Preparing Statement of Affairs Video Lecture - SSC CGL Tier 2 - Study Material,

let's let us move on to ascertain meant
of profit under single engine profit
under single entry may be ascertained
under two methods one is the statement
of a phase method or the net worth
method and two is conversion of single
entry into doubling statement of offense
so what is a statement of offense the
statement of a phase is a list of assets
and liability so that is really similar
to a balance sheet what is a balance
sheet after all it's a statement of
assets and balance sheet so this is like
a balance sheet like a balance sheet
similar to a balance sheet only we call
it a statement of affairs because we are
not very sure about the value of the
figures some of them some of the
accounts some of the values that we have
put all the assets could be just
estimates so we call it a list of assets
and liabilities we call it a statement
of affairs and not a bubble sheet once
we list the assets and the liabilities
assets minus liabilities is nothing but
the capital assets minus liabilities is
the balancing figure assets minus
liabilities is the capital and they
balance in short it may not be entirely
accurate now let us just consider an
example suppose I were to start a
business by bringing in cash off to
Pease 10,000 sort of business by
bringing in cash of rupees in terms so
what happens at the beginning if
somebody asks me my cash my asset is ten
thousand therefore capital is also ten
thousand the balancing figure the only
asset I have is ten thousand it belongs
to me that is the net worth of the
business at that moment on the first day
of the business and capital S ten
thousand so cash is the housing capital
is ten thousand and the beginning of the
year
what happens at the end of the year
suppose let me let us see what are the
transactions that I had with this cash
during the year let us say we have I
have purchased I have purchased for cash
goods worth rupees 10 tons
I also purchased some more but on credit
another 10 tons I also sort coos let us
say I made sales for cash of 20000 and I
sold on credit let us say for another 10
minutes let us just assume that this is
all the transactions that I have had in
the whole year
what happens then at the end of the
goods at the end of the year what is my
cash balance what is the amount of cash
that I have just look at my heads and I
look at my liabilities so what is my
cash that I have I had started with ten
thousand then I purchased so money went
out ten thousand credit is for 10 so
there is no outflow of money then I sold
goods for 20,000 and therefore received
another 20,000 this therefore gives me
twenty thousand is my balance of cash
right next what is my other asset
another reset that I have is the money
that is receivable because I sold in
credit therefore I have debtors worth
ten thousand so the another asset that I
have is debtors amounting in ten
thousand so what is my total asset I
have is thirty thousand on the other
side I owe money to somebody creditors
because I purchased here on credit let
us have creditors of ten thousand if I
deduct this what I get is twenty
thousand
this must be my capital at at end of the
year at end of the year if that what
does this mean it means that
I started with a capital of 10,000 at
the beginning of the year and end of the
year I it has grown to 20,000 so 10,000
has become 20,000 therefore my profit is
actually
10,000 that is 20,000 closing capital
- I began with 10,000 this 10,000 is my
profit logically is that correct let us
just check what is my total purchases
20,000 what is my sales 30,000 sales
- purchases 30 minus 20 is 10,000 and
therefore my profit is 10,000 as can be
logically conclude from the system from
the double-entry system that we have
done before we know that our prophet had
we prepared a trading account we would
know that our profit is 10,000 we have
not taken any other transactions just in
a very simple way to help you understand
that when my capital grows if I start
with 10,000 end of the year I have
20,000 it means I have made a profit of
10000 during the year this in very
simple terms is the statement of a face
method which we are going to discuss let
us first see how to prepare a statement
of purpose
prepare a statement of a face from the
following particulars cash balance of
15,000 Bank 75,000 investments of 1 lakh
for each of 40,000 stocks 15,000
salaries do 10,000 creditors 15,000 so
what are my assets here cash is my asset
bank balance is an asset investment
sorry I said furniture is an asset stock
is an asset salaries do salaries do is
salaries payable therefore this is my
liability creditors is my liability how
do we prepare a statement of repairs we
make a heading say a statement of
affairs and a statement of a face just
like a balance sheet is relevant on a
particular date did not mention the day
here but it should be on a particular
date this is a statement of a face let
us say on one side we write the
liabilities and on the other side we
light they assess what are the
liabilities in half his salary is
outstanding salaries do how much is that
it's 10,000 creditors is 15,000 what are
my assets my assets are cash balance of
15,000 bank balance of 75,000
investments of 1 lakh e stock of 15,000
stock of 15,000 and furniture of 14,000
if I make a total now what do I get
till at 45,000 is the asset if I were to
take balance both sides the balancing
figure to like 45 less 25,000 I would
get a balancing finger off two lakh
twenty thumbs balancing figure of two
lakh twenty thousand this is how we
would prepare a statement of affairs
list of assets and liabilities balancing
figure capita