Alec's return
Alec (known as either "Alexander The Great" or "Smart Alec") is negotiating with one of his friends.
"Can you loan me $10?" Alec asks.
The friend, having just received his allowance, looks in his wallet. "Uh... sure."
"But only hand over $5," Alec requests.
The friend hands over a $5 bill. "Here ya go."
"Great," Alec replies, pocketing the $5.
"Why'd you only take $5?" asks his friend.
"This way," Alec grins as he starts walking off, "I owe you $5, and you owe me $5... so we're now even."
Is Alec correct?
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From an accounting standpoint:
Note that the amount Alec owes his friend to pay off a $10 loan never changes from $10, because it was a $10 loan and nothing was paid on the loan's principal.
He could let his friend apply the $5 he's still holding toward the principal of the loan instead of giving it to Alec, lowering the loan's principal to $5, but then his friend owes him nothing and he still owes his friend $5, the remaining principal of the loan.