 First and foremost part of our, you know, being here is to understand, you know, the accounting. In my first inaugural address, I was just discussing the easiest thing to understand, easiest thing to implement and easiest thing to take, you know, during your course of whatever services, whatever work you are doing. We, all people are, I think, in the accounting department, all are in accounting department, okay. Even if the person, I was objecting, Dr. Professor Bartok lecture here, but he just went away. I'll give him writing that even if you teach any technical or any subject, they must keep one subject of accounting. In all sciences, one basic conceptual subject of accounting they must have always. Otherwise what will happen? They will misunderstand. Like Mr. Professor Bartok telling to madam, he, madam is harassing, you know, some document is not there, some voucher is not there, etc., etc. So one subject, particularly in the first year or second, they must have accounting so that they can understand the conceptual issues of the accounting, okay. Now we come to the accounting. Accounting is made of what? Accounting is made for what? For a unit, for a institution, for a trade, for a commerce, for industry or for anything. The concept is different, we'll come later, but I'll tell you one very important thing is accounting, the person who is doing the accounting, the person with honor of the entity, the person who is behaving with the accounting are completely different than the entity for which we are making the account. It is not a fundamental accounting principle, it is accounting concept, but whenever I go and discuss, I'll discuss only first because we are taking the lectures for the bureaucrats, IS officers, then Rastan or other state accounts officers because they are coming from the RAC exam, you know, different examination, they are not coming from the Charter Account and its examination. So the first and foremost thing you have to understand that will make everything easier to you is that the person who is preparing the account, the person with honor of the institution, the person with director of the institution, the person with employee of the institution or anything is completely different than the entity for which you are making, you are preparing the account. It is very clear, very clear. Now what entity is what? Entity is a artificial person, nothing, and he, that artificial person, say this is the entity, I can say this mobile is the entity, mobile can understand a lot of things, I can say this span is an entity, okay. Now this entity does not understand anything, does not understand anything. It understand only that who is transacting to me, who is in contact with me, who is working with me and under what circumstance, under what nature it is working and it asks every question to you only. Like you gave this entity 500 rupees, this entity says 500 are given, so I will not keep, they say I do not, I am only a small entity, so I will not keep anything with me. So this 500 rupees where to put? I have given, I am owner of this entity, I have given 500 rupees, okay, I am giving 500 rupees just to start, say no, no, I do not need any money. So I give 500 rupees to entity, it says from where to put? The money has to go where? I do not keep any pocket, I do not keep anything, I am a single artificial person, simple, nothing. So it says okay, you give me 500 rupees, I tell him that you time being put in the cash box, you took time being put in the cash box, so it is okay, I put in the cash box, so it is a box, okay, so it says box, I am giving you 500 rupees, I will take back from you. So it will debit, hindi maul the naam likdena, debit, debit cash box, that I have given you 500 rupees, I will take back from you. So it will debit to cash box, cash account debit, cash box debit, 500 rupees. Then the system is, it says that I keep the account equal, the balance should be 0, debit credit should be 0, so I will credit to whom? Kiske jama karun? Kiske jama karun? Bola sham agarwal, who are you? Say I am owner, okay you are owner, what owner means in the account? I say it is capital, okay capital, so I credit capital, sham lal agarwal, finished. So it is a computer box, whatever I put inside it covers, okay. So it is a double entry accounting system. This entity says I have given you 500 rupees, cash box, debit, who have given me? I am a partner, proprietor, owner, who are you? I am sham agarwal, okay, sham agarwal. For what you are giving, I am giving as a capital, okay capital, capital account credit. Account talent, talent, very clear. So now you come out any transaction in your life, in the institution, you think all those transactions in such a manner, you will find the solution. One solution is very clear that whatever amount has come, whatever amount has gone, whatever asset has come, whatever asset has gone, whatever expenditure I have incurred, whatever revenue I earn, there are two entries. One is debit, one is credit. This should be clear in your mind. And both debit and credit, debit means I have to take money from you and if I take money from you, I will give to somebody, so balance is clear. So this concept you should keep in mind all the way. This is the main concept of the accounting. Never think that this is owner, this entity is not owner anything. It is only an entity which is keeping an account for you. So it is not coming in picture. It is neither carry asset nor carry liability, nothing. Whatever you put, debit and credit. Now what is debit and what is credit? What is debit and what is credit? Debit