Trading and Profit and Loss Account and Balance Sheet with Adjustments explained in easy way

Trading and Profit and Loss Account and Balance Sheet Explained with Example in easy way for Commerce Students | CA | B.Com | M.Com | CS
Hello Guys, I am back with another video on Accountancy. In this video I am going to teach you guys how to prepare Trading Account and profit and Loss Account as well as Balance Sheet. And the best part of this video is that I am going to explain this with a difficult Example so that you guys would be able to do any kind of questions relating to Trading and Profit and Loss Account and balance Sheet. Okay so, let's start.
Before starting with the Question, here is a quick format of trading and Profit and Loss Account. It starts with the heading Trading and profit and Loss Account for the year ending dash dash dash means for whatever period we are preparing it.So, if we are preparing it for the year ended 31st March 2016, we will say Trading and Profit and Loss Account for the year ended 31st March,2016. So, It is prepared in a T format, T as in English alphabets which includes Particulars Amount Particulars Amount as you can see in the slide. I still remember the time when I studied this format for the first time, I used to call it Papa P A P A Papa which is an Indian word for Father. So, this whole account is divided into two parts i.e Trading Account and Profit and Loss Account. Firstly we start with Trading Account. on the Debit side, we write Opening Stock, then To Purchases, then Wages and then Other Expenses. Okay, Always remember that we add the expression 'To' to every account written on the Debit side of the Trading account. And on the Credit side we write By Sales and By Closing Stock. On the Credit side we add ' By' to every account instead of To. Now, this is where almost our Trading Account ends. See, I said almost not completely. The most important part of Trading Account still lefts. As you guys may know that in Accounts we balance both Debit and Credit side i.e the total of Debit side should always be equal to the total of Credit side. Therefore, to balance both the Debit and Credit side of Trading Account, we use Gross profit or Gross Loss which is the main purpose of preparing Trading Account. Now, if the Credit side is more than the Debit side, we have Gross profit and if the Debit side is more than the credit side, we have gross Loss. These are the balancing figure which means that their amount will depend upon the difference between the Debit and Credit side. This is where our Trading Account ends. In't it simple? Don't worry if you guys feel it is difficult, stay with me till we solve the question and all of your doubts will vanish.
so, here is the total of Trading Account which we write inside two straight lines. Okay, now it's the turn of Profit and Loss Account. It always starts with either Gross profit or Gross Loss. It depends upon the result of the Trading Account. If the result of the Trading Account is Gross Profit, profit and Loss Account will start with Gross Profit on the Credit side and if the result is Gross Loss, profit and Loss Account will start with Gross Loss on the Debit side.
Also On the debit side of profit and Loss account we record Indirect Expenses i.e all other expenses except Direct Expenses and on the Credit side, we record Indirect Incomes. Now, comes the Totaling part. So, as I said Debit is always equal to Credit , therefore If the Credit side is more, we have Net profit and if the Debit side is more, we have Net loss.
So, if you guys want a complete explanation on Direct and Indirect Expenses and Incomes, the video link is in description.
So, with this we have studied enough of the format, now let's solve an Example with Adjustments.
Okay, so here is a Trial Balance given from which we have to prepare Trading and Profit and Loss Account as well as Balance Sheet. But before reading the question, you guys should have knowledge of Assets, Liabilities, Direct Expenses, Indirect Expenses and Indirect Incomes.
Now, if you are studying Trading and profit and Loss Account, let me assume that you already know about Assets and Liabilities because we study thm in starting. Now Direct Expenses are those which are directly related to production. Example of Direct Expenses are Wages, Carriage Inward, Freight Inward, Octroi, Royalty on Production etc. And Indirect Expenses are those Expenses which are not directly related to production. Example includes Salary, taxes, Postage, Telephone Expenses, Insurance, Printing and Stationery Expenses, Depreciation, Advertisement Expenses etc.
Now let's study the question. So, the question is the Following is the

[@CALavishGupta]

Do watch my latest video kzbin.info/www/bejne/f6bak3puoZuDmKc

[@gladsonsamuel31]

papa is an English name.....

