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Interest on Capital topic is visible on your screen
You have learnt Capital Entry in previous clips, right?
Now learn to invest on it
What does interest on capital mean?
Bank has your saving account
Absolutely sir
Have you ever checked your passbook
Bank gives you some interest
The money you have deposited in your bank account
Bank gives you some interest on it
In the same way the firm, the business also invests on the
capital amount invested by the owner by paying interest
I told you that it is separate
Owner is different, business is different
Capital means the money transferred by the owner from his
personal savings account to the current bank account
Do you know what the business is saying?
Do you know what the firm is saying to the owner?
That if you had not transferred this money to the business
Owner sir, if you had not transferred this money to the
business if you had kept this money with you then at least
you would have received interest from your bank
You transferred that money to us put it in our account
Now the interest on the money from the bank also comes in
the current bank account of the firm
That is why the firm says that we will pay you the interest
This is called opportunity cost.
This is the opportunity cost of the owner.
The owner invested the capital money in the business when
he could have invested it elsewhere.
He could have invested it in his bank or in his personal
savings account.
If he had invested it there, he would have got interest.
But the owner did not earn that interest because he
invested the money in the business.
This is called opportunity cost.
In other words, to invest money elsewhere, you have to
forego your money.
You have to take out some of your expenses and costs
instead of investing it elsewhere.
This is called opportunity cost.
The firm understands this.
It says, you gave us money when you could have earned
interest from elsewhere.
We will make you pay for it.
We will pay you the interest you earn.
This is called interest on capital.
We will read the notes first and change the trend a little
this time.
Surya, the trend has changed.
Have you seen the movie Don 1?
The trend has changed.
This time, we will read the notes.
After that, we will go to the telly to enter.
Interest on capital invested by the owner in the business
is provided by the business against opportunity cost
incurred.
Whatever capital the owner has invested in the business,
the business pays interest to the owner in return in the
name of its opportunity cost.
There are steps.
You have to take a general voucher, F7.
Sir, why?
You had told me that if there is a payment from the bank or
cash, we have to select a payment voucher and the interest
on capital will be paid to the partner by the firm.
Accordingly, the payment voucher should be entered.
Think a little deeper.
I gave an example a while ago.
You also have a bank account.
The interest on the bank account comes to you.
You will get an entry in your passbook.
But whenever...
Tell me one thing.
Did you get a call from the bank?
Did the bank say that your interest money is ready?
Come, take it.
We are paying you cash.
We will transfer your account.
No.
What do they do?
They increase the same amount in your account.
They don't pay it.
They know that if they need it, they will withdraw it from
their ATM.
They will withdraw money from their passbook.
Whatever they need.
It's not like the bank will call you and say your annual
interest is Rs.
The bank will not give you Rs. 500 notes.
They will not call you.
They increase the amount in your account.
Both the firm and the business do the same.
The business does not pay the interest on capital to the
partner in cash.
With the same amount, they increase the capital.
With the same amount, the capital is increased.
You can also take the inflation cost.
If the capital is there, the value of the money increases
with time.
The value of the capital should be increased with inflation.
The entry will be in the general voucher.
The debit will be in the interest on capital account.
The heading will be indirect expenses.
This is the expense for the firm.
Paying interest on the owner's capital is an expense for
the firm.
That's why it will be in the indirect expense.
We will enter the amount.
We will do the credit on the owner's capital account.
We will press the control.
The credit will be on the owner's capital account.
When we saw the capital investment entry, did we create the
owner's capital account?
Yes, sir.
You have to increase that money with the interest amount.
You have to increase that capital with the interest amount.
You have to do the credit.
If you do the debit, it will be the opposite.
It will be cut.
It will be set off.
That's why you have to create the owner's capital account.
Let's see this on the telly.
Let's see on the telly.
Come to the prime.
Take this.
Is it on the gateway of telly?
Yes, sir.
Press V for vouchers.
And now listen to me.
As soon as I say the command, come with me.
According to me, I have to press the command.
I have to speak.
I have to explain.
So I am doing more work.
You just have to listen and press.
And you have to go ahead.
As far as understanding is concerned, then understanding
will come with you.
I am telling you.
Don't be careless at all.
I am not getting anything written.
Now you feel that we will be left behind in writing.
So don't write.
Just press what I am saying.
