Accrual concept of accounting
The basis of accounting, the whole accounting, the thought
on which it is based, is called an accrual concept.
What is it? How is it? We will learn in today's clip.
We will take a lot of time.
Once the accrual concept is clear, the first brick of
accounting,
The first brick to be laid in the foundation of accounting,
You have laid it well.
Your base will be strong.
The possibilities of this have increased.
Accrual concept is so important that if you do not want to
learn anything in accounts,
You should still know the accrual concept.
Because the general knowledge of accounts is also an
accrual concept.
Anyone who has no knowledge of accounts knows that there is
an accrual concept in it.
And you are a permanent accountant. You have to do this all
your life.
Someone asked you,
What is the accrual concept in accounts?
A person with a non-commerce background asked.
What will you tell him?
Yes, something happens.
Some people take loan transactions.
You will say that you are not well today.
The doctor has forbidden me to speak a little.
I will tell you tomorrow.
You will not meet again tomorrow.
You will disappear.
It is better than doing such things that the meaning of the
accrual concept is learned from A to Z.
And friends, I will serve the whole profession in front of
you.
4 and 5
I will present 5 examples in front of you.
To explain my point in full.
To make you understand the accrual concept in full.
I will take 5 examples.
And I will go straight to the pad.
And I will also make a request to all of you.
Whatever I am writing, every student should write and go.
You have to understand the accrual concept.
Everything has to be written down.
You will not write.
Your loss.
In this, your loss.
I don't lose anything.
You would have understood the accrual concept.
If you had written.
Yes sir, we will write.
We will definitely write.
Here is the government.
To explain the accrual concept.
I wrote something.
I write in front of you first.
Friends, what is written in our notes.
For once, forget that there is something written in the
notes.
Write what I am writing.
What is written in the notes will also come there.
For now, what I am writing.
Only and only focus on it.
Pay full attention to it.
Accrual concept.
We will open it from the root.
It will be opened.
In full way.
Just keep listening.
This concept presents.
And keep writing.
Yes, yes, yes.
This concept presents.
An equation in front of us.
Just write first.
Then I will explain.
That is.
Revenue.
Minus expenses.
Is equal to profit.
Revenue.
Minus expenses.
Is equal to profit.
Put an arrow and write below the revenue.
Gross inflow.
Of cash.
Comma receivables.
And.
Other considerations arising.
Write the spelling correctly.
From.
Sale of goods.
Or.
Rendering of services.
Or.
Used by others.
Of enterprises resources.
Used by others.
Of enterprises resources.
Yielding.
Interest, royalty or dividend.
Interest.
Royalty.
Or dividends.
Interest, royalty or dividends.
Put an arrow on expenses and write.
Cost.
Related to the.
Revenue earned.
During the period.
Or.
Cost.
Benefits of which.
Do not extend.
Beyond that period.
All people.
Easy to note.
See what is.
What is written in our notes.
There is nothing to say in it.
But.
In a more detailed way.
I have written here in front of you.
I opened it and wrote it.
And each word of it.
We will understand carefully.
I will present examples on each word.
I will explain in front of you.
Then you will understand the meaning of the acrol concept.
There is the same thing written there.
But here I have written in a better and detailed way.
Because through them I have to explain examples.
So note a little quickly.
Everybody write down.
Then we will start the examples.
If there is a word, write it carefully.
The spelling should be absolutely correct.
Do not make a mistake.
There are so many requests in the spelling.
Okay sir, we will not make a mistake.
No issue at all.
Let's go to the examples.
Yes sir.
And if someone has not written.
Then pause and write.
Example number one.
To understand these things.
Messers
Rajasthan Traders
Everybody has to write.
Started a
Claude's business by investing
Started a
Claude's business
By investing
Rupee one lakh
By investing rupee one lakh
Write further.
