come back with one more adjustment after talking about
knowledge now we are talking about second knowledge the
name of next adjustment is unearned income advanced income
i will explain it with my example i will explain it with my
example come dear children you will understand with my
example what is the meaning of this how is it you put this
heading above advanced income now try to write together if
you say i will write easily but stay together i have to
say, write, explain you have to listen
write you will understand by yourself
here i am make my photo quickly
this is me
how do you like me thank you now i will make your face
now you will come on computer screen
here you are
dear children for example for example there are two papers
one in may and one in november now it is june and december
we take original may and november so your may attempt
suppose you have paper in may you have exams in may
and you have come to me on 1st november when you have come
on 1st november and you come to me and you have exams in
may and you say sir sir we have exams in november,
december, january, february, march and april teach us for 6
months teach us for 6 months so that after 6 months we give
paper in may and take professional degree and update status
on facebook and put css or cma in front of your name right
yes i will teach you and you know that i teach accounts so
you said sir please tell me fees
you think i will ask more because of this so i said no no
no problem you said no no so i said for 6 months i will
take 6000 i am telling you account fees i teach only
accounts i told you 6000 6000 you said ok i said listen one
more thing fees will be advance you know we have to give
advance ok we will give advance later but general trend is
you have to give 6000 in advance this is the fact you on 1
november i took 6000 from you received what you did there
are two words earning and getting
is earned and getting is received received means you have
done your work your responsibility is over you have done
your hard work you have fulfilled your duty of taking money
and received means you have received money tell me on 1
november i have received 6000 say yes or no i have received
but have i earned have i earned no why Deepak because
earning means you have done your work my responsibility is
over you are talking about completing when will my
responsibility be over 30 april 2023 when
it be over 24 30 april now i make year in front of you
understand carefully when did you pay me fees on 1 november
i have received how much money i have received 6000 go
ahead 6 months november, december, january, february march
and april and april let's end on april
when did this year start 1 april 2023 and where will it end
here 31 march 2024 31 march 2024 the 6000 rupees i have
taken from you i can say every month 1000 rupees are coming
every month 1000 rupees are coming this year 23-24 how much
is my income 5000 rupees and this 1000 in which month i am
earning 1 april 24 to 30 april 24 in which year it went
24-25 this is related to 24-25 this is related to 24-25 why
when will i earn in 24-25 when will i earn when will i
teach 1 april 24 to 30 april 24
year it will be 24-25 when did i get this 1000 in 23-24 but
still i will consider income of 23-24 as 5000 not 6000 i
will remove this 1000 because when did i earn in next year
when did i fulfill my duty in next year in previous case i
fulfilled my duty because what is important when did i earn
when did i fulfill my duty when did i fulfill my duty that
year's income when did i get it totally ignore it so in
23-24 how much will i write 6000 or 6000-1000 5000
6000-1000 5000 i will write 6000 1000
not of this year we will earn next year how much is this
year's income 5000 it is different what do we call this we
call this unearned income unearned income what do we call
unearned income unearned income unearned income not earned
yet duty is not fulfilled we can call it advance income
what can you call it we can call it advance income sir
advance is total 6000 so when are you making on 31-24 on
31-24 5000 advance is not there you fulfilled your duty
that is your natural income on 31-24 only
was advance ok its journal entry
its journal entry 1000 rupees advance will it be your
liability advance money is always a liability because you
have to pay in return advance money is your liability
because you got money and you have to fulfill your duty why
you have to pay in return what do we call liability we call
it credit to unearned fees tuition fees 1000 rupees we call
liability credit we call it unearned fees the fees which we
took but unearned and what will we do we will debit the
income account we have to reduce the
we have recorded 6000 entry will be fees account debit to
unearned fees account one effect of this will be in your
P&L from income from fees income it will be minus because
it is not of this year it is of next year and next year's
money you have taken that is why in balance sheet you will
show the liability side in balance sheet you will show the
liability side write friends
done
done How to present it properly in P&L account
Income side, my credit side
There I have written fees total 6000
I will make it less from that
Unearned fees
I have not studied this year 1000 Yes 5000
I have taught children in studies
That will be my income for this year
And along with that
In balance sheet
Liability side 5000 With what name?
With the name of unearned fees
Tell me one thing
Now think what will be its effect
How will balance sheet be tallied
Even after entry
Balance sheet will not be mismatched
How? I will tell
Sir, you reduced your earning from 1000
How much was income side before? 6000 You reduced from 1000
How much did you write net earning? 5000 How much did you
write?
Net earning 5000
Is it done?
Yes sir
So you can say
You reduced your earning from 1000
As soon as you reduce your earning from 1000
Friends, your profit will also
Reduce from 1000 or not?
Tell me the truth
Yes Yes Yes Yes Our profit will also reduce from 1000
And as soon as profit will reduce from 1000
I wrote unearned fees 5000
Sorry Tell me
Only 1000 will come here
Yes So as soon as profit will reduce from 1000
So what will happen friends?
Tell me
You know in balance sheet
In liability side capital
Profit plus
You know in balance sheet
We finally add profit in capital
Right So as soon as you go in balance sheet
So in capital
When we add net profit
Don't you think
That net profit will also be less than 1000
Tell me
That net profit will also be less than 1000
When your net profit
Earlier it was coming 10,000
But as soon as you reduced this income
Now how much will your net profit come? 9000 So how much
will you add here in capital? 9000 So net profit will also
be less than 1000 from here
Net profit will also be less than 1000 from here
And you have increased more than 1000
By what name?
By the name of unearned fees
So it fell down from 1000
On the opposite side of the balance sheet
And from 1000
Came up
So that effect will be equal
And your balance sheet will be tallied
And there is no effect on the asset side
There is no effect on the asset side
Note this thing quickly
To remember
Note this thing quickly
Done? Okay See you in the next clip
Thank you, bye bye and take care
Do review this clip
And the previous one too
Because the adjustments are related
Same same
Then you will say that things are getting mixed up
Okay, take care
Same things will get mixed up
Keep reviewing
Bye bye