Let's try to understand the meaning of some more accounting
terms in this clip.
First of all, Outstanding Expenses.
Out means outside. Standing means standing.
Those people who are standing outside your door to take
money for their expenses, they are called Outstanding
Expenses.
For example, you told an employee, you told an employee to
work for a month and you will get his salary by the 3rd of
the next month.
Work for a month, you will get your salary by the 3rd of
the next month.
Then work for the next month, you will get his salary
within 3 days of the next month.
So friends, what happens?
For example, let's talk about March.
Employees worked with you from 1st to 31st of March and
31st of March got completely over.
From 31st of March to 3rd of March, till the time you don't
pay them, till then that expense will be called Outstanding.
Meaning, Outstanding Expenses means your responsibility has
become to pay the money but you are not paying.
The date has come to pay, but because the promise has been
made that you will pay after some time, so it is not a due
date yet, you can say this.
Outstanding Expenses means which has been incurred but has
not been paid during the accounting.
Salary from 1st to 31st of March.
You have got the work done this year.
I will take you to the pad and explain this.
This will be understood better on the pad.
For this, we will need to write.
Come on, let us write this down.
I have connected.
Let's go in a minute.
Take this, sir.
We take this year with us.
Let's say from 1st April 2021 to 31st March 2022.
1st April 2021 to 31st March 2022.
It will become old if you feel that the classes are not old.
Take this, 22nd March 2022.
1st April 2022 to 31st March 2022.
Friends, what happens is we get the employees to work in
April and pay them till 3rd or 4th of May.
Then we get them to work in May and pay them till 3rd or
4th of June.
Meaning, the main thing is that the salary of the month is
paid till 2nd, 3rd or 4th of the next month.
Yes, sir.
Talk about March month.
For example, the salary of March month will be paid on 3rd
April 2023.
And in 3rd April 2023, the next year will start.
There was no problem in the previous months.
Because payments were made in the next month of the same
year.
The next month was of the same year.
Not of any other year.
But if we are talking about March, then this year will end
on 31st March.
And when you will pay on 3rd April, the next year will have
started.
The next year will have started.
So, the expenses that are due to you on 31st March, will be
called Outstanding Expenses.
But there should be one more condition.
There should be one more condition.
On 31st March, the money that is due to you, you show it as
Outstanding Expenses.
And in the balance sheet, you write the liability side.
Because it is due to you.
But there should be one more condition.
What is the condition?
One more condition should be fulfilled.
The repayment time for these expenses should be within 12
months.
There should be a payment period of up to 12 months.
If you have to repay this loan even after a year, suppose
you have a loan of Rs 2 lakh on 31st March, and you have to
repay it in 2023-2024, in 2025, then this will not be
Outstanding Expenses.
On 31st March, the loan that has to be paid in the next
year, that will be Outstanding Expenses.
On 31st March, the loan that has to be paid in the next
year, that will be Outstanding Expenses.
That means Outstanding Expenses.
Now let's see what was written there in the notes.
It is an expense, such as salary, that has been incurred.
Incurred means we got the work done from the employee.
In March, we got the work done from the employee.
Means expenses have been incurred.
But has not been paid.
But we have not made a payment till the end of the year.
During the current accounting year.
We have not made a payment in 2022-2023.
Since the amount is payable, it is a liability for the
business, and therefore shown as a liability in the balance
sheet.
And one more thing I have to keep in mind.
It should be paid next year.
In the next year, the payment should be due within 12
months.
Payment should be done.
Okay.
After that, Profit.
What is Profit?
Profit is a very simple thing.
Profit is what we are all trying to earn.
And if you don't know the meaning of profit, then what is
it?
Let's talk in this simple local language.
Earned 12 out of 10.
So what came from above is profit.
Tell me how it is.
Earned 12 out of 10.
What came from above is profit.
But if we talk in English,
Let's see what is written.
It is the income earned by the business from its operating,
i.e.
day-to-day regular activities which are carried out by the
enterprise to earn profits.
These activities can be either sale of goods or provision
of services.
You can still earn profit.
For example, I am not selling you anything.
Am I selling you any goods?
No, I am providing you services.
Pure Professionals Academy Private Limited.
What are we doing?
We are giving you classes and sharing knowledge with you.
We are not selling any goods.
Still, we will earn from you.
We will also get profit.
Right.
So to earn profit, goods can be sold and services can also
be provided.
This profit is further divided into gross profit and net
profit.
This is something to learn.
Profit is also of two types.
One is Gross Profit and the other is Net Profit.
Gross Profit.
It is the difference between revenue from sales and or
services rendered and its direct cost.
You did not understand this, sir?
I will explain.
There is a trading business.
They buy goods and sell them.
Okay, sir.