means, suppose I have given you 500 to him. So I will ask 500 to him. So I am a, even if capital, I am giving as a capital, but I have given 500 to entity. I see entity, I have given you 500 loan or capital, whatever I can take back from you. So this says I have to pay Mr. Agrawal 500 back. Now I am owner or I am a creditor. I am giving money to him as a capital or as a loan or as a supply of material in any case. This entity has to give me back money. Now it depends on the transaction. What transaction you are carrying out? And that is why professor was trying to tell to madam that madam wants the transaction supporting evidence. Okay? Because if you go to the evidence, the evidence can convert a asset into an expenditure. Evidence can convert a liability into income because both are credit. Suppose I am giving 1000 rupees to this entity. This entity can say 1000 rupees is fees given by Mr. Shyam Agrawal to me. So if it is a fees to the entity, it is income of this entity. If say I am giving a loan to the entity, then it is a liability. So mind it that loan or income are on one side. Income and liability is on one side. And suppose this entity gives you 2000 rupees. So if it gives you 2000 rupees, giving a lecture, it becomes expenditure. It will not come back. And if you give 2000 rupees in advance, then it will come back. So it has become expenditure or asset. If the money has to come back to this entity again, then it is a asset. If it is not coming back, it is expenditure. If it has to pay somebody back, it is a liability. And if it need not to pay back, it becomes its income. So this is a basic principle of accounting which everybody must understand. It appears to be very simple, but it is very logical. Logical in the sense that it goes by its own basic, basic, basic principle. And very simple and you know very conceptual and very easy to understand. Now you tell me anybody sitting here could understand this transaction or not. Anybody is aware of not. Now fully aware that asset and expenditure are on one side and liability and income are other side. Because liability and income are credit and asset and income are debit. So this is the principle of basic principle of accounting that this entity does not carry anything. Either it has to pay or it has to recover. It has to incur or it has to create an asset. Either it is income or it is a liability. So these basic principles of accounting takes you a long way. Now every transaction, any transaction in your life comes, you should think only four corners in your mind. Only four corners. Any transaction will either be a income or a liability and counterpart will be asset or expenditure. Or it can be increasing a liability. A liability may increase and other liability may decrease or asset may increase or other asset may decrease. So it will counter the transaction. This is the basic principle. Asset and liability are the balancing. Because asset and liability would say that those asset and liability, what is asset and liability? Whatever transaction is carried on in any entity, if the transaction after incurring the transaction, it is not to be discussed in future, not to be recovered in future, not to be paid in future. Nothing, nothing to be done, you know. It becomes a gone case. If that is the matter, then it is either income or expenditure. But if whatever transaction has taken place in the next year because accounts have taken a particular date or next period, it may be one month, two months. If those transactions carry in the next period also, next period also, if they are carried either as asset or a liability, then it comes in the balancing. So the expenditure income means they are not carried for the next period or income or expenditure. If they are carried, it becomes asset or liability. So we concluded that there is a profit and loss account, income and expenditure account and there is a balancing. All others are part of all these two things. So whenever you carry any transaction, you think in your mind that where it will go. Suppose I purchase this furniture. So this entity say, furniture purchase, I don't know furniture. What is furniture, furniture? Okay, furniture account debit. I will recover from the furniture. Why you recover from the furniture? Why? Because furniture is not an expenditure. Furniture is not an expenditure. Furniture will provide you facility to speak, to sit for one day, two day, three day, ten day, one year, two year, three year. Whatever may be the life. But it will provide you the facility to work. Okay? So it becomes asset. So I say furniture is asset. Furniture, debit. Now who has given the furniture? A supplier. Accent company. So it means I have to pay accent company some money. So furniture, debit, accent company credit. I have to pay money to accent company. We recover from the furniture. Now why I have taken this example. You cannot recover the furniture. It is not a cash box. So what will the recovery? When one year complete or one period complete. I say furniture of one thousand. Furniture of one thousand rupees. Has become now eight hundred rupees. Because its life is only five year. Or four year. Whatever it is. So two hundred fifty rupees expenditure. So whatever I will say, whatever income is there. I will charge from the income. Telling that I have purchased the furniture. Of that furniture. Some part is lost. It depreciated. So that money I have to recover from the income. So that becomes the depreciation. So that two hundred recover from the furniture. And you pay to the creator. If you pay him early. Then you