[@THarshith]

As your name like i say sir i follow your channel my doubts are vanish like as your name lavish you really deserve that sir.

[@bihankanxo257]

Please speak in hindi

[@hi-fitunes9590]

If credit purchases also given in the problem wht we do

[@channammapolicepatil7694]

Bro tell the kannada

[@gauravtare5669]

Who is watching this before 1 day of exam

[@user-qo9up8hw4u]

My exams in the evening 😅

[@axhuxhhhh]

Now

[@banjaramodel5523]

😅😅

[@amal8244]

Exam at 9:30 me watching it at 7:39

[@sandeepparmar3584]

Me😅

[@RahulGupta-nr7cq]

I saw this video in 2021 when i was in 11th and now im in college having my accounts exam tomorrow ...and it still helping me a lot..... memories got refreshed...

[@rizzXyguy]

Same lockdown 😢 memories

[@cloviscyomoro2727]

You are a genius ... Learning this better than in class

[@benardw6243]

great tutor of accounting,only saw the small mistake on 5%*sales but you are really great.

[@danielprince6442]

This video successfully made me regret choosing accounting, (but you explain really well), and now I understood accounting isn't really my thing XD

[@narendrajadhav7775]

I am refreshing my knowledge in this lockdown 2021, and come across this video. This video is very much useful, you have explained it in very simple and subtle way, good job dude.....Hope you have created more such videos for beginners as well advance Accounting students.

[@suriyasuresh3412]

Great teaching...keep up the good work 💪🏼

[@ull893]

Total Sales = 1987500, 5% commission =99375, (1987500 x 5/100), or 1987500 x .05 = 99375, comm already paid = 87500, Therefore outstanding or still left to pay is 99375 minus 87500=11875.

[@yarrabhagyasri1364]

Yes sir

[@sandeshnayak8823]

yess, i was also claculating and found this error. but while mentioning in the balance sheet he mentioned Rs. 11875. So it is correct.

[@aneesrahman5396]

i notice that and waiting for him to complete balance sheet but he still manage to tally both side ?

[@fierce7627]

man.........you tought better than my teacher ............................................hope he wont find my comment though 👀

[@shamimahmed6105]

😂

[@josephnkhata6945]

😂😂😂😂

[@abdulrehmankhan606]

I can see

[@balicagayang1020]

That is why some of the teacher... They're just the heading the problems.. Whether you understand or not you just have to say "yes"... Lastly by hook or by crook we have to watch on KZbin... Thank you so much SIR

[@sahanan8933]

😂😂😂

[@williamchongolombeii9162]

wow what a beautiful lesson to watch and learn thank vry much now i can solve my problems

[@Gabe_D_]

Bro you made a whole video perfectly and even wrote the subtitles for us to understand.....respect and thanks👏

[@tana2207]

Wowwww. Very nicely explained. I really liked the presentation skills. Neat and clean with concept clear explanation. Please keep up the good work. God bless. Liked, subscribed and shared👍👍👍

[@DHIRAJKUMAR-di4il]

You r such an amazing accounts teacher.....

[@shashanks911]

Thank you .. Very clearly explained ... !!!!

[@bekomdkhar8769]

Thank you sir for this explanation I have clear my doubts....you are awesome and you are a great teacher

[@PlabonTalukder]

Thanks dude. You helped me a lot in the exam!!

[@shubhlaxmibhat7490]

Excellent teaching. Gr8. God bless you sir.

[@Nishajasmin]

Thanks a lot.. 😊 I can understand clearly..

[@badalguptaxyz]

Thank you very much for posting this video. You cleared all my doubts . 🙏

[@anamikabanerjee8111]

it's really helpful to understand sir... thank u so much❤

[@varunjaival231]

Very Nicely taught. It's a Good Tutorial for knowing how to prepare Trading, P&L and Balance Sheet.