The total cost of buying goods, packing goods and paying
the rent will be the total cost.
The total cost of buying goods will be the gross profit.
For example, I bought a pen for 10 rupees.
I brought it here.
I bought many pens.
But let's say I kept one pen in the truck.
I paid 5 rupees on freight.
The pen cost 15 rupees.
I packed it for 5 rupees.
The pen cost me 20 rupees.
The cost of a pen is 10 rupees.
The rent is 5 rupees.
I have to bring it to my office.
I have to bring it to my office and sell it.
I have to pack it for 5 rupees.
I cannot sell it just like that.
I have spent 20 rupees on goods.
I have goods in saleable condition for 20 rupees.
If I sell it for 30 rupees.
Then the sale price of 30 rupees minus the cost of goods
for 20 rupees will be 10 rupees gross profit.
Gross means raw profit.
Which is not solid, not final, not strong.
Which is raw profit.
Sir, I sold it for 30 rupees.
The cost of goods was 20 rupees.
The profit was 10 rupees.
This is a fixed profit.
10 rupees will be saved in the pocket.
Where did the rawness come from?
Because there are some more expenses left in this.
Profit means everything.
Net profit means fixed profit.
Everything is left in the pocket after cutting.
After spending everything.
You sold a pen for 30 rupees.
The cost of the pen was 20 rupees.
So, out of the remaining 10 rupees.
You have to pay the office rent of 1 rupee.
You have to pay the electricity bill of 1 rupee.
You have to pay the employee's salary of 1 rupee.
You have to pay the cleaning and water guy of 1 rupee.
Then you will have 5 rupees left.
That will be a fixed profit.
Net profit.
That will be a fixed profit.
Net profit.
That would be it.
Net profit.
After deducting total expenses from total revenue.
The profit that is left after deducting all expenses.
It is called net profit.
If after deducting all expenses.
If the profit is not left in the negative.
Then it is not net profit.
It is called net loss.
It is not net profit.
It is called net loss.
Like we have 10 rupees left.
And the expenses of your office.
Separate from the pen.
If it is 12 rupees.
Then you will go to the loss of 2 rupees.
That 2 rupees will become net loss.
That 2 rupees would be your net loss.
Gain.
It is the increase in the owner's equity.
Resulting from something other than the day-to-day earning.
That is of irregular or non-recurring nature.
It is the profit from non-operating transactions.
But which is incidental to it.
Such as gain on sale of land, machinery, etc.
Gain means.
The same thing happened.
Non-operating income is called gain.
Like.
We have machinery.
Let's take the example of machinery.
We sold the machinery after keeping it with us for 3 years.
We bought it for 10 lakhs.
We kept it with us for 3 years.
In 3 years, it was depressed by 1 lakh rupees.
That remained 9 lakhs.
And we sold it for 9.5 lakhs.
Listen carefully.
We bought a machinery for 10 lakhs.
We kept it for 3 years and depreciation of 3 years is 1 Lakh
So, 10-1 Lakh, we have 9 Lakh rupees left
And we sold it
In how much? 9,50,000
So, friend, total 9,50,000 will become capital receipt as I
told you in last clip
The money which is not regular, which comes once in a while
Like we sell machinery once in a while
So, this 9,50,000 will come as capital receipt
And in this 9,50,000, the remaining 50,000 is gain
Profit hidden in capital receipts is called gain
So, we sold 9,50,000 in 9,50,000 and that is capital receipt
So, that 50,000 is gain for us
And loss, you know what is the need to say in loss
It is the excess of expenses over its related revenues for
a period Which decreases owner's equity
Means, expenses are more, earnings are less, so loss is
there
It decreases owner's equity
Means, it affects the capital of the owner, it affects the
equity
Who will have to bear the loss?
Owner So, business says, loss is there, okay, I will deduct
it from your capital
The capital which is written as liability side in balance
sheet
From that, loss is minused
So, from loss, your capital goes down
Who will bear the loss?
The money of the owner which is in the business, from there
the loss will be borne
And from where will it come?
And who will give the money?
Okay It is a broad term and includes loss incurred in its
operating
Money over money is worth loss again
With the firm received no benefit or any loss from event of
non-negotiator
It means, loss is there
Even if it is loss from regular activities
Even if you have to sell machinery for Rs.
9,00,000 or Rs.
Capital loss is also loss
It wants to say that loss is of two types, revenue loss and
capital loss
The loss from daily activities
If the pen which we sold for Rs.
Which we bought in Rs.
20, it was a profit of Rs.
It was spent for Rs.
So, loss of Rs.
2 is your revenue loss
And any capital item, like you are selling machinery
If there is any loss there, it is capital loss
Loss is also of two types, revenue and capital
Okay Thank you