Double Entry System Video Lecture | Principles and Practice of Accounting - CA Foundation

hello friends today we are going to
learn the double-entry system of
bookkeeping or accounting and after that
we will also learn something about the
accounting equation so this double-entry
system of bookkeeping is actually based
on I said Newton's law which was for
every action there is an equal and
opposite reaction
I said you don't say that for every
action there is an equal and opposite
reaction so for every transaction the
same concept has been applied in
double-entry system for recording of
every transaction and this double-entry
system was first advocated by mr. Luca
Pacioli of Italy way back in
fourteen hundred and ninety four he was
the first person to advocate this system
as a system of recording transactions in
accounts so under the double-entry
system
Luca Pacioli said that every transaction
has two aspects every transaction has
two aspects one is the receiving aspect
and other
giving aspect so if you receive
something in a transaction you have to
give something and the value of the
receiving aspect and the giving aspect
will always be equal so our transaction
has two aspects one is the receiving
aspect and other is the giving aspect
the value of which is always equal so
the receiving aspect is also called the
debit aspect you must have heard two
aspects of a transaction debit and
credit and obviously the giving aspect
is called
they did aspect so and let us discuss
the receiving aspect first under the
receiving aspect under the receiving
aspect we can receive benefits we will
receive benefits and what can we do with
the benefits we can receive the benefits
and we can utilize it or we can receive
the benefits and we can't waste it say
you receive the benefit but you wasted
it you couldn't use it or utilize it and
you can receive a benefit you can
receive a benefit and not utilize it but
keep it for future use you can receive a
benefit but you do not utilize it
currently and keep it for future use so
that your benefit remains an expired and
expired for future use so what do we
call it the benefits which are received
and utilized the benefits which are
received and utilized are called
expenses
the benefits which are received but
wasted
are called
Nasus and the benefits which are
received but remain unexpired for future
use are called
assets
I hope I am clear to you this may sound
a bit confusing but it is a very
straightforward way of decoding the
receiving aspect of a transaction that a
receiving aspect of a transaction is
always the debit aspect and under the
debate aspect you have either expenses
losses or assets now let us come to the
credit aspect or the giving aspect under
this you can have amount given by others
amount let me write it down for a clear
point of view amount given by others
which you need to repay which you need
to repay and amount given by others
which you don't need to repay so I'm all
given by others which you need to repay
is called a-- any guesses it is called a
liability
amount which is given by others but is
needed to be repaid by it the business
is called the liability of the business
an amount given by others which is not
needed to be repaid by the business it's
called it's called incomes or gains so
from this we are clear we can now write
the debit debit aspect and the VAT total
value of both the aspects will always be
equal as we have derived from this part
so we can say that for the debit aspect
we we we have
expenses plus losses
last assets it would be equal do
would be equal to
liabilities
Plus incomes
lots of games
so in this video I would keep it up to
this point only and later we would start
it from here but the main motive of
explain the main motive of discussing
the double interest system is the fact
that every transaction can be decoded
into two aspects where one is the
receiving aspect and other is the giving
aspect I'll let me try to explain this
by an example
let us say let us say example let us say
say you bought a book you buy a book
or please 100
you made
by
did card
so you buy a book for rupees 100 and you
pay by credit card so basically when you
are buying a book let us see what is the
receiving aspect
let us decode this transaction into the
receiving and the sacrificing aspect so
the receiving aspect would be the
received of the book because you are
receiving a book in this transaction
so the receiving aspect would be the
book which is an asset because all
assets expenses and losses come under
the receiving aspect written over here
they received this is the receiving
aspect and it has been decoded into the
sum total of expenses losses and assets
so on you are the hair the receiving
aspect is the book which is an asset and
thus its value will be rupees 100 and
this will be surely a debit debit aspect
and under the sacrificing aspect you
have you have a liability which you have
created by using your credit card you
have created a liability by using a
credit card and liabilities incomes and
gains are part of the sacrificing aspect
or under the umbrella of the credit
aspect so sacrificing here you actually
by using a credit card you incur a loan
to your bank you now owe your bank rupee
is 100 so here you incur a loan
which is a liability
there's a liability the value would be
same rupees 100 we have previously
discussed the Newton's third law which
is equal and opposite reaction so the
value will always be equal for both the
aspects of the transaction it can never
happen that one aspect of the
transaction has a value of rupees 100
and the other aspect has a value of
rupees 200 or 150 or 50 whatever it will
always be the same for both the aspects
but the nature of the the aspects of the
transaction will be just the opposite if
one is a debit other would be a credit
if one is an asset that would be a
liability one is an income other would
be an expense it cannot happen that both
the aspects of a transaction or a
receiving aspect or both the aspects of
a transaction or a sacrificing aspect it
cannot happen like that one aspect has
to be the receiving aspect and other
aspect has to be the sacrificing aspect
I have repeated many times the same
thing and I hope it is clear to you by
now so this would be the dit aspect so
we'll discuss the later part and we'll
start from this position and we'll
arrive at the accounting equation in the
next video