Dear children, you will get PL and balance sheet.
Yes, in this clip we have brought the discussion of profit
and loss account and balance sheet.
Are you ready? Ready Steady
Here we go.
Which people have not seen the clip of our trading account?
Useless people, if you have not seen it yet, then please,
please, please, useless people, I mean useless children,
please, please, please go and see that clip, otherwise you
will understand that clip, otherwise you will not
understand that clip, because PL and balance sheet are
linked to trading.
So, brother, go and see the clip of the trading account,
don't make me say it again and again.
Come on, the children who have seen the clip of the trading
account, let's start the discussion with them in the style
of Shubman Gill.
Sir, we don't like Shubman Gill, we like Sara's style, but
it can only come in your dreams, it is very difficult in
real life, you know, she is the daughter of God.
Profit and loss account of XYZ Private Limited, we have
taken such a format, debit credit, particular amount,
particular amount, let's say, just like any other account,
the format of P&L is also made, it is not a very unique
account, it is not very different, it is not very unique,
just like others, it is exactly the same, either side
debit, either side credit, after that particular amount,
particular amount, above the name of the account, profit
and loss account and these words are very
for the year ending 31st March 20, these words are very
expensive, for the year ending 31st March 20, why sir, see
friends, the P&L account tells the whole state of the whole
year, tells the whole state of the whole year, profit and
loss account, from 1st April to 31st March, how much is the
total sale, from 1st April to 31st March, how much is the
total purchase, like all these things were told by the
trading account, in the same way, the P&L account also puts
all the data from 1st April to
March, that's why we will also use for the year, for the
year means the whole year data, balance sheet is made for a
particular date, so the balance sheet is called as at, I
will tell you, assume the profit and loss account, how will
you keep it, video camera, which is made in the wedding,
video camera, it is being found, who picked up the plate,
who picked up the plate, after that which way did he go,
which item did he take first, then what did he eat, then
which way did he look, which way did
smile, with whom his eyes fought, all those things are
recorded, then with whom he went out of the party, this is
video, P&L and trading account are like video, tells the
state from start to end, whereas balance sheet, balance
sheet is just like, smile please, a photo, balance sheet is
a photo, like in a photo, only a particular moment, a
particular moment is shown, in the same way, in the balance
sheet also, a particular date 31st March, what assets and
what liabilities are there, its
is shown, my dear friends, ok sir, for the year, you have
discussed
a lot, what is the reason for this, the reason is
conceptual knowledge, talk to the final students, many
final students have doubts in this concept, I am not saying
much, but out of 100, 1 or 2 students will get the final
ones, who will say, yes, for the year, it is written, I
have seen, under the balance sheet, assets, but if it
comes, then why does it come, may not be able to tell the
proper logic, so I said, brother, it is necessary to put
the balance sheet, so it is right, sir, if you put
then what is the problem, now move forward, I said, ok
done, how is its inception, the meaning of inception is
start, start, beginning, how, this brother, the gross
profit of the trading account is handed over to P&L, GP
comes out of the trading account, I will show you the
trading account, let me show you the trading account, here
is GP, can you see what is written in front
of it, to gross profit transferred to P&L account, the
trading account is now making a sound, gross profit came
out of the trading account, sir, we call gross profit as
raw profit, yes, why sir, there are expenses related to
goods, only direct expenses, so we are calling it raw
profit, we are calling it gross profit, ok sir, then what
is the fixed profit, when all the expenses are minused,
when all the expenses are minused from this
GP, then the fixed profit will come out, fixed profit,
final profit, net profit, for this only we make profit and
loss account, for this only, friends, profit and loss
account is made, after minusing the remaining expenses from
the raw profit, to get the final net profit, we make P&L,
if you remember this line in Hindi, then according to me,
you will be able to retain the concept for a long time, and
you will be able to tell two people, now you are getting
used to the technicality, what is
in the book, in the technical language, you try to remember
it, you try to show it by talking between four people, and
inside the box is closed, the light is closed, it is not
clear what you are saying, you just do the parrot work, pay
attention to the line I am saying, after minusing all the
remaining expenses from the raw profit, to get the net
profit, the account is made, its name is profit and loss
account, sir, this definition is good, and you have to
listen again, you have to go back 10
in the video, you have to listen the line again, try to
catch this line, you can modify it a little in your words,
no one is stopping you, a little modification is allowed,
but try to take such words with you, which you can retain
for a long time, not only in this subject, not only in this
topic, for always, forever, the local language is the most
convenient language to memorize something, right, why do
you remember the opposite words very quickly, they are
catchy, in the local language, when
opposite words come in movies, vulgar words come in movies,
you catch it immediately,
I will say this to that friend, forever retained in memory,
it does not take even a microsecond, you remember those
words faster than the stumping of the drum in the brain,
right, why local language, so the language should be
remembered locally, it is absolutely fine, sir, so now we
will reduce all other expenses from this gross profit, net
profit will come, we will make a P&L account for this only,
fine, but sir, what do you mean by all other expenses, the
