Assets = Claims

Now, according to the laws of math, both sides of an equation have to be exactly the same thing — substitutes for each other. That means that if the Assets has a balance of 100,000 debit, then the Claims must also have a balance of 100,000 debit.

But we know that this is impossible, the Claims must have a balance that is of a credit nature. We can say that the weights of the 2 balances is the same (just like your scale analogy), but we know the balances themselves are not exactly the same.

We can mix apples and oranges (or debits and credits) into the same math equation by saying that they are exactly the same thing (which is what accountants have done to a disastrous effect) or we can say that they are opposites of each other. The opposites fits because a credit is the opposite of a debit. But if we do that, the traditional formula says the following about the Assets debit balance and the Claims credit balancle:

100,000 = -100,000

This is what the accounting equation says and it is dead wrong. We can say the following however:

100,000= -(-100,000)

or:

Assets = -Claims

or:

Assets + Claims = 0

or:

100,000 + (-100,000) = 0

Recognizing this is the beginning of a revolution. The next step is to recognize that the accounting equation, even after it has been corrected, is information vacuous — it is simply a check upon the bookkeepers handiwork.

1. If two numbers are in balance they must be equal in magnitude and opposite in sign.

2. If two weights on a scale are in balance, the scale, which we use to find magnitude only,
has two forces on it of equal magnitude but of opposing torque on the scales pivot.

3. The original balance sheet was used to show how the credits exactly offset the debits.

4. The General Ledger must always have a balance of zero — each debit entry is matched by a credit entry, keeping the total balance at zero. Since the Assets and Claims represent the whole general ledger after the books are closed, they must also have a combined balance of zero.

In the words of an officer at Price Waterhouse, “accountants work with an implied negative multiplier on one side of the equation.”

I see the intuitive logic for looking at the claims as negative. If you were not “balancing” the equation you could treat the claims as a negative asset.

But in order for a balance sheet to “balance” the two sides have to have the same total. A scale with a five kilograms on one side needs five kilograms on the other (I haven’t seen a negative-5 kilogram weight) to balance properly.)

So as counter-intuitive as it may seem, we’ll side with the orthodox version.

Assets + Claims = 0
or
Assets = -Claims

Your expression is the orthodox version and is found in most textbooks, but it is actually impossible mathematically (except if the Assets are zero).