The video is especially for the science students who come from a different
background. This is a very simple and straightforward video so please make sure you
watch this video till the end to understand the whole concept of accounting very
practically and logically right let 's start this video. The balance sheet gives us
the financial position of the business and profit and loss account. Accounting
accounting is nothing but recording classifying and summarizing the financial data
into meaningful format that is all accounting is right so now let 's see the
accounting process. The accounting process is very simple accounting process starts
with the source document. The process from source document till trial balance it is
called bookkeeping. An asset is a resource controlled by an entity as a result of
past events and from which future economic benefits are expected to flow to the
entity that is what an asset is now previously we used to say that asset is
something that the company owns if company owns the land and building then that 's
an asset of the company'
Expenses are the cost of operations that a company incurs to generate revenue and
from which no further benefit is expected is the main difference between a certain
expenses that you know in acid we get future economic benefit but here once you
incur the expenses that means you have taken the benefit already the benefit is
already taken. so see here a present obligation of the entity to transfer an
economic resource as a result of past event there will be some past event for
example you purchase you know ten thousand worth of goods yeah and you did n't pay
then you have present obligation to pay that person pay to pay your supplier. If
you owe money to your supplier then that supplier that creditor he will have claim
on your total assets of the company. Capital is simply whatever money that is
brought in by the owners of the company that's called capital or equity share
capital or preferential capital simple as that. The technical definition would be
it is the claim of owners in the total asset of the. company after deducting all it
's liabilities. shareholders because they 're in companies the capital is divided
into small small units of shares.
Sales is our revenue and then rendering of services if it 's a service business
then we will render the services and we will get the money etc and also interest
received all these things okay other things also etc mean side interest receive
rent receive whatever it is dividend receive whatever we get that 's called running
simple as that' Let 's say you purchased a machinery to do business yeah you wanted
to do some production or something yeah so of course your cash will reduce. Now
there is an obligation that is being created that you have to pay 40,000 back to
the bank is n't it so this obligation is called a present obligation. Before you
had claim on the total assets of the company yes but now there is liability holder
also outsider also outsider. First priority goes to the liability holders and then
the owners okay so these people will have claim on total assets and also you but
you will get only after deducting liabilities okay your claim is only one lakh.
Accounting attempts to record both effects of a transaction or event on the NT
these financial statements. Every transaction will have one debit one credit and
one credit okay and the effect of them will be equal always equal that 's the
duality principle or dual aspect principle of accounting. Every transaction will
have dual aspect it will have to us but that is what is meant by double entry and
both the aspects have to be recorded so entire accounting is based on this modern
equation. When you purchase machinery what happened when you purchase the machinery
there was cash cash cash was reduced cash and then this machinery twenty thousand
this asset increased. Accounting process shows document you prepare you prepare the
journal entries so yeah in the coming videos we are going to going to document the
accounting process. What is asset expense liability equity and revenue? What asset
means something you have control or ownership on and you will get future benefit
from that?
background. This is a very simple and straightforward video so please make sure you
watch this video till the end to understand the whole concept of accounting very
practically and logically right let 's start this video. The balance sheet gives us
the financial position of the business and profit and loss account. Accounting
accounting is nothing but recording classifying and summarizing the financial data
into meaningful format that is all accounting is right so now let 's see the
accounting process. The accounting process is very simple accounting process starts
with the source document. The process from source document till trial balance it is
called bookkeeping. An asset is a resource controlled by an entity as a result of
past events and from which future economic benefits are expected to flow to the
entity that is what an asset is now previously we used to say that asset is
something that the company owns if company owns the land and building then that 's
an asset of the company'
Expenses are the cost of operations that a company incurs to generate revenue and
from which no further benefit is expected is the main difference between a certain
expenses that you know in acid we get future economic benefit but here once you
incur the expenses that means you have taken the benefit already the benefit is
already taken. so see here a present obligation of the entity to transfer an
economic resource as a result of past event there will be some past event for
example you purchase you know ten thousand worth of goods yeah and you did n't pay
then you have present obligation to pay that person pay to pay your supplier. If
you owe money to your supplier then that supplier that creditor he will have claim
on your total assets of the company. Capital is simply whatever money that is
brought in by the owners of the company that's called capital or equity share
capital or preferential capital simple as that. The technical definition would be
it is the claim of owners in the total asset of the. company after deducting all it
's liabilities. shareholders because they 're in companies the capital is divided
into small small units of shares.
Sales is our revenue and then rendering of services if it 's a service business
then we will render the services and we will get the money etc and also interest
received all these things okay other things also etc mean side interest receive
rent receive whatever it is dividend receive whatever we get that 's called running
simple as that' Let 's say you purchased a machinery to do business yeah you wanted
to do some production or something yeah so of course your cash will reduce. Now
there is an obligation that is being created that you have to pay 40,000 back to
the bank is n't it so this obligation is called a present obligation. Before you
had claim on the total assets of the company yes but now there is liability holder
also outsider also outsider. First priority goes to the liability holders and then
the owners okay so these people will have claim on total assets and also you but
you will get only after deducting liabilities okay your claim is only one lakh.
Accounting attempts to record both effects of a transaction or event on the NT
these financial statements. Every transaction will have one debit one credit and
one credit okay and the effect of them will be equal always equal that 's the
duality principle or dual aspect principle of accounting. Every transaction will
have dual aspect it will have to us but that is what is meant by double entry and
both the aspects have to be recorded so entire accounting is based on this modern
equation. When you purchase machinery what happened when you purchase the machinery
there was cash cash cash was reduced cash and then this machinery twenty thousand
this asset increased. Accounting process shows document you prepare you prepare the
journal entries so yeah in the coming videos we are going to going to document the
accounting process. What is asset expense liability equity and revenue? What asset
means something you have control or ownership on and you will get future benefit
from that?