There should be no carelessness in it.
Go with the rhythm.
If you have anything different from me at any step, then
you can ask there.
Okay.
You can also ask.
No problem.
Those who are watching recorded, you can also ask along.
If available, you will definitely get the answer.
Come on, press V for voucher.
V for Voucher.
We have pressed the voucher.
Okay, sir.
Which voucher do you want to take?
Journal Voucher
What is the entry for Journal Voucher?
Now see, if you turn, then you will keep turning.
Neither front nor back.
We have to select Journal Voucher in the vertical button
bar.
For that, it is F7.
Press F7.
And as I told you, which account do you want to do?
Interest on Capital Account.
There will be no type.
You have to press C with Alt.
You are very smart.
Write here,
Interest on Capital Account.
Write the AC of the account.
Interest on Capital Account.
Under which heading will it come?
Indirect Expenses.
Expenses because it is an expense for the firm.
The firm has to pay this in the partner's account.
Okay, sir.
And the indirect word is because it is not related to the
goods.
Whatever expense is related to the goods is a direct
expense.
And whatever expense is not related to the goods is an
indirect expense.
Okay, sir.
Now you have to save this screen by pressing A with Ctrl.
And now after pressing A with Ctrl,
Come where, my dear friends?
In your register, on the last page where we were writing
the common command sum.
Write there again.
Interest on Capital Account will be created under the head
Indirect Expenses.
Interest on Capital Account will be created under the head
Indirect Expenses.
Although it is also written in the PDF notes.
But still,
If we write by hand, we remember it once.
There is no harm in doing it for a minute.
It will be yours forever.
Okay.
Interest on Capital Account.
Concept.
Interest on Capital Account will be created under the head
Indirect Expenses.
Okay.
For example, the amount of interest is ₹ 10,000.
So take ₹ 10,000 here.
Now enter the amount here.
₹ 10,000.
After entering the amount,
Press Enter once.
It came on credit.
Press Enter again.
Here you have to credit the owner's capital account.
Because it has to be increased by this amount.
So here it is.
No need to create.
The owner's capital account of Mr. X is already created.
Come down and press Enter on it.
This ₹ 10,000 will be automatically created.
If you enter once more,
You have to write the narration below.
Being Interest on Owner's Capital.
Provided by the Firm.
Firm means there is no partnership firm.
Do not be in doubt.
Firm means any business.
There can be any individual, sole proprietor, partnership
firm.
LLP, anything.
Firm means business.
That's it.
And this entry is also seen a lot in the case of
partnership.
Being Interest on Owner's Capital.
It is also written in the partnership agreement.
Whenever a partner makes an agreement with each other.
So this is a very important aspect for it.
Okay, sir.
Now from here,
You will also understand.
How an expense ledger is created.
Like we just did indirect expense.
So one entry teaches us a lot of things about the other
side.
Okay, sir.
Now here you have to press A with CTRL.
So your screen will be accepted.
You have pressed A with CTRL.
Screen is accepted.
Now the ESC button in the top corner of the laptop.
Press it once, twice.
And come back to the Gateway of Tally.
Have you come?
Yes, sir.
Now friends,
You have to go to the same balance sheet and check.
Whether your capital has increased by Rs 10,000 or not.
Press B.
And press F1 with ALT to detail it.
And you see.
So, how much money is there in the capital account of
Mistrax?
Rs. 10,40,000
If you come down and press enter once and press enter again
then you will get a complete view of Rs.
Rs. 10,00,000 is invested in the bank
Rs. 20,000 is invested in cash
Rs. 10,000 is invested in in-kind capital and Rs.
10,000 is the interest on that
Total is Rs.
Okay sir
From A to Z, we got the information
How much entry can be made in your capital
In-bank, in-cash, in-kind, interest on that
Everything is completed
Okay sir
And we would like to see this expenditure
We made Rs.
10,000 in indirect expense
So, we would like to see if this expenditure reached our
Profit & Loss
So, friends
Press P here
P P word is highlighted for Profit & Loss account
Press P
Detail it
Alt plus F1
So, you will get
Rs. 10,000 in indirect expense
And your loss is also Rs.
Net loss
See here
Why? We haven't earned anything
We have just spent
Net loss
So, for now
You are at a loss of Rs.
This was the interest on capital
Okay sir
We have seen the complete overview
Out