Hello everyone, once again welcome to the class
We are going to start a topic called Financial Statements
and Adjustments
Financial Statements and Adjustments
If we talk about accounts, then the accounting cycle
Dear students will speak with me
Where does the journal start?
Then it goes to ledger
Then it goes to trial balance
The last stage where we make trading P&L and balance sheet
That is called Financial Statements
We make Trading Account, Profit and Loss Account
We get Gp from Trading, Net Profit from Profit and Loss
And we get Assets and Liabilities from Balance Sheet
So what we make, Trading P&L and Balance Sheet
Two accounts, Trading and P&L and one sheet Balance Sheet
What is called by combining them?
Financial Statements
So you have reached the last stage of Accounts
You are at the last stage of Accounting
That is Financial Statements
What is written as End Adjustment?
We will see this when we come to this topic
So you can see the notes
I will show you here
This is the meaning of Financial Statements
Objective, Capital Expenditure vs Revenue
Such receipts
After that Trading Account
We will learn this in today's clip
You can see
From Trading P&L and Balance Sheet
We will learn Trading Account in today's clip
Thereafter P&L Account
Here it is
And thereafter Balance Sheet
So the notes are well-drafted
Then we will discuss about Adjustments
Thereafter we will discuss about Adjustments
Okay Sir
Okay Okay
Let's start
You have to come to the pad
To understand the meaning of Trading Account
All of you
Keep your mobile phones
Pen and Register should be visible in your hands
Please use Pen and Register
Write with me
Come
Do you need anything else?
Check it
Otherwise Journal Then Ledger
Then Trial Balance
And at last
We come to Financial Statements
What do we have in Financial Statements?
Trading Account
Profit and Loss Account
And Balance Sheet
After understanding these
We will discuss about Adjustments
What is the meaning of Adjustments
We will discuss about it
Sir Sir, we have to learn step by step
First Trading
Then P&L
Then Balance Sheet
Number 1
We will try to learn Trading Account
Through some examples
See I know it very well
Many of you already know the face of Trading Account
Those who don't know
They must have seen it now
And some
Artists must have kept the format well
Here it comes
In the end, GPL comes
GL comes
And everyone must think that we know
In that way
We will not discuss about trading
We will not do trading
What are we going to do?
We will understand its concept
The account that is made
That T-shape
That format discussion
Will come somewhere at the end
Before that
There are many discussions with you
Let's start that discussion
Everyone let's have a go
Dear children, tell me
What is the formula to calculate Profit?
Tell me quickly
How can we calculate Profit?
How do we calculate Profit?
Any Profit
You have to calculate any simple Profit
I am not saying Average Profit
Super Profit
Normal Profit
Gross Profit
Just think
You don't know about accounts
You are a common man
And you have bought and sold something
Very good
Sir, any simple
If we talk
If we forget accounting
We become a common man
Isn't it?
However, there is a danger in becoming a common man
Anyone can put you in jail
Right? The sign of the broom is dangerous
Sales Minus Cost
Very good
Brother, how much did you sell?
For example, 120
Out of that, how much did you buy?
For example, if you minus Rs.
Then you will get Rs.
20 of savings
You will get Rs.
20 of profit
I am saying accounts
If you understand the basics
Then there is nothing easier than accounts
To be honest
Accounts is a very easy thing
Very very easy
And it is also very logical
Accounts is the most logical
Now, I will give examples
To prove this further
You also write, I will also write
Example number 1
Mohan purchased
Purchased
1000 T-shirts
At the rate 200 each
He sold
All the T-shirts
At the rate
250 each
Find out the profit
Sir, don't make it too fast
That Rs.
50 into 1000 is 50,000
Follow the formula
Because there will be typical examples
So, to get profit
What formula did you tell me now?
Sir, Sales minus
Cost
Very good
How much did you do sales?
Sold 1000 T-shirts
At the rate of 250
Sales of 250,000
Right Yes Minus What is your cost?
You bought 1000 T-shirts
At the rate of 200 200 per T-shirt
Means 200,000
So, 250,000 minus 200,000
250,000 minus 200,000
How much will be your profit?
Rs. 50,000
Your profit would be Rs.
