Bad debts, a word that a businessman never wants to hear,
but sometimes he has to hear it even though he doesn't want
to.
In bad debts, debts means debtors and bad means bad.
Those debtors who turned out to be bad, who did not give
money on time.
Who are debtors?
Those who we give things and trust them and say, give money
after some time.
For example, someone is asking us for two months, we gave
two months.
Even though we took it in writing, it became our bill
disable.
But there is no guarantee that he will give the money.
If he turns out to be insolvent, if he does not have money
to give, it will be Diwali.
So somewhere there is still a 1% risk of bad debts.
Bad debts means not getting the money for the work done,
the money sold.
We paid the return of a client's income tax, he did not
give us money, we got bad debts.
We did not get the money for the work done.
A trader sold something to a person and he said, I will
give it after some time, he did not give money, we got bad
debts.
Manufacturing or trading or service sector, wherever your
bad debts can be, this is the virus that can enter any
system, any business.
It should not enter, but it can enter.
It is the amount receivable by the business which becomes
irrecoverable.
The money that should have come to the business but has
become irrecoverable, will not come.
And is therefore treated as a loss by the business.
And this is a loss, the money that was going to come is a
loss.
And debit it to the profit and loss account.
Any loss will be debited in the profit and loss account.
There are two sides of the profit and loss account, one
debit and one credit.
On the credit side, all incomes are written, on the debit
side, all expenses and losses are written.
The expenses and losses are minused from the earnings, the
remaining figure net profit comes out.
That's why we write the bad debts on the debit side.
In P&L account, there are two bad debts.
What is the next thing?
The next thing is that on which the entire business is
based, balance sheet.
Balance sheet, it is a statement of financial position of a
business on a particular date.
On a particular date, these are very expensive words.
What is a balance sheet?
See friends, what are the purposes of accounting?
A businessman should get information about his business.
This is the ultimate purpose of accounting.
What information does a businessman need about his business?
First of all, does the business run in profit or loss?
This news is needed.
The second news is that what are the assets of the business?
And what are the loans on it?
So that he can see whether there are enough assets to pay
off the loan or not, my dear friends.
This is the meaning of balance sheet.
This is the meaning of balance sheet in which assets and
liabilities are told about it.
The news of profit and loss that the business needs is
obtained from P&L account.
Balance sheet gives information about assets, liabilities,
property and loans.
It is prepared on a particular date.
Have you ever seen?
Below the balance sheet, it is written as at 31st March or
as at 31st December.
Balance sheet tells the condition of a particular date.
Balance sheet is prepared at a particular date.
I give you an example.
For example, you go to a wedding.
There are two types of cameramen at the wedding.
One is doing the job of clicking a photo.
And the other one does not disturb anyone and does not say
anything to anyone.
He just takes a video camera and makes the whole video.
Your balance sheet is a photo and your P&L account is a
video.
Photo tells the condition of a particular moment.
Where were you looking at this moment?
How were you standing?
Whose shoulder was your hand on?
Video tells the whole situation.
Video tells the whole scene from start to end.
Who was walking from where?
Where was he going?
Who was looking at whom?
What was he saying?
Video tells the whole situation.
P&L account is also made for the whole year.
It tells the purchases, sales, expenses, income of the
whole year.
Balance sheet tells the assets and liabilities of the
business on a particular date.
Balance sheet is prepared at a particular date.
Balance sheet shows the assets, liabilities, reserves and
other account balances at their respective book values.
What does book value mean?
Book value is very simple.
In the balance sheet, the value at which the assets are
written and the value at which the liabilities are written
is called the book value of the asset and liabilities.
That's it.
Very simple.
The values written in the balance sheet are called book
values.
What is next?
Books of account.
Next is books of account.
It is the record or books in which all the financial
transactions of an entity are recorded and maintained.
It includes journal, ledger, cash book and bank book.
This is a very simple thing.
Books of account means where the journal entry is made,
ledger is made, cash book and bank book are made.
We call them books of account.
First of all, the transaction has a journal entry.
Then its ledger is made.
Then its cash book and bank book is also made.
So we call these as books of account.
The book in which journal entries will be made, it's will
be called books of account.
The book in which ledger will be made, it's will be called
books of account.
The book in which cash book and bank book will be made,
it's will be called books of account.
But we now make all things in tally.
So in tellines the journal entries are ledger, cash book
and bank book and they are in books of account.
These are maintained even in the telly!
So we will call them as books of account.
Next is cost of goods sold.
It is the cost attributable to the production of goods sold
and or services rendered.
Very simple.
Cost of goods sold.
It is called COGS.
C for cost, O for off, G for goods, S for sold.
COGS COGS COGS COGS
It is the cost attributable to the production of goods sold
and or services rendered.
It is the cost attributable to the production of goods sold
and or services rendered.
It is the cost attributable to the production of goods sold
and or services rendered.
For example, I sold a pen for 12 rupees.
It is the sale price of goods.
The same goods that I sold, the pen, how much did I buy it
for?
Or how much did it cost to make it? 10 rupees for example.
That is my cost of goods sold.
And sir, what is the meaning of services rendered?
For example, now I am giving you a service.
The cost I am getting in this will become my cost of
services rendered.
Whatever I have spent here, by apportioning electricity,
whatever my opportunity cost is,
Whatever I am spending on giving services, we will call it
the cost of services rendered.
Okay sir.
So friends, this was with us.
I mean, who did we see?
Sir, bad debts, balance sheet, book value, books of account
and cost of goods sold.
Okay.