are paying from the other income. Other balances. Other credit. From where? Suppose you want to pay accent company two thousand rupees. From where you pay? Because furniture. Depress may take four year. Accent company not remain pending four year. So I as a owner give you two thousand to capital. So liability of capital increases. I will pay two thousand rupees. My account two thousand credit more. So that will increase. And the liability to the accent company will decrease. So increase in liability and decrease in liability. Is a similar transaction. Increase in asset. Decrease in asset is a similar transaction. Increase in expenditure. Decrease in can also be the same. One expenditure can be recovered. One can be paid. Increase in income. Decrease in can also be the same. But the trial balance. The balance of debit and credit should tally. So every transaction wherever it comes in your life. You imagine that is a system of simple debit and credit. Nothing else. And while carrying out the transaction. While carrying out the evidence checking everything. You should find whether this transaction is creating a set. Creating a set or it is expenditure. Will not create a set. Whether it is coming to me as income. Need not to pay back. Or I have to pay back the money it has come. Those two principles only you have to account for while discussing every transaction. And this discussion will take you a long way. And you will simply able to prepare everything. Cash basis accounting. Double-end system accounting. Accrual accounting. There are three accounting system. People are confused. The cash basis accounting is double-end accounting. Double-end accounting is cash basis accounting. Accrual accounting is different accounting. But what is cash basis accounting? Previously what was happening in the government sector? You are given the budget. Budget means treasury payment. Now what you normally used to do it? That whatever payment you want to make salary or establishment or PF or some expenditure or consultancy etc. These are the recurring charges. So you had a budget of recurring expenditure. Non-recurring expenditure or capital budget or revenue budget whatever it can be called. So capital budget you say furniture, picture or fan or some AC or some you know some equipment etc. So that is capital budget. So budget is given to you whenever somebody supplies you material you approve it. Put that budget 5000, less incur 200, balance 4800. Mark the budget register and bill is passed. Shields signed, verified and sent to the treasury. Treasury pays it. So that is a cash basis accounting. Single-entry system. Because you do not make double-entry. Who will pay? Treasury will pay. What you have? You have a budget. Whatever income comes to you? Whatever scrap sale or any, you know, any scrap sale or any miscellaneous deposit or any investment deposit or anything which may come to you. Or any fees etc. Whatever you recover. That is your income. So what you say? Amount received as fees. Credit to the treasury. Underhead 241, 342, 342. What are their two heads? One is loan head. Another is the receipt head. So receipt head you credit to the treasury and the things are gone. So you need not to maintain any account. That is the single-entry system. Normally people say cash basis accounting. But cash basis accounting is basically a double-entry system accounting. Whenever you make two entries of one transaction, it becomes double-entry accounting. When you do not make any entry, then it becomes single-entry. Single-entry and double-entry both can be cash basis. But double-entry can be accrual basis also. What is accrual? What is double-entry? Cash basis that I will explain later. But you first understand there are three system accounting, not two. People always confuse. Whenever I go to lecture, even professional people, certain people are taking lecture. They say that the accounting is set to only. One is cash system, one is accrual system. Now in person working in the government department, way for them it is very necessary to understand there are three accounting system. Not two. So whatever in education system we are following, if a department is there, then you are following single-entry system. The department says whatever budget comes to you, verify the bill, pay, send it to the department. The budget is clear. So for department it is a single-entry. But for the institution as a whole, it is a double-entry on cash basis. Double-entry on cash. Because in institutions some grant comes. So they have to take grant income and debit to the bank account. So bank account debit and grant account credit. They have to make one entry. They have to maintain a cash book at the center level. So what is cash book? Cash book is not a single-entry. Cash book is a double-entry. Why double-entry? Because one part of the entry is already in the cash book. Suppose you pay the amount as expenditure. So you go. What entry will make? expenditure account debit to cash. Cash gone to you. So two cash, cash books you have taken cash. Whenever you take back from cash book, cash books you have to credit. Because you have taken money from cash books. You are given, debited. Taking, credit him. So you have to give credit. So credit, cash books, debit to expenditure. Because to whom you are paying? I am paying for the establishment. So the entity says, okay, establishment, debit. Now whether recoverable or not recoverable that you decide. Now say I say establishment, salary, PF, gratuity, printing history, telephone. They are revenue head. So it says, okay. Establishment, bracket