expenses related to the goods, which
call direct expenses, where did they come, they came in the
trading account, now which expense is left, indirect
expense, indirect means sir, which is not related to the
goods, who is Kajal, Kajal, and who is the other girl, who
is not Kajal, have you seen your meme, if you have not seen
it, then definitely search it, okay, okay sir, so friends,
what is direct, that is the expense related to the goods,
and whatever is not related to the goods, that is, whatever
is not a direct expense, what are
those, indirect expenses, the definition of the private and
public company is also written, companies act 2013, they
have written the definition for one company, and for the
other, like the definition of the private company was
given, and for the public company was written, a public
company is a company which is not a private company, which
is private is private, and which is not private is public,
okay sir, okay, indirect expenses will be minus, means sir,
you want to say this indirectly, I
yes, I say this directly to you, that
I want to say this indirectly, friends, now the gross
profit which is in trading, you can see this, the trading
account is making a sound, the trading account is shouting,
take gp bro, gp, where is the P&L account hidden, come take
my gp, come take my gp,
P&L account, who is making this sound, trading account, we
will hand over the trading account gp to P&L, and then P&L
will minus the indirect expenses from it and hand it over
to the net profit owner, you can also understand it like
this, friends, that there are two accountants in the
business, one's job is to make the trading account, and the
other's job is to make P&L, the one who makes the trading
account, he comes in the morning shift from 10 to 2, he
came, he worked from 10 to 2, and made
trading account, now from the trading account
P&L will be made, which is not his job, it is the job of
the accountant at 2 o'clock, he comes in the shift from 2
to 5, 6 o'clock, so the trading one is going, and the P&L
one has come, so the trading one says to the P&L one, take
the gp I took out till 2 o'clock, now you do the rest of
the work in it, you do the rest of the work in it.
so friends if I tell you in simple words then this gross
profit we will hand over to P&L here is P&L account we will
write here buy gross profit transferred from trading
account now what will happen out of this all indirect
expenses will be deducted from this here you can see a very
long list of indirect expenses left side one to salary to
rent to printing and stationery to postage and telephone to
electricity bill insurance premium legal expense
establishment expense trade expense audit fees
fees travelling expense general expense carriage and
freight outward commission brokerage advertisement bad
debts and many more and after deducting all these expenses
finally net profit comes out my dear friends finally net
profit comes out do we have to remember this list no what
are you talking about you have the arrow of concept you
have the bow of knowledge and after that you talk about
rednecks not at all goods related expenses carriage freight
fuel production cost all these become part of
trading account and all the expenses which are not directly
related to goods which are not spent in goods production
all these become indirect so what is the need to remember
the list you have to analyze it yourself whenever you see
the expense in front of you then you have to see it
yourself you have to analyze whether this expense is direct
or indirect it is related to the cost of goods it will be
included in the cost of goods production it is directly
influencing the cost of goods and
is different from this indirect expense ok ok ok and
practice will be done slowly slowly we will also ask your
question we are not saying no to them sir what is all this
loss on sale of fixed asset loss by fire loss by theft P&L
does not only take expenses but also takes loss what is the
name of P&L profit and loss account so its name is profit
and loss because finally either net profit will come out or
net loss but as far as debit side of the profit and loss
account is concerned it also takes
and also takes loss it has a big heart it says give me
expenses it takes expenses on one shoulder on the shoulder
of debit and then it says on this shoulder you put loss on
this shoulder and then it takes loss on this shoulder and
then it bends like this then who will bring it in balance
trading GP and indirect income indirect income incomes my
dear friends indirect income sir what is this indirect
income my brother I will tell you remember indirect income
means the opposite of indirect expense
you say then in the trading account you considered the same
type of income sale in the trading account the regular
income of your sale of goods sale of services which comes
you considered that only but my dear friends friends
friends there can be more income in business interest
received rent received dividend received commission
received profit and sale of fixed asset gain mind gain
anything can happen right right right so all these things
are added in gross profit all these things are added
gross profit they are added in gross profit I join your
hands I join your hands I touch your feet you can see here
indirect income finally finally the final picture is gonna
come to you my dear friends now gp ira ira gp ira who is
singing this song pnl from where it came from it came from
trading ok in that indirect income was added so the
strength came the strength gp is also there and indirect
income is also there a lot of money has happened from this
now indirect expenses will be minused so
what will be left with us net profit gross profit plus
indirect income minus indirect expenses is equal to net
profit this is the equation for profit and loss account sir
trading account equation equation equation equation
equation equation equation equation I am making it I am
just showing it means that these accounts are not eating
they are drinking right these accounts are not eating means
this account
is not an account is a mere equation is a mere equation my
dear friends these are just is called balance sheet and you
can see below as at 31st March 2020, it is a photo, it is a
picture.