Full stop
After that bought goods
Of rupees
One lakh
Full stop
He sold
All clothes
For rupees
One lakh twenty thousand
Full stop
Customers Paid him
Rupee one lakh
Cash
And Assures To pay
Rupees Twenty thousand shortly
Full stop
His revenue is
Rupees One lakh twenty thousand
It arose
In the business
By sale
Of goods full stop
Rupee one lakh is
Inflow of
Cash
And rupees
Twenty thousand
Not yet
Received
But Considered as
Revenue As per
Accrual concept
As per
Accrual concept
As per
Accrual concept
Write Note
Note Write Note Note Note Note Note Note Rajasthan Trader
is a business
They started a cloth business
Invested 1 lakh rupees in it
And bought goods worth 1 lakh rupees
Means bought cloths
To sell further
And sold all the cloths
In how much money? 1 lakh 20 thousand
If you are buying things worth 1 lakh
Then you will not sell in 1 lakh
You will sell a little expensive
In how much? 1 lakh 20 thousand
Customers paid him
Rupees 1 lakh cash
And assured to pay 20 thousand shortly
The customers
Gave 1 lakh cash
Out of 1 lakh 20 thousand
And said they will give 20 thousand later 20 thousand later
What is the revenue of Rajasthan Traders?
Some people will say 1 lakh is the revenue 1 lakh is the
income
Because we have only 1 lakh rupees
To silence such people
Comes the accrual concept
And the accrual concept says
Dear children, your revenue
Will not be 1 lakh
It will be 1 lakh 20 thousand
Which you have sold the goods
In how much? 1 lakh 20 thousand
Your entire sale price
Will be your entire revenue
Even if you did not get 1 lakh
If the entire credit sale
Would have been 1 lakh 20 thousand
Even then our revenue would have been 1 lakh 20 thousand 1
lakh 20 thousand 1 lakh is
Inflo of cash 1 lakh is the cash inflow
Which has come to us
And 20 thousand not yet received
But still considered as revenue
Those who have not received 20 thousand
They will also be considered as revenue
As per the accrual concept
What does the accrual concept say?
The accrual concept says
What has not come is going to come
What has not come is money
But will come in the future
That will also be considered as your revenue
Now it has not come, no problem
It is going to come 9 out of 10 times you send a loan 9
people give you money
Only one person is a fraud
So take that fraud and spread all your accounting principles
Accounting is done with a positive mind
That you have sold here, money will come
We will do accounting thinking that
The one who has sold will get money
We will do accounting thinking that the one who has sold
will not get money
Then only accounting is done
That's it
We will believe that money will come
Even if some 1.5% money is lost
Its accounting happens later
According to the accrual concept
Money will come
Equally Accrual concept
Presents an equation in front of us
Friend, we have to make a profit
Revenue minus expenses is equal to profit
Now what is the meaning of revenue
In detail
And what is the meaning of expenses
This is the accrual concept
To make a profit
The simple equation
Revenue minus expenses
To make a profit
Revenue minus expenses
In that
The one who describes revenue and expenses in detail
That's our accrual concept
That's what it says
In revenue, not 100,000
In total 120,000
To make a profit
Revenue minus expenses
In total 120,000
Not what is available
What is the accrual concept for revenue
It is gross inflow of cash
The 100,000 that has come
That will become revenue
And the receivables
Has not been received, it is receivable
Revenue minus expenses
In total 120,000
How can revenue come
With the sale of goods
I have explained as much as highlighted
I will explain further in other examples
Okay sir
Let's move to the next example
What have we learned so far
In revenue, cash comes
And the incoming money also comes
And we sell goods to earn revenue
We have learned this much
After this we will write
Example no.
Everyone write example no.
Reliance Industries
Started Electricity Supplies
Full stop
It spends
Rs. 8 lakh
For fuel
And wages
For fuel
And wages
In generation
And distribution of business
In generation
And distribution of business
Full stop
Reliance Industries Limited
RIL collected
Rs. 10 lakhs
By way of
Electricity Charges
By way of
Electricity Charges Full stop
This is
Also revenue
It arose
In the
Business It arose in the
Business By rendering
Of services
It arose in the business by rendering of services
Write 10 seconds
Example no.
Write Example no.
Film on
This is also called revenue.
Sir, they are getting collected.
Even if they are not getting collected, they are still
called revenue.
What did we learn from here?
What did we learn from example no.
We learned from example no.
2 that
Revenue is not necessary.
It arises in the business by rendering of services.
Accrual concept says that when you apply the equation of
revenue minus expenses to get profit, you will also include
revenue arising from rendering of services.
You will also include revenue arising from electricity
supply.