by revenue head. Debit. Understanding is debit. Okay. So it will go to revenue expenditure. So this is the system. When cash book is maintained it is a double-entry. It is not a single-entry. When cash book is not maintained, only budgetary system is done, it becomes a single-entry. So you should be clear what is single-entry, what is double-entry. But what happens in the government department, education department, you prepare the cash book. Then you see it is single-entry. Whatever amount you pay you just list. One, two, three, four, five, six, seven. Make it total. And then cash balance itna. How much amount cash balance? And make total given the money. Finish. Single-entry. Because you are not preparing the, you are not posting the entries made in the cash book. Head-wise. You are not making the classification. What you are doing? You are having the classification register. Some people have classification in the cash book only. One, two, three columns. They will total the cash book. We will classification the cash book. It is a double-entry. Double-entry. Because once you are telling that cash came from whom? Bank. So you say total payment made by each department. Say one department pay 10 lakh rupees on various heads. And the closing balance is 10,000 rupees in the bank. So 10 lakh, 10,000 is total. Okay. 10 lakh will come from where? Either it has come from the head office. So it will say H-O. Central office it will say C-O. Restar office it will say restar office. Or from bank it will say bank credit. Because sometime money may be given a bank extra. Or sometime the previous balance of bank may be utilized this year. So the opening balance of bank was 10 lakh. And now closing balance is 10,000. So opening balance of bank has provided you funds to incur the expenditure. So this is the system. So whenever a cash book is prepared you should prepare a trial balance, known as trial balance that from where the money came and where money goes. And what was the opening balance in our pocket? What was the closing balance? A simple system. You go from the house. Whatever money available in pocket is your asset. Asset means it was opening balance on the day when it started your journey. It is your asset on the first day. Now whatever money came inside, suppose somebody gave you 200 rupees fees for lecture. So that is lecture fee. 100 rupees pocket, 200 lakhs of it, 300 income. Expenditure, distance expenditure, 200, 50 rupees, balance 50 with cash, 30 with cash balance. So opening balance 100 rupees, 200 rupees income, 250 with expenditure and 50 with cash balance. Trial balance, 300, 300, finish. So take your pocket as a trial balance. You will understand every transaction. Now in the pocket and the entity, only one difference is certain expenditure or revenue expenditure. Certain expenditure are capital expenditure. Revenue expenditure paid finish. Capital expenditure you incurred but the benefit will be available on next period also. I gave you salary, salary month finish. Next month it will not be available to you. Next month you again want to salary. So go on finish. But I gave you the advance. Food can advance. So say food can advance. 10,000 will be given. Every month 1,000 reduction. So gave in September 6 month reduction. 4,000 will be deducted next year. So 4,000 is advance. Not deducted. That I will take. That I will take next year. You assume that everything is paid. First you understand everything is paid. Because if you don't understand everything is clear then we will not be able to understand next step. So first we should understand everything is paid. Paid incurred. Or not incurred, credited or debited. If not incurred, debited or credited. I told you now I supply furniture. It is either paid from the cash box. Not paid, it is credited. It means it is credited to my head. So 1,000 rupees I am giving a lecture. I am not getting a fees. It is debited to institution. IIT Bombay 1,000 is recoverable. So but I can expand only in my pocket balance. So cash balance will be go, will go by the cash, cash book. So cash, so far cash book is concerned. It is concerned only with the cash. So far paid or not paid is concerned. It is not concerned with the cash book. This transaction will not be entered in cash book. Cash has to tally. Pocket cash, morning, evening has to tally in the evening. No transaction which is not paid or not received will not come in the cash book. So that will be a separate book. That will be a separate book. Or people for convenience keep a different column in cash book. So that is debit and credit set. That is a counter entry. Debit also, credit also. So for that there is separate book called as journal. Journal says two entries. Because one entry in cash book what is benefit? You have to make only one entry. It becomes double entry. Because one should pay expenditure and put on credit side of the cash. The opening balance 100 rupees get reduced by payment. So closing will be 50 only. So one entry to credit the cash is not required to make. Because cash balance is written in the left side. Right side you have expenditure entry. So balance is 50 rupees cash. Automatic cash reduced. Automatic cash reduced. So because cash book is maintained on opening balance, closing balance. So second entry is not required to make. Because one side is already there in the cash book. That is a simple system. You put any example in your life and calculate you will find it is very easy. You make entry first separately and then maintain the cash book you find the same balance. And you will say it is very