That sounds like an interesting class, Carlos! Thank you very much for the kind words. Please spread the word about the channel to fellow students. This playlist might have more topics that could be helpful for you: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html Wishing you lots of success in your studies.
Thank you! Greetings back from the Netherlands. Wishing you lots of success in your studies. Please share the link to the channel with fellow students.
Happy to help!!!! More useful stuff available in my Accounting 101 playlist: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html&pp=gAQBiAQB Take a look which videos could be useful for you.
Wishing you lots of success with the exams, I hope all of the videos in this playlist will be useful: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html
Glad you think so! There are more videos on related topics in the Accounting 101 playlist: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html
Enjoyed this explanation of double entry accounting? Then subscribe to my channel, and watch the related video on the accounting equation ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-OYql7Y9NnBg.html and the video on debits and credits explained by using DC ADE LER ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html
This helped me overstand some more about how this works when it comes to Bills of Exchange. Been diving deep into this for discharging debts and making resources for people to learn from. Thank you!
Good to hear! One step at a time. ;-) Have a browse through my Accounting 101 playlist, and see which other videos could be helpful ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html
Thank you very much for the kind words! Happy to help. There might be more useful videos for you in my Accounting 101 playlist: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html
I really love your channel and appreciate your hard work! Could you make a video about bad debts (allowance method, direct write offs)? Because I couldn't find a video on this topic...
Thank you very much for the kind words! Bad debt did come up (in passing) in the video about Contra Accounts ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-ixkdvOT7ZDI.html And yes, I might make a specific video about bad debts in the future! ;-)
The Finance Storyteller Ah thanks for the quickly response! I just have seen the contra accounts video and yes it’s a great video (as always) but I think there are some points in the topic of bad debts that should be discussed in more detail (direct write-offs, allowance method...) And again: I love your videos and please keep going! Informative, focused and no unnecessary information! You could replace the professor at my business school, or are you a even a professor?!
Thank you very much! I am honoured! I am not a professor, but I do teach "finance-for-non-financials" programs, and run business simulations as part of leadership development programs, at corporate clients. The Finance Storyteller RU-vid channel started off as an extension of that: bonus material for the participants. I guess that after 100+ videos it has gained a stand-alone status. :-) Please spread the word with your fellow students! ;-) I will put "bad debt accounting" on the "to do" list of topics, and hope to get to it soon! Thanks for the suggestion.
Happy to help! More good stuff (related topics) in the Accounting 101 playlist: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html&pp=gAQB
very good videos. RU-vid seems to rearrange out of an order that makes sense for a newby. You may want to place a number in front of each title so we can go in order. ty
Thanks for the kind words and the suggestion! I have rearranged my "Accounting 101" playlist a bit, to have a more logical flow from one topic to the next. I am also fine with viewers skipping some of the videos, in case there is an overlap, or if they are already knowledgeable in that area. Whatever works for each individual! I will not change the video titles, as that might hurt their ranking in the search results in case viewers are only looking for one specific topic.
The Tangible Assets, Liabilities and Cash are all good! It is the Intangible Assets and Goodwill that an investor has to worry about, as these are the accounts which unscrupulous managers can debit with "hot air" and "jingle bells"!
Intangible Assets ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE--TzaG-VD2GU.html and Goodwill ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-yq9qjCmUfS4.html are indeed more subjective, but they do have their role to play in accounting. If the sum of both of these is more than 50% of the balance sheet total, I tend to get very suspicious too! See the links I pasted above for in-depth reviews.
@@TheFinanceStoryteller Your videos are excellent. However, my comment was based on what Charlie Munger is reported to have said - “The liabilities are always 100 percent good. It’s the assets you have to worry about.” I hope my statement makes sense without rejecting the role of "Goodwill" and "Intangible Assets" in a financial statement . An investor has to be cautious about these as the value of these are subjective, unlike the Liabilities and Cash, the value of which are more objective! Thank you for your excellent videos.
Thank you very much for your kind words! Charlie was right, may he rest in peace! Have a look at my video on asset impairment, it talks about the fragility of some of the main asset categories on the balance sheet: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-lWMDdtHF4ZU.html Even cash isn't always safe, as was confirmed in 2023 with the Silicon Valley Bank case.
Recording a credit to cash in a journal entry means that cash has left the company, and the balance goes down. The journal entry example I use in this video is quite a complicated one. It's probably easier to run through the steps of my "income statement and balance sheet relationship" video in order to understand how things relate to each other: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-wZdaVEX41WQ.html
How come you're subtracting assets from an asset (cash) or debits from a debit (cash). Isn't cash an asset? Shouldn't cash be on the debit side vs. the credit side of the equation?