Okay, sir.
Okay, done. No problem.
Example no. 3.
Example no. 3 is very important.
Listen carefully.
Example no. 3 will tell many things.
Let me change the color of the pen.
Example no. 3.
Mr. Bahubali
invested Rs.
2 lakh in a business.
Bahubali also came to know that there is no benefit in
doing business.
In the end, he only betrays.
Bahubali understood this very well.
So, he started a business.
He invested Rs. 2 lakh in the business.
First of all, he purchased a machinery paying Rs.
2 lakh.
He purchased a machinery paying Rs.
2 lakh.
He hired
H I R E D
He hired it out
for Rs.
40,000 for Rs.
to Bhallal Dev.
Wow! He rented the machinery to Bhallal Dev.
He rented it for Rs. 40,000 annually.
Rs. 40,000
is the revenue of Bahubali
as it arises as it arose from the use of the machinery.
Enterprises resources by others
He invested 2 Lakh Rupees in a business
What did he do?
He bought a machinery from 2 Lakh Rupees and gave it to
Bhallal Dev on rent
And how much is the rent? 40,000 Rupees per annum 40,000
Rupees per annum
So for Bahubali, 40,000 Rupees per annum will become
Revenue As it arose from the use of
Enterprise resources by others
And see friends, what is happening here?
Till now, what was taught to you in revenue?
Whether it is the source of income from the sale of goods
We will call it revenue
Or money is coming by rendering services
We will call it revenue
But here one thing has been taught to you in example no.
If the enterprise
Business The resources, the assets
Like Bahubali, Messers Bahubali
Which is a business, it has a resource
The machinery he bought
If you give it to others to use
To someone else
And from there, the rent or royalty you get
Royalty means
Another better name for rent is royalty
So that will also become revenue
This 40,000 Rupees that Bahubali has earned
He did not earn by selling goods
Because he did not sell the machinery
He just gave it to use on rent
Nor did he earn by rendering services
He did not give any service to use the machinery
So if our goods
If not sold to others, but given to use
The money that comes from there will also become revenue
Accrual concept teaches this thing
That will also become revenue
If interest and dividend
If you are coming
Enterprises Give money to someone to use
In return, you take interest
So this is also your revenue
Use of enterprise resources by others
Yielding interest
The resources of your business
Someone else used the cash
In return, you earned interest
This will also become revenue
Your company
How do you earn dividends
You have invested money in a company
Bought shares
You will get dividends from there
Your company's money
You gave it to another company
To use in their project
You gave the money of your business to another business
He does business with it
In return, you get dividends
This will also become revenue
My dear friends
So we understood the revenue
Only this is left
Other considerations arising
We understood the whole revenue
Only this is left
Other considerations arising
Let's see this too
Other considerations arising
Example no.
Write everyone
Imagine
In place of
Rupees 40,000 to be paid by
To be paid in cash by
Bhallal Dev
To be paid in cash
By Bhallal Dev
He pays
He sends
Some gold
Worth rupees 40,000 He sends some gold
Worth rupees 40,000
Will this still become revenue?
This is my question to you 40,000 rupees
We have to take from Bhallal Dev
Because we gave him the machine
To use for a year
He is not giving 40,000 rupees cash
He sent 40,000 gold
Baahubali says, okay, no problem, we also needed gold
Baahubali accepted gold
Will this still become revenue?