easy. So this is the cash basis accounting you must first understand. Is clear everybody? No problem? So how is it? It is the easiest thing in the life because normally since morning to evening we are maintaining a cash book. At every point we are whenever you go to a shop you will find how much money I have put. No I don't have put. Where are we? Where for the? Okay opening wise 5000. I have drawn back again 5000 became 10000. But I paid 10000 the school fees. So money is not here. 10000 is gone. So purchasing cannot be done. Every moment you prepare the cash balance cash book in your pocket. So this is the cash book and cash system of accounting. And it is a double entry. When you prepare cash book it is a double entry system accounting. Okay. Now double entry and equal system of accounting. What is the difference? Why MHRD is behind everybody to prepare account on double entry accounting system? This concept I want to take later but I will give you just brief only. Because first we have to go accounting concept. All accounting concept there are lot of accounting given in the book. So I will go by you know item wise so that whenever you read you find this is what that. Okay. So double entry accounting why ministry is in interest study that at any cut of date any point of time you are not able to understand and arrive at and report that what is my asset today and what are my liabilities as on today. Because you are accounting only payment basis whatever paid you treat expenditure what are required you treat as income. So you are not able to understand at particular date which is normally end of the year end of the month end of the quarter you are not able to understand that how much asset I have how much amount I have to recover. And how much amount I have to pay that is my liability even if I have not received any amount I have to recover even if I have not paid the amount I have to pay. So some people carry I am a good position having lot of cash balance but at next morning on 1st April 1st we have to pay immediately all the payment. So his enjoyment goes you know only for 2, 3, 4, 5 days when the days come balance become near. So that is why ministry came that there should be a equal system of accounting in equal system accounting only one thing comes that on a particular date. You are aware that what is my asset and what is my liability. Whether amount received to you or not if it was income you will account for as income and saying that I have to recover this income from these fellows list it out. And whatever is your expenditure whether you incurred the expenditure you have to pay the salary all the people but salary bill not pay bill in March you have to pay in April. So you must know how much amount I have to pay on account of salary for the particular year in which the persons have done the job. So why particular year to have a matching concept that whatever income you account for is your particular period, particular year and expenditure also for a particular year so that they can match together. If you do not match then mismatch will be there in one year income will be used another year expenditure used. So a matching concept is coming when you have actual system of accounting. So when you start actual accounting you will learn matching concept, monetary concept, going concept, a lot of concept will come. Those concept you will automatically understand when you start making the, automatically understand. So first I will take up the concept terminology and then we will conclude the mercantile system of accounting or the actual system of accounting or the people say double entry system accounting double entry case also. But normally double entry people say it accrual based accounting. So not to be confused now. So all these terms I think you will be very clear for that. So let us go item to item what are the accounting names? What are the accounting heads? We will go by A, B, C, D. So that you can understand well. Account. One is one you will find account. What you will say? You will say account. What account? Furniture account, Ramlal account, Shyamlal account, salary account, PF account, okay. Expenditure, whatever name? Whatever name you have in your mind, you know institution, fees account, cost and money deposit account. Every head, every head of receipt or payment. Every head of income or expenditure. Every head of asset or liability. Whatever may be head which is not matching in one head. Salary means salary payment. Now salary payment you want subhead? Salary payment to admin staff, salary payment to technical staff, salary payment to hire staff, salary payment to junior staff, salary payment to PON, salary payment to driver. You can have separate heads also. So how many heads? What number of heads are there? You can have more heads, you can have less heads. There can be one main group. That's salary payment. Okay, salary payment. Now in salary payment you can have salary minister staff, salary education staff, salary other staff, whatever names you want you can have subhead. So account means there will be an account of that particular type of transaction. So that the particular type of transaction you can get at one place. Because whatever entries you are having in cash book, cash payment and whatever entries you are having when we see the mercantile laser in a journal book. Both are posted to an account laser. So posting is made account wise. Suppose you have to make payment salary every month. So this account will say it will have the, you know, date, particular and amount. Okay? So it will say date on 