Frances Sabatier asked a local bank for a $50,000 loan to expand her small company. The bank asked Frances to submit a financial statement of the business to supplement the loan application. Frances prepared the following balance sheet.

Required:
The balance sheet has several flaws. However, there is one major deficiency. Identify it and explain its significance.

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FS COMPUTING Balance Sheet June 30, 2023 Assets Cash and investments Inventory Equipment Personal residence (monthly payments, $2,800) Remaining assets Total assets Liabilities Short-term debt to suppliers Long-term debt on equipment Total debt Stockholders' equity Total liabilities and stockholders' equity $ 9,000 30,000 46,000 300,000 20,000 $405,000 $ 62,000 38,000 100,000 305,000 $405,000