Hello Jamal! Yes, cash is an asset. The natural state is for an asset account to have a debit balance. The account balance goes up when you debit it, and goes down when you credit it. The transaction I am describing in this video has cash leaving the company, hence the credit entry to the account. With the T-accounts that I was drawing, I only highlighted the journal entry, NOT the total account balance or flow in the cash account. Does that help?
Hi Lesi! I only make videos (on a lot of different topics), and do not write textbooks.... If you are looking for a short book on finance, I can recommend "finance for non-financial managers" by Gene Siciliano, or the Sunday Times book "How to understand business finance".
Sir can I ask you advice? I am try to get a job as senior accountant. I will have a excel exam and they mentioned that they will ask trial balance in excel plus double entery. What they can ask about? Find a balance ?
Very hard to predict the specific questions they will ask. To be on the safe side, have a look at a few of these related videos on trial balance, adjusting entries, closing entries, etc.: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-SpAwI_SSDHY.html&pp=gAQBiAQB
Hi Oliver! This example is related to another video on intangible assets ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE--TzaG-VD2GU.html for the acquisition of a company. The acquiring company is paying in cash, therefore cash goes down, and the asset (cash) on the balance sheet needs to be credited. More discussion on debits and credits: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-n-lCd3TZA8M.html
I am confused on why the outside service expenses will drop the equity, as equity is what the owner own and lability is what the owner owe, if we decrease equity coz the expenses and increase liability coz the payable, doesnt this mean a double loss for the owner ? Even though in equation the asset stay the same
Hello there! Good question. Expense accounts are part of a category of accounts called "temporary accounts", where the account balance needs to be “reset” to zero through closing entries at the end of the period. The balances are transferred to the income summary account, which in turn gets closed out to retained earnings (which is part of equity). Then you can start the new year with all income statement accounts at zero. For more detail, see this video: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-CXiKLtb7tqI.html
I have often wondered why blockchain technology is considered so disruptive and game changing ledger keeping, while we have this 700+ years old, ingenious method, which could accomplish almost the same with a fraction of fossile fuel consumption (in terms of recording transactions). Am I missing something here?
Have a look at my video on closing entries: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-CXiKLtb7tqI.html Through the income summary account, the profit gets added to retained earnings on the balance sheet.
Wishing you lots of success with the test, Mohamed!!! Here's the link to my accounting 101 playlist, maybe there are more useful videos in there for you: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-b93KBmcXanI.html
Hello Khalid! I hope this video on double entry accounting, as well as related videos in this playlist on debits and credits, and T-accounting, can help you: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-ioNZy80xx9c.html Wishing you all the best in your exam preparations.
I don't understand why what we owe has to equal what we own. Why can't we own heaps and owe nothing ? Or we could owe trillions and own nothing. Doesn't make sense.
Hello Anthony! It's an agreement/convention on how to record financial transactions, to ensure everybody uses the same logic, and to know what you are looking at when you read financial statements. Similar to every country mandating whether to drive on the left or on the right side of the road, and specifying how wide a train track needs to be, or whether to use the metric system of the imperial system to measure distance and weight. To illustrate how helpful it is, check out this video on balance sheet and income statement relationship: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-wZdaVEX41WQ.html Or for a short story on the history of accounting ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-HAL0sBd9oyg.html
@@TheFinanceStoryteller I understand the need for conventions, but conventions generally make some sense. Everyone drives on a certain side so we don't crash. The convention you're explaining is wrong and illogical. We don't always owe what we own. That would be a strange coincidence if all of my assets exactly equal my liabilities. Hopefully one day, I will own far more than I owe....then I can consider retirement. For example....if someone inherits millions at birth and saves it all..... they own a lot, and owe nothing. Your explanation is either wrong or incomplete.
The accounting equation ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-OYql7Y9NnBg.html says assets = liabilities plus equity. So from an accounting standpoint, if you inherent millions at birth, then on the assets side you have millions (in cash, jewelry, cars, art, houses) and on the other side the same millions in equity. I have personally never made a balance sheet for my personal wealth, but on a company basis this is the way you would do it.
@@TheFinanceStoryteller Another ridiculous answer that doesn't address your very first claim. You claim that what you owe equals what you own. Simply not true. And now you introduce a whole new concept to make it add up....equity. It's like saying what you own (assets) equals what you would get if you sold everything(equity). What a bizzare way of saying the value or what you own equals the value of what you own. Am I missing something ? or is this entire convention ludicrous ? This is my interpretation so far. the value of what you