Find why a set of statements does not agree

Financial statements share amounts because the year's income changes equity and ending equity is part of the balance sheet. This connection is statement articulation. Use this optional extension to investigate a disagreement without changing an account merely to force equal totals.

All facts needed appear below. You should be familiar with assets, liabilities, revenue, expenses, and basic adjusting entries, but no earlier lesson supplies missing case information.

Establish the correct accounts

Maple Studio is a design-services corporation reporting for the calendar year ended December 31, 2026. Beginning Common Stock is $20,000 and Retained Earnings is $8,000. There are no share transactions, income taxes, or other equity changes. Dividends are $2,000.

These are Maple's complete adjusted balances:

Account	Debit, US dollars	Credit, US dollars
Cash	$19,400
Accounts Receivable	9,600
Equipment	30,000
Accumulated Depreciation		$6,000
Accounts Payable		7,500
Wages Payable		1,500
Common Stock		20,000
Retained Earnings		8,000
Service Revenue		46,000
Wages Expense	18,000
Rent Expense	6,000
Depreciation Expense	4,000
Dividends	2,000
Total	$89,000	$89,000

Expenses total $28,000, so net income is $46,000 - $28,000 = $18,000. Ending retained earnings is $8,000 + $18,000 - $2,000 = $24,000. Common Stock adds $20,000, making total equity $44,000.

Prepare the ending position

The balance sheet reports assets, liabilities, and equity at a date. It uses ending retained earnings, not the $8,000 balance before closing transfers. Income and dividends affect equity but do not appear as separate balance-sheet accounts.

Maple Studio: balance sheet at December 31, 2026	US dollars
Cash	$19,400
Accounts receivable	9,600
Equipment, at cost	30,000
Less: accumulated depreciation	(6,000)
Equipment, carrying amount	24,000
Total assets	$53,000
Accounts payable	$7,500
Wages payable	1,500
Total liabilities	$9,000
Common stock	$20,000
Retained earnings	24,000
Total equity	$44,000
Total liabilities and equity	$53,000

Accumulated Depreciation reduces the reported Equipment amount; it is not a liability merely because it has a credit balance. Equipment's carrying amount is cost less accumulated depreciation here. Do not add both equipment cost and its carrying-amount subtotal when calculating total assets.

Match the reports before changing the records

A difference may come from an accounting error or from comparing different reports. Check these matters before preparing another journal entry:

Confirm that the reports cover the same company.
Match the reporting period and ending date.
Check the currency and units, including dollars versus thousands of dollars.
Confirm that every report uses the same adjusted balances.
Recalculate income and ending equity, then compare them with the balance sheet.

A unit conversion changes the display, not the underlying transaction. Replacing an earlier draft with the corrected version also does not require another entry. Find the cause before changing the ledger.

Follow a missing adjustment through the reports

Maple's adjusted balances include a $1,500 wage accrual: a debit to Wages Expense and a credit to Wages Payable. The employees performed the work before year-end and had not yet been paid. Suppose this entire adjustment was omitted:

Amount in US dollars	Correct	Accrual omitted
Net income	$18,000	$19,500
Ending retained earnings	24,000	25,500
Total equity	44,000	45,500
Total liabilities	9,000	7,500
Total assets	53,000	53,000
Liabilities plus equity	$53,000	$53,000

Missing wage expense overstates income and equity. The missing payable understates liabilities by the same amount. The balance sheet still balances, and the shared amounts can agree across reports, even though the accounting is wrong.

Record the omitted accrual once, then prepare the reports from the corrected balances. Typing a lower income into one table would leave the other effects unresolved.

Check what the evidence supports

A draft balance sheet reports $45,500 of equity. The adjusted trial balance above supports $44,000. Should you change Accounts Payable to make the draft balance, or investigate why it differs?

Check the answer

Investigate the difference. The facts do not support changing Accounts Payable. Check the wage accrual and whether the draft used the corrected balances. A balanced table is not permission to invent an offsetting amount.