4th April 2013. Amount, salary paid cash, cash, accrual base, it will say salary payable, it will say amount. So those entries which are related to salary for the whole year or the whole period. Suppose you want to make total quarterly. You can make quarterly account. Yearly is yearly account. Normally we take yearly so that you can understand better. But instead of yearly you can make quarterly or monthly or happily also. Okay? So yearly account means a particular account of which all transaction, whether debit or credit are entered in that particular account. So we prepared a trial balance while making the cash book. I will tell you only two entries. Okay? Will you? Two entries. One entry, I have given 1,000 week cash as a capital. So this entity will say 1,000 rupees credit to Shyamagarwal capital account. Capital account bracket with Shyamagarwal because some, there may be partnership from, then there will be two persons. So it will be capital account Shyamagarwal. The proprietor, proprietor capital account. The partner capital account Shyamagarwal. Okay? Debit to cash books or cash books debit? Cash account debit to Shyamagarwal. Okay? Now, second entry. I have paid cash to purchase furniture. Okay? So furniture account debit 1,000. Two cash. Cash is returned back. So furniture debit to cash 1,000, 1,000. So 1,000 was in box. 1,000 returned back. So cash balance become nil. Now what happened? 1,000 furniture is a set debit. And 1,000 capital is credit. So trial balance is 1,000 asset. Furniture account debit and Shyamagarwal. Trial balance tally. This is tally. In this fashion, whatever transaction you want, this debit and credit will tally you. Now say, in furniture account, there are five entries. In first month, I purchase 1,000. In second month, I purchase 2,000. In third month, I purchase 4,000. In fifth month, I purchase 10,000. So how do you know total furniture account? You cannot know. What happened in cash book? I paid all the time cash. All the time cash. I went to the company, you know, this entity. 1,000 gave, 1,000 cash book. 2,000 gave, 5,000 cash book. Now 1,000 cash book become paid to furniture nil. 2,000 became paid furniture nil. 5,000 became paid to furniture nil. So total amount, 8,000 furniture and 8,000 capital. So from where we will get 8,000? We will not get 8,000 to one place. Because not only furniture entry, there are other entries also in the cash book. So all the entries in the cash book will be posted to the respective account. Okay? And that account will tell you in the whole year, 8,000 is entry, 8,000 case came balance nil. Now there are going to be 1,000 entries. So that way 1,000 entries amount will have, definitely has to be in cash book. And there will be 10 heads. So all 10 heads taking together will tell you to the total amount available as credit to the cash book. Very easy. So like 2 entries, there can be 5. Then you add 6. Then 7. Then 8. Then 9. Then 10. Then prepare the trial balance. Then there will be 10,000. So it does not make a difference. The difference will come only when in the cash book side, I have written 5,000 as furniture purchase. While posting to furniture account, you write 6,000 wrongly. So if I have purchased 5,000, you have to debit furniture and only 5,000. Not 6,000. That you have to mine. If you debit 6,000, then your balance will not tell you because 1,000 where will you come? In cash book, 5,000. Now only I paid 5,000 paid furniture. So you will have a difference. So that will give them a laser account is prepared to have all type of transaction of a particular head at one place. So that for the complete year, you can know how much expenditure I incurred on salary. Say 2 lakh rupees. Who paid? 2 lakh rupees. 2 lakh rupees Sambra and Agarwal paid. Sambra and Agarwal is who? I am a proprietor. You are proprietor. So you paid as loan or capital? 1 lakh I paid as capital. 1 lakh I have loaned. Why you paid loan? Why you paid capital? Because I paid capital for 1 lakh. Because I had only 1 lakh in my head. Another 1 lakh is not I am having. So where money will come? In the next year with this salary I will earn money. So from that earning I will take 1 lakh back. So next year what happen? You arrange the classes. All those faculty you earn 4 lakh from the classes. And 2 lakh is expenditure salary. So 2 lakh you save. Out of 2 lakh, 2 lakh is available in cash books. Out of cash books loan is paid. What will happen? My loan is paid. Capital normally is not paid. So 1 lakh my loan is paid. 1 lakh become nil. And cash balance of 2 lakh becomes 1 lakh. So that account is valid. So this says who has given you the money? Now the question double entry will come? Okay. The money was not there then whom you have to pay? I have purchased furniture 10,000. I have to pay accent company. So trial balance will say furniture 10,000. And payable to accent company 10,000. Balance telly. So at each and every entry the balance of debit and credit. Means asset and liability expenditure or income should telly. In all the debit heads there are either expenditure or asset. In all the credit heads there is a liability or income. So both credit and their nature is credit. Because whenever amount comes to you as a profit. Even if it is a profit. Why it is credit? Now concept of credit is from where it comes. Suppose this is a business entity. You have given him 2000 income. No expenditure, nothing. No, not only one. He has received 2000 rupees as cash. Why? Because I am owner of this entity. I came here to take a lecture. And professor paid cash 2000 rupees in the name of this