What does the balance sheet say?
You click my photo, you click my photo, my love, the
balance sheet is a photo, a particular date tells the
condition of 31st March.
Sir, can't you make it on any other date?
Make it as you wish, no problem, it will tell the condition
of that date.
it means that the day you make the balance sheet, it will
tell the condition of that day.
If you want to know the condition of every day, then you
will have to make the balance sheet separately for each day.
But sir, what information does the balance sheet give us?
You have been talking about this for so long, we are
listening, we are listening, what is the balance sheet?
What information does the balance sheet give us?
What does this balance sheet take?
Yes, sir.
Let me drink water and then tell you.
Just give me a second.
Friends, in any business, for a businessman, it is very
important to know 4 things.
4 things.
1 took a 4, 4 took a 1.
4 things.
Which are those 4 things?
Oh, you must be very happy today.
Which are those 4 things?
Number 1, Profit.
Number 2, Loss.
How much is profit?
How much is loss?
Number 3 is Assets.
And number 4 are the Liabilities.
How much is the business asset?
And how much is the loan on it?
Profit is 2 types of G.P. and N.P.
It is known by trading and P&L.
To a businessman, to the owner, to the owner.
But how will he know how much is the property in the
business?
And how much is the loan on the business?
Means to repay the loan, how much property is available?
How many assets are available?
Right? That thing is known as Balance Sheet.
That thing is known as Balance Sheet.
Liabilities, Amount, Assets, Amount.
You can see on the left side, liabilities are written and
on the right side, assets are written
Now friends, this format is very detailed
In this, the names of assets and liabilities are also
written
I will tell you in short form
Sir, in balance sheet, we have three types of assets
Non-current assets, non-current investments and current
assets
Current assets are those that convert into cash within 12
months and earn money
Non-current assets are those that do not convert into cash
within 12 months
You will not sell them, you will keep them to use in your
business for years
And non-current investment means you have invested money
somewhere for a period of more than one year
These three types of assets come in total
And in liabilities, there is capital and non-current
liabilities and current liabilities
Sir, current liabilities are those that have to be paid
within 12 months
Very very good, who told you?
Very good, very good
Give me your back so that I can pat it
Very good
Non-current liabilities are those that have to be paid
within 12 months
Wow, the other back
There is no other back
I pat my back with the other hand
Very very good
But sir, you said that capital will also come on the
liability side
Why will capital also come on the liability side, sir?
How and why?
Sir, capital is the owner's money
It has its own account
What kind of liability is that?
It is not a loan, it is his own money
What kind of liability is that?
It is not a loan
How the hell is this possible on the planet earth, sir?
Oh brother, you forgot
You disappointed me
If this question comes to your mind
Then life is not Jhingalala at all
You disappointed me
Tell me
Separate legal entity, business entity concept
You forgot
The owner is different
Business is different
We do accounting from the angle of business
Yes Yes We don't do it from the angle of the owner
So the money that the owner has given to the business
The money that the business has received from the owner
The business also has to return that money to the owner one
day
That's why he writes it on the liability side
Because he also has to return that money one day
He has to return it one day
Are you making a business balance sheet?
We are not making a business balance sheet
Okay sir
Okay That's why we write capital on the liability side
And in capital, net profit is added
And minus the drawings
Okay Interest on capital is added
Sir, why did you add net profit?
And why did you minus the drawings?
Brother, what should I tell you?
Capital is the money of the owner
Yes sir
And who has the right on profit?
Of the owner
Right He was working hard day and night for profit
He had seen so many dreams for that
To earn that profit
He has created so much chaos for himself
So much hard work day and night
Meetings, clients, coming and going
He is spending his brain
So it is his money
He has the right on it
So it is added to his capital
Capital is also the money of the owner
Net profit is also the money of the owner
How much money did you make by adding both?
Two in front of three, two behind three
How many three?
Did you hear the quiz?
If you don't know the answer
Then comment in the comment box
You must be watching recorded
I have to WhatsApp the answer
Okay Okay sir, okay
You have homework today
And sir, why do you minus the drawings?
Why the drawings are deducted?