Rs. 50,000
Write Sir, this is very simple
Today, it seems like you have given us
A question of 5th class
Simpler than that
Gradually, the level will increase
You have to take the formula to a higher level
Step by step
Sir, I understood
Okay, dear students
Write example number 2
Example number 2
Write with blue colored pen
This time
Mohan purchased
1000 T-shirts
At the rate 200 each
He sold
800 T-shirts
At the rate
300 per T-shirt
Find out the profit
Now, you will say the same thing in solution
Profit means
Sales minus cost
Very very good
So, tell me how much is your sales this time? 800 into 300
800 T-shirts at the rate of 300
And what was your cost? 1000 into 200
So, your sale price is 240
And your cost is 200,000
So, we can say
How much is our profit? 40000
For your information
This answer is absolutely useless
Sir, why did you make us write?
I was watching
Whether you guys write behind
Or you guys check
That there is something wrong
What's wrong with you sir? How did you write it like this?
Big brother! Big brother!
Pay attention to one thing
Sir, which thing?
Oh brothers, friends, colleagues, look at this
You are taking a sale of 800 pieces
And you are taking a purchase of 1000 pieces
Isn't this injustice?
To make a profit
Oh brother, the 200 t-shirts that haven't been sold yet
Why are you including them in the profit calculation?
How will you make a profit on the items that haven't been
sold yet?
Are you getting it, Devesh?
How will you make a profit on the items that haven't been
sold yet?
If the sale is of 800 items
Then how much cost do you have to take?
You have to take the cost of 800 items
If the sale price is 800 x 300
Then sir, take the cost of 800 x 200
Then you will get 2,40,000
Minus 1,60,000
Your correct profits are 80,000
What concept does this say?
This thing is called the matching concept
This thing is called the matching concept in accounts
Write it down
The matching concept says
If you want to make the right profits
Then compare the cost of the same piece with the sale price
The meaning of cost is here
The meaning of cost here is not the total cost
What is the meaning of cost here?
Cost of goods sold
The cost of the 800 pieces that have been sold
In the first example, you were acting smart
That this is a very simple thing
Do sale minus cost and be happy
Are you seeing
You are also getting to know here
That there are small shortcomings somewhere in the base
Sales minus cost of goods sold
The goods you have sold, sir
You have to take the cost of them
So now tell me the formula
What will you say to make a profit?
Sales minus cost or sales minus cost of goods sold
And tell me its short form
Sir, this is a very long name
Cost of goods sold
Who will say
This is lovingly called COGS
Now write in your own copy
Profit is equal to sales minus cost of goods sold
COGS in the bracket
And then write from there 800 into 300 minus 800 into 200
Is equal to 240 minus 160 is equal to 80,000
Okay sir
After this write example 3
Example number 3
Mohan purchased t-shirts
How much? 1000
At the rate 200 each
Sir, will Mohan keep doing this again and again?
Today Mohan will keep doing this
Don't know about tomorrow
Mohan purchased t-shirts 1000 pieces at the rate 200 each
He paid 2000 for freight charges
Full stop
He then sold all t-shirts
At the rate 250 each
Find profit
Sir, how does profit come out?
Sir, now you don't ask us
Write it yourself
You change something
We will say something
You will change
Sales minus cost of goods sold
How much is the sale?
All t-shirts are sold
Sale of 1000 t-shirts at the rate of 250
So what is the cost of t-shirts? 1000 t-shirts
And friends, do you know the fun thing?
The cost will come out
That 1000 into 200 is there
What will you add to it now? 2000 rupees freight
The goods that he bought
To bring it to his showroom
To the warehouse
Which is spending 2000 on rent
That will also be added to the cost
So the basic purchase price does not come in the cost
If you are doing any other expense
To bring it to your warehouse
So that will also be part of your cost
So I can say
How does COGS come out?
Purchase price
Plus direct expenses
What do we call freight, sir?
Direct expenses
Directly incurred on goods
The expenses to bring the goods to the warehouse
What do they call them?
Direct expenses
The freight you will pay
It is the expense to bring the goods to the warehouse
So what will it be?
Direct expenses
Okay sir
So sales minus COGS
And what is the formula of COGS?
Purchase plus direct expenses
Okay sir
So friends, how much will it come finally?