[@mohiniaggarwal2988]

Thank u sr for explaining trading and P&L account its very helpful for me

[@nitinbelgaonkar9227]

Amazing work . Detailed explanation a big thumbs up to you. Keep up the good work.

[@CALavishGupta]

🙂🙂

[@joechibangu2007]

Excellent journey of accounts!

[@subratanandi9425]

Thank you sir. Very clearly explained...

[@nihad9460]

The best tutor i've had ever

[@NorBU993]

Good one. Plz keep this video for future reference. Don't delete. Much appreciated 👌👌👌

[@melophile6983]

you are a great teacher.. very useful information..well explained.. love you 😍❤️

[@godspowergodday5357]

Sir, Thank you for the Teaching. Its was awesome 👌

[@geetikapasupuleti2502]

Very clear explanation. Thank you so much.

[@DHIRAJKUMAR-di4il]

It is really very helpful .....god bless u sir ...keep it up👍👍

[@krishnaveni.n6016]

Explaining method is too good bro. Tq so much

[@ull893]

Really great effort. i have not seen any video done so neatly. Which software do you use.Thank you very much.

[@aasimanees]

Hey King, You dropped this 👑

[@cynthiawangui3468]

very very very well elaborate and to the point. Thank you Sir!!

[@MOBIGAMEXZ]

English explanation is better than in hindi 👍🏻 Thank you Bruh 🔥

[@sanyarathore9570]

The way u explained is amazing....

[@ayanmandal8257]

Sir agar adjustment mai 2% for discount on debtors likha rahe to indirect expenses ki column me. Kya likhna hoga?

[@anvitabelawal9305]

Great video, thanks!

[@URUKONDASAMPATH]

Tq so much sir, I got clarification ,nice explanation sir. !!!

[@Naiffrica]

One of the great teacher u are

[@diya7096]

Simplest explanation..thanku so much

[@iamsyedashik]

Best video ever had on this topic. New Subs and Love from Bangladesh ❤

[@asnaasna3697]

Excellent explanation so very use full clz tnq so much sir 👍

[@alimujahed2008]

Excellent brother I have good knowledge after watching your this video

[@rajanagu6182]

Very nice video..after a long time I ll refresh my account for my interview.. really hats off you bro☺️👍

[@CALavishGupta]

Thanks 🙏

[@yuvaranimunuswamy996]

Outstanding and detailed explanation... It's very easy to understand and my doubts are clear now... Thank you so much....😊

[@ramanababu5601]

Hi

[@commercewithmilan1627]

Great video highly appreciated SIR Thank you Student from sikkim 🇮🇳

[@techandsocial1424]

You are the best teacher sir. I like your video to much. Please upload regular video sir. 🙏🙏

[@ayannafees5799]

Thank you sir for this amazing video!

[@sonuojha2991]

Really worth full vedio 👍

[@pitamberk1789]

It's really very good explanation thank you sir

[@hearit7]

Thank you so much👏🏾🔥

[@aishwaryae8804]

Thank you bro it's very clear to understand

[@asnaasna3697]

Tnq sir i can understand very easily 🤗

[@DhirajKumar-yw2lq]

I am science student working in bank with no account experience Thanks man

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Thank you sir for this video

[@syedafirdousfathimahashmi863]

Thank u so much... It's very helpful for me. 👍🏻 Thank u I understand very clearly ❤️

[@CALavishGupta]

😊

[@huespotentertainment5512]

I don't know about P/L Account till I watch you video! Thanks for your Lecture, but sorry to say that the Balance Sheet tally amount is 16,38,250. So, if you are willing to accept I will explain....

[@CALavishGupta]

Yes, I know I have miscalculated there. 😉

[@RakshFusionCanvas]

Can u explain wht was that Miscal

[@regan7823]

If you have made a proper calculation it could have been a perfect work. There are some corrections in net value of salesman commission and in balance sheet.