entity. This Shyam Agarwal and company. My firm name is Shyam Agarwal company. So he made a cheque or cash Shyam Agarwal 2000 rupees. So it got 2000 rupees. And he said no, no, no. No income is not mine. Because I have to keep nothing. So who is the owner? Shyam Agarwal. So I have to pay to Shyam Agarwal. So what to do? 2000 income will come in income side. No transaction. Then in the P&L account it is transferred to capital account. Income, who is the owner of the income? Me. So it will transfer to my account. Then income will come credit to my account. So whenever cash will be there, it will pay to me. So that is why the entity concept comes. Income does not pertain to this. Income does not pertain to this. So whatever income is there, the income is also liability for the entity. Because income does not belong to this entity. You go to this point. Now I think it should be very clear. Even income comes. People may say income here, income is your asset. People are confused. Whatever income or entity, it is asset. It is income. It should be powerful. It should have a set. It is true. But income is not his income. Income relates to either proprietor or partner. So net income, income less expenditure, balance income, it will credit to owner. So it will keep balance. Okay. Now what is net balance? 2000. So 2000 income he has to pay to me. Where is 2000? 2000, 1000. Facebook once are recoverable from IIT. So when IIT people give him, it will give 1000 to me. If I want to case 1000, I can take 1000 case. So account is net. So income does not relate to entity. That is why income is also a liability. You go to the point. You have to put this finally in your mind income is not a set of this company. Income is a liability. Whenever I go to government department, they say, when is what you are doing Mr. Agrawal? I want 50 crore rupees profit and you are showing in liability side. How it is liability? It is my profit. Because whatever P&L account net profit comes, it transfer to the liability side. Because liability side we have capital. Because capital for this company, whatever capital I am giving, it is liability for it. This entity, I am giving a capital. But the capital is also liability for this fellow. I am preparing account for this, not me. Not my individual insight, my heart. My heart debit gate are different for this. So I am giving capital, it is liability. So whatever profit you are earning, that is also liability for the company. Because this company has to pay to government. No, no, no, it is my company. I am the government officer and I am managing the actor. This should be my asset. You are not mistaking and you don't understand. You should be removed from the auditor. Ultimately this is happening in the bureaucrats. So this is very much, Bakshi sir, that you must have the classes first for the bureaucrats, second for the account officer, so that they can understand what is this. Because what happened? Once we go to the seat, we say, normally I discuss in case-based accounting also we have to prepare balance sheet. Balance sheet? What balance sheet? There is no accrual, no money came, money gone, only case balance. Why? Because as on the closing date, whatever is a case balance, that is asset of that company and that asset has to pay to the owner. So owner is the liability. No, no, no, you are mistaking. I am the managing director. That is a big problem. I am the secretary of MRD. How Bakshi you understand like this? So that becomes a problem. So whenever I take classes for bureaucrats, because normally I teach in the OTS, I first teach them the first lesson that this entity is different and you are different. That is the first part. So this will make you understand a lot of things. Now you will think any time you will be very easy for you to understand. So this entity concept is a must for you and that is the part that we are working in this environment. That is the easiest thing. You ask whenever I read accounting in 10th class and 11th class, I had two years I had accounting system because I am a shop, my father is shopkeeper. So I think when I was in 8th or 7th class, I used to write the books of the shop. Whenever I used to go in the schooling classes, I used to speak. This will happen like this. How do you know? I am doing in my routine practice. So that makes you very easy to understand. And if any person in the country does not understand accounting, even if it becomes IIT in top or any top R, I think he is failing in his duty because always he will be questioning those things which will completely be rational, ethical and in any center even if it is a medical, it is IIT, it is engineering, it is technical, civil or whatever they are especially only for one thing, their particular subject. And your accountant, you are especially for every sector because whatever, medical purpose you want to purchase, how much money you have paid? Why 10,000? In market available 6,000, madam says no, no, you first year bought 6,000, now how about 10,000? Oh madam, I don't know, it was non-people. Why non-people? You have got 10,000 system, open system, how can you do it? What is the life of it? Three years. Three years life only. Where are the many things to do? What is the system? So accountants are much more powerful. They understand everything. Not one subject. There is no one sign. Accountant is a sign of every sciences that convert into all the transaction into a monetary system and by which everything is measured, monitored, controlled and administered. So this is the most important accountant system. Thank you very much.