250,000
Minus 2,200,000 2,200,000 Profit is 48,000
Your profit is 48,000
Please write this down
Have you written it down?
Good
Write it down
Sir, how many more examples are there?
Just 1 or 2 more
Not 3
Example number 4
This is a very good example
It will sum up everything
Write it down everyone
Mohan purchased
1,000 T-shirts
At the rate 200 each
He paid
Freight Rupees 2,000
He paid freight rupees 2,000
Sir, can you tell me
If the total fare to bring 1,000 T-shirts is 2,000
Then how much will it be for 1 T-shirt?
Tell me
I will be insulted
If the total fare to bring 1,000 T-shirts is 2,000
Then how much will it be for 1 T-shirt? 2 Rupees
Backbencher saved the day
He paid freight rupees 2,000
Write it down
He sold
800 T-shirts
He sold 800 T-shirts
At the rate 300 each
Find out profit
I will write the complete solution
After that you write
Profit
Sir, how will the profit come out?
Look at it very carefully
Everything will end here
Profit is equal to
Sales minus
Cost of goods sold
Sales minus cost of goods sold
Okay? Okay sir
How do you show sales?
You will take sales like this
1,000 into
Sorry, sell 800 800 into 300 800 into 300
Sir, I have just taught you the cost
How did you take the cost?
Sir, we will take the cost of 800 T-shirts
We will take the cost of 800 T-shirts 200 Rupees
And will we add freight this time?
We will add freight this time
How much freight did I add? 2,000 Don't you think I made a
mistake here too?
By adding freight of 2,000
Because freight of 2,000 is on a total of 1,000 T-shirts
And how many T-shirts are sold?
Only and only 800 T-shirts
Sir, you have to take the freight of 800 T-shirts
The 200 T-shirts that are not sold
Why are you including the freight in the calculation of
profit?
So if there is a total freight of 2000 on 1000 t-shirts,
then how much happened on 1 t-shirt? 2 rupees
So sir, how much happened on 800 t-shirts? 800 times 2
means 1600 800 times 2 means 1600
Okay Can you tell me what is coming out for once? 800, not
800, 1600, 1600, 160 and 1600 161600 161600 161600 I am
saying that I should write this first, then you will write
161600 You don't even write by saying, now I am saying that
if you stop, then it will not stop
Sir, can I write this 800 times 200
Can I write like this?
Please pay a lot of attention 1000 times 200 kg total I
bought this much
Minus 200 times 200
Remove the 200 which is not sold now
Can I write it like this?
Kajalji, tell me
Can I write 800 times 200 as 1000 times 200 minus 200 times
200?
Yes or no?
I can say that this is my total purchase
What is this?
This is my total purchase
What did I remove from it?
What do I have now?
Closing stock
What do I have now?
Closing stock
So ultimately what will be left with me that sold? 800
times 200
Okay, yes
How can we write this 800 times 200?
How much was the total freight?
1000 times 200
Minus The stock that has not been sold yet
The remaining closing stock we have 200 times 200
Remove that
Still you see this will come to 1600 1000 times 200 minus
200 times 200 is 400
Means 1600
Right You will solve this equation 1000 times 200 minus 200
times 200
This will come to 2,00,000 minus 40,000
Means 1,60,000
And if you solve this equation
This will come to 1600
So ultimately this will come to 1,61,600 1,61,600 Okay This
will be the way to write
We have the detail
Do not write 800 times 200 directly
Why sir?
Do not write 800 times 200 directly
Why sir?
Because there is a principle in our account
Whose name is Full Disclosure Principle
What is its name?
Full Disclosure Principle
What does Full Disclosure Principle say friends?
Full Disclosure Principle says
If you write 800 times 200 directly
It will look like you sold 800
And you must have bought 800
You will not know how much stock is left
When you write the whole thing
That I bought 1000
And 200 is left
Then Full Disclosure will come out
That I bought 1000 200 is left
Means 800 sold
This is called presenting the whole thing
Tell the whole thing openly
The result will be the same
The total amount will be the same
You just told the whole thing openly
And Full Disclosure Principle of accounts
Wants the whole thing to be told openly
This will be the way to write
So now you can tell
What is our formula?
