His name was Charles Deatherage, but everyone called him The Bug.

He'd grown fond of wearing tiny, curved, reflecting sunglasses, because he'd once been in love with a party girl, and once she'd said to her boyfriend -- not him, but he had overheard -- that such glasses were cool. The girl and the fashion had long since moved on, but The Bug clung to his shades, and those shades, combined with his ruddy face, protruding ears, and the sad bags beneath his eyes, were what made him The Bug.

The Bug was a rookie at the brokerage house of Roman, Wise, & Pecunia, Inc. He did not like the fact that, at age 28, he was still considered a rookie, and had to sit in the bullpen along with the other rookies. He was determined to become a million-dollar producer, whatever the cost. He regarded his oversized ears as an asset in that pursuit.

When an assistant asked him a question, he'd barely turn his head. He understood that to show willingness meant to show weakness -- unless a direct superior were involved. He would respond to such questions in a low monotone, staring at the computer screen in front of him. Whoever had asked the question was immediately put off balance, and had the vague feeling that they had disturbed an Important Person. He was aware of this, and it made him feel macho. On rare occasions he would secretly wear cowboy boots underneath his polyester pants.

He was on the phone. He was often on the phone. He loathed the phone, and he longed for the day when he'd have a registered rep who could do the calling for him. He hated it in part because he had to sound so cheery to the prospective clients, and sounding cheery weakened him, he was sure, in the eyes of his co-workers.

"Mrs. Petruno," he was saying, "I think it's wonderful you're studying the balance sheet. Let me explain. Liabilities are money you owe. And current liabilities are ones you have to pay within the coming year. They arise from ordinary operations of buying and selling goods."

"So current liabilities are the only payments you'll have to make in the next year?" asked Mrs. Petruno.

"Exactly!" said The Bug, euphorically.

Exactly, dear reader? Really?

1) The Bug is right.

2) The Bug is wrong because the company will incur other obligations as the year progresses

3) The Bug is wrong because the company will also have to pay some long-term liabilities during the year.

4) The Bug is wrong because actual current liabilities differ wildly from the amounts the company owes at the balance sheet date.

The answer is 2) The Bug is wrong because the company will incur other obligations as the year progresses. (This week we continue with our examination of the balance sheet).

Current liabilities are amounts owed as of the balance sheet date. They represent events and transactions that have already taken place, such as purchases of goods from suppliers for which the company has not yet paid and amounts owed to employees for work they have done but have not been paid. As the year progresses, the company will buy more goods, its employees will continue to work, and its cash payments will greatly exceed its current liabilities at any gven time.

The company might pay some long-term liabilities in advance, but that is not normally required. Answer 4 is false because although no balance sheet captures every asset and liability with perfect precision, the differences between true Current Liabilities and recorded Current Liabilities will usually be slight.

The Bug drummed his fingers on his desk, wishing the woman would make up her mind. He had a schedule to keep to. He also had the feeling that something was going on in the office he didn't know about, and he didn't like that. He just couldn't put his finger on exactly what.

A great wave of perfume surged past his desk, as Allison Mellon glided by, and he temporarily forgot about Mrs. Petruno altogether.

Tomorrow:
Roman, Wise, & Pecunia -- Episode 2

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