[@harishgaming_999]

Excuses me. You hav side in sales rupess is 1987500 in commission we HV to less the 5% sales then we gets the99375.and you said 99225 it's wrong

[@proloymondal9209]

very useful sir, thanks very much

[@edenedeogheneruese9422]

Wow, I learnt alot

[@happinessrelaxation964]

Thanks for the efforts

[@anjalisahu3470]

Unequivocal explanation sir... Thank you so much..... 😊😊😊☺

[@CALavishGupta]

Happy to help.

[@rajababu-vp5yq]

Thanks bhai bahut mast padatai ho aap

[@devdkaria853]

Thank you very helpful

[@wardatfatima9351]

Thank you brother... it helped so much

[@thelmamwewa9493]

Thank you for the excellent explaintion 👍

[@amtulkhadernoori159]

Sir plz make videos on nios class 10 as i m unable to solve one problem could u help me plz its a humble request

[@sameer55313]

Well explained!! Have a question on this. Do all expenses have to be mentioned in Notes to Account? For example, Cost of Sale in P & L account has many sub costs. Do we have to show these cost in Notes to account in detail? Thanks

[@damnwhoareu]

Man how r u faring now? I mean it's been 3 years and i remember back then seeing ur comment and i see it again. So how has ur life been

[@ngulimnyuy1395]

Good job 👍 Thank you

[@user-xx8xz1rs7z]

very detailed and great video thank you

[@user-fs5lu6js2n]

Very good teacher and teaching 😊

[@tapiwadube3662]

Excellent presentation Sir.

[@jyotiupreti2469]

Nice vdo sir...thank you

[@ojasvijaiswal9707]

Very nice sir you teach very good

[@dpsln]

Thanks for the video sir

[@regan7823]

Can you pls explain depreciation on furniture and motor cars ?

[@rakeshthati3093]

Tq sir such a wonderful class

[@mrigankasekharchakraborty2940]

why was the bad debt amount 10,000 not taken into account in the balance sheet?

[@shivanichoudhary7618]

this was really beneficial...

[@user-pp6sw4si7h]

Good explanation but there is one mistake only.. The Net profit balance is rs 63000 not 62875 in profit and loss Account. And sales commission on liability side is rs 11750 not 11875. If you adjust these calculations then Balancesheet Total gets Equal to 1637750.😊

[@nukvid2772]

Please can u explain how net profit is 63000?? M a bit confused??

[@Saudathome]

5% of sales is supposed to be 99,375 not 99,250. Hence the error. It is 11,875 if you do subtract it.

[@RahulKumar-ly6ly]

Thanks sir very helpful video

[@joyabraham6234]

Awesome Sir

[@cheraddysujatha2364]

Thanku bhaiya you saved me..🤕

[@evelynebutichi8419]

Lavish kudos very insightful tuitions. I choose to subscribe.

[@CALavishGupta]

Thank you.

[@rvenukumar6209]

Nice sir Baga ardam avuthondhee i good ma sir kantai Baga chaparu

[@viviangee7149]

Thankyou Sir. A very helpful video. Could you please present it in a vertical format?

[@suriyamass5769]

Nice job man keep it up

[@louyrenzacarias8090]

This was so helpful on this lockdown ,thank you. Sir,have you published/done the balance sheet format video?

[@ushabansal7286]

Determination of income of certain business or profession on presumptive basis video bhejdo sir please income tax ka chapter hi

[@creditpark5506]

Very well explain Sir

[@user-le5lw7vl1m]

brother thanks for the good explanation

[@dhermenderchauhan4736]

❤❤❤ great sir

[@l_a_r_xgamer4020]

Thanks sir your explanation is osam Today is my exam my doubt hai been clear know

[@NOOBGAMING-gh8kn]

If the trial balance didn't mention the transaction is dr or cr.what should we conder it??

[@Rohitkumar-nw4zj]

It's really helpful

[@jakobalincola7033]

Thanks u Sir It was Helpful

[@perubhatlasreenadh5580]

Good video and provided good knowledge

[@sudipsuryavanshi5346]

bro its more helpfull do blance sheet and make entries in p&l account