Now you can tell the formula
What is the result of profit?
Sales minus COGS
And what will be the formula of COGS?
Total Purchase
Plus Total Direct Expense
Direct Expense
Minus Closing Stock
See how I am writing
Sales minus COGS
See what I am writing
Total Purchase
Right? Plus Total Direct Expense
Total Direct Expense
Minus Closing Stock
Ok Sir?
So our formula is like this
Sales minus COGS
And what will be the formula of COGS in detail?
Total Purchase
Plus Total Direct Expense
Minus Closing Stock
Sir? If in your question
Assume that opening stock is also given
So if we are minusing the closing stock
So you can tell
What will we do with the opening stock?
We will make it plus
Because it will be just reverse treatment
So if there is an opening stock
So what will be done with it?
It will be made plus
Now the whole formula is made
It is complete
Now the matter is over
The formula to get profit is
Sales minus Cost of Goods Sold
Means COGS
Sales minus Cost of Goods Sold
Means COGS
And what is the formula of COGS?
Opening Stock
Plus Total Purchase
Plus Total Direct Expense
Minus Closing Stock
Now Sir?
This trading account is nothing
It is the second presentation of this formula
Trading account
If we write this formula in T shape
Then it will become a trading account
I will write and show
Let me show you
If we make a T shape like this
And write this formula here
Write sales here
And the COGS
Cost of Goods Sold
Write it this way
And then minus COGS from sales
So what will come out?
Profit Do not write anything now
Pay attention to see
Write sales here
Write COGS here
You must know this much
Writing the other side in the account
Means minus
Then COGS will be minus from sales
So equal to what will be left with us?
Profit will be left
Profit will be left with us
And then we write this COGS in full detail
COGS is written in full detail
What is the formula of COGS?
Tell me the whole formula
Opening Stock
Plus Total Purchases
And we do not write plus
Why Sir?
Writing the same side in the account means plus
Writing the other side means minus
So if you write the purchase on the opening stock side
So understand automatically
What is the sign of this?
Sign of Purchase
Opening Stock plus Purchase plus Direct Expense
And friends have to do minus
What do we have from this?
Closing Stock
So to do minus
Should I write on this side or on the other side?
Write on the other side
Closing Stock
Write on the other side
Closing Stock
So you can see
What is made by combining all this?
This is the same
COGS I wrote it by opening it
Opening Stock plus Purchase plus Direct Expense
And closing stock of minus on the other side
So this is the detailed formula of COGS
And you know this much
What will you write here?
To And what will you write here?
By What will you write here?
By Okay And what name will we give this?
Trading Account Will write here
Debit Will write here
Credit And this total will come out
Then both sides
Yes Keep one thing in mind
What is the name of this profit?
Gross Profit
Gross means
Raw Profit
Sir, this is not sure
Now there is no final profit
No Why sir?
Because now we have only minus direct expense
Which is related to goods
The expenses of bringing the goods to the godown
After that also there are expenses
Expenses of selling
Selling Expense
Advertisement Electricity Expense
All these are minus in P and L
Then there is a solid profit
Final Profit
Net Profit comes out
What does the trading account give us?
Gross Profit
And there is no need to say
If the purchase is written
Then it will be minus from the purchase
And if the sale is written
Then it will be minus from the sale
Okay Now I show you the format of the trading account
Which is written in our notes
Let's see the format of the trading account
Which is in our notes
Is it like this or not?
Yes, you people can see
Here it is written
To opening stock
To purchase
Buy sales
Buy closing stock
If there is any scrap sale, then it will come
And all these are direct expenses
All these are direct expenses
Wages, Carriage, Inward Freight
Cartage, Fuel, Octroi
All the expenses of bringing the goods to the godown
Means the expenses before selling
To prepare it
All these are direct expenses
And then what will be left
Gross Profit
Okay So this was the trading account
Friends in front of you
Trading account
With concept
I explained to you
That there is no trading account
Now you can see
You can't see the account
You can see an equation in it
Sales minus COGS
In which the formula of COGS is
Opening stock plus purchase
This is the way to cover it up.
We will meet in the next clip.
If you have any doubts, you can ask me.
Till then, thank you, bye bye and take care.