, begin with a description of the conceptual issue
  4. Next summarize the issue, so you demonstrate to the interviewer, your understanding of the concept
  5. Finally, provide a concrete example to demonstrate how you would apply the concept in an accounting setting

Preview of the answer..

Accountancy or accounting is the communication, measurements and processing financial information regarding economic entities. Accounting is a broad field that has very broad categories of job opportunities. However, Balance sheet is very vital in accounting field. It is basically a financial statement that recaps the company’s liabilities, assets and also shareholders’ equity at a given specific time. The three segments of the balance sheet give an idea to the investors as to what company..

APA 553 words

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