Now drawing means
How much money
Was in the business
Of the owner
That is, capital plus net profit
From that
How much he took out
To spend his house
To buy jewelry for his wife
To take the child to the water park
For the expenses of the blind family
Right Okay sir, okay
So it will be deducted from his money
Okay And the rest that you are seeing here
These are examples of non-current liabilities, current
liabilities and assets
No need to remember the list
Remember what I told you
That's it
Okay sir
One last question
And we will discuss today
One last question
Okay sir
Have you seen the movie Hatim Tai?
You had given seven questions in Hatim Tai
Jitendan What was his name then?
Pari Banu
I don't remember the name of the heroine
Then she went and became a fairy from stone
Would you also like to become a human being from stone
today?
Yes So answer the last question today
Today you have a chance to show knowledge
To rise above in my eyes
Although you have risen above already
To rise even higher
You have a chance today
Sir, ask what question is that?
It seems you have brought a very special question today
What is that question sir?
Tell us
We would also like to listen to it
Friends
Liability Why is it written on the left side?
And assets
Why is it on the right side?
Assets could have been liabilities here too
Sir, it must have happened
There is a child in the class
The child who reaches first sits on the first seat
The one who reaches last sits on the last seat
So liability must have reached first in his balance sheet
That's why he came
Assets must have come late
His watch must have gone backwards
That's why he must be seen there
Such logic is heard by batches
When children get worried
When they are unable to answer this
So they say, yes, there must have been such a reason
Then they start telling the reason
I hope you
You will not tell me such external reasons
You will tell the proper reason
Tell me
I give you 30 seconds to think about this
The clock is ticking
You have 30 seconds
You gotta answer
3 2 1 30 seconds
Time's up
So the people who had thought in their mind
The same answer that I am going to give
Congratulations to them already
Those who had thought of something else
Their concept is now going to be clear
Friends I am taking it on the pad
Let me explain this to you on the pad
I need a writing pad
Writing pad is available
Okay Friends, will you tell me one thing?
Are you born in India or Pakistan?
Sir, what did you ask me today?
You have crossed the limit
Sir, in our heart
In our life
In our liver
In our mind
In our blood group
In our DNA
In our nerves
In our blood report
This is what is written in everything
We are Indians
We will write a new story in a new era
We are Indians
Absolutely right
Sir, you are in a good mood today
To sing a song
I think
You have sung a song to someone today
And he has praised your song
I have caught him right
Don't tell anyone
But okay
It's just between you and me
Okay sir
Done Which language do Indians speak?
Sir, Hindi
Do you know Urdu?
No sir, I don't know Urdu
Urdu is taught in some other country, Pakistan
Beyond the border
Absolutely right
In Hindi language
Is it read left to right?
Or is it read right to left?
Sir, left to right
Start reading with the wrong hand
Not with the straight hand
Go from left to right
How do you read any book?
Start from left
Go to the right
Then next line start from left
Go to the right
Whereas Urdu is upside down
Do you know?
Urdu is read like this
Right to left
Then next line
Right to left
Like this
Okay okay okay
So sir
90% of people on the planet earth
Tendency is
That they read left to right
And when a balance sheet is made
When a balance sheet is made
So after making the balance sheet
Who gets it first?
Owner gets it
First of all
After making the balance sheet
After cleaning
After combing
After dressing up
After applying perfume
After applying powder
Owner gets it
First of all
Owner gets it
That the balance sheet is this way
Okay And then what will the owner do?
He will start reading it
And from where?
Left to right or right to left?
Sir Left to right
Absolutely right
So he will read from the left
So in the left
First of all
What does he want to see?
His money
His capital
What does the owner want to see first?
How much money do I have?
How much capital do I have?
By adding profit
By drawing minus
How much capital do I have?
First of all
Everyone wants to know about themselves
Hey brother
Do you get the result?
On the board
Yes Everyone runs
Yes Do you see someone else's result?
No First of all
You try to find your own
Right Then when you don't get it
You say like Farhan
Son Look from below
Last 13
Yours Yours Second Last First Who came?
Rancho Right That scene
Absolutely right So in balance sheet, the owner will start
reading from the left side and will try to see his money
first.
That's why friends, first capital is written, then on the
second number, the balance sheet goes to the lenders.
In the hands of those people who have given loan money to
the business.
Bank loan, long term borrowings, debenture holders, that
is, in the hands of people with non-current liabilities.
Then after that balance sheet.
That's why they get the next number.
Then they get the number of such assets.
This is the real logic, my dear friends.
So sir, this was the conceptual discussion of P&L & Balance
Sheet.
My attempt was to clear the concept by mixing technicality
with plain language.
And cross the ocean of accounting.
This will remain in the next clips.
Revise it well.
Then watch the next clip.
Till then, thank you.
Bye Bye.
Take care.
See you dear friends.
Will meet in the next clip.