If money comes or
A value equal to money
Even if it didn't come, it would still be revenue
And you are saying that something came
Instead of money, gold came
Akul concept says, even if it didn't come
Even if it was borrowed, it would still be revenue
Okay, okay, okay
So other considerations arising
Means this
Even if you don't get money, you get something else
Even then it will be a part of your revenue
So my dear friends, let's read the revenue in full
Whether the money comes in cash
Or not
Or come in some other form
Revenue will be made
And where can the money come from
Or where can we leave our loan
Or something else instead of money
Can receive
By selling goods, by rendering services
And interest, royalty, dividend
That is, by giving your stuff to someone else
By selling goods, by selling services
Or by giving your stuff to someone else
Okay Okay Now it comes to expenses
What are these expenses
Akul concept says
What is the meaning of expenses
That is cost related to
Revenue earned during the period
During the year
Whatever revenue you earned
To earn that revenue
Whatever greed you have
Will be your cost
Or cost benefits of which do not extend
Beyond that period
Take the expenses of that year
Beyond that period means do not take the expenses of the
next year
If you are taking
Profit of 22-23
Then take the revenue of 22-23
And minus the expenses of 22-23
Cost related to
Revenue earned during the period
The year you are taking the revenue of 22-23
The expenses of that year
Will be the expenses and minus the revenue
Profit will come
Beyond that period
The expenses of 22-23
Will not be included in the calculation of profit
Akul concept says this
Akul concept
Says this
Revenue minus expenses is equal to
Profit Akul concept tells us this
So friends
Akul concept to get profit
Equation Revenue minus expenses
This is the work of Akul concept
This is the work of
Akul concept
This is the work of Akul concept
Now let's understand what is written in the notes
What is written in our notes
That term
Akul means something is due
Especially in amount of money that is yet
To be paid or received at the end of the accounting period
It implies that revenue is realized
At the time of sale through cash or not
Whereas expenses are recognized
When they become payable
Whether cash is paid or not
If the money has come or not
It will be considered
Similarly, if you have paid expenses
Even if you have not paid
Then we will consider them as expenses and minus them from
the revenue
And take out the profit
Even if you have not paid the expenses
If you have bought the goods on loan
Then it will be considered as your expense
Akul concept does not just say
Consider the income as the revenue
Consider the expenses as cash
He says the same thing in expenses
Akul concept also says the same thing in expenses
If there is a loan expense
Consider it as an expense
And minus it from the income
To take out the profit
Therefore, both the transactions are recorded
In the accounting period in which they relate
Forget about the payment
When did the revenue happen
When did the expenses happen
Minus the expenses from the revenue and take out the profit
In the accounting system
Akul concept tells that the business revenue is realized
At the time goods and services are sold
Irrespective of the fact when cash is received for the sale
We will record the revenue
When will the money come
Today or tomorrow
We will record the expenses
When we have incurred the expenses
When are you making the payment
Forget it
So friends, we have this discussion of Akul concept
Please note this example
I will flash it again
In front of you
Please note this example
Please write it all
Nothing should be left here
Now let me talk to you
Let me talk about the cost
Cost related to revenue
In example 1, tell me what will be the cost
In example 1, the cost will be 1 lakh rupees
To sell for 1,20,000
The expense you put 1 lakh rupees will be your cost
In example 2 8 lakh rupees will be your cost
To earn 10 lakh rupees
The expense you put 8 lakh rupees
And come to example 3
Example 3
To earn 40,000
If you buy a machinery of 2 lakh rupees
My cost is 2 lakh rupees
No The life of a machinery of 2 lakh rupees
Is 20 years
The life of a machinery of 2 lakh rupees
Life is equal to 20 years
Write in example 3
Its life is 20 years
So friends, Akul concept
Says that divide 2 lakh rupees by 20
And 10,000
Will be the cost of this year
What did it say?
Related to revenue and during the period
If you want to make a profit
If we see what profit did Bahubali earn, he will put an
equation
Revenue minus Expenses is equal to Profit
He will say that I got revenue of 40,000 this year
Minus I bought a machine of 2,00,000 and I lost 1,60,000
He will get the actual concept and will say that you are
doing wrong
Expenses divided by 2,00,000 is equal to 10,000
And 40 minus 10,000 is equal to 30,000
Because you have to take the expense of the same period
If this revenue is 40,000 for 1 year
Then minus the expense of 1 year
You spent 2,00,000 for 20 years
Machinery in 2,00,000 will run for 20 years
So the expense of 2,00,000 is for 20 years
So if the expense of 2,00,000 is for 20 years
Then how much is it for 1 year? 2,00,000 divided by 20 is
equal to 10,000
This is what the accrual concept says
If you are taking revenue of 40,000 for 1 year
Minus the expense of 1 year
Then the correct profit will come
That is 30,000 rupees
Means 30,000 rupees
Ok Sir
We understand this
I said it should come
So the cost has also been discussed in detail
Here I am pausing
If you want to write an example, write it
Here I am pausing
If you want to write something, write it
We will meet in the coming clips
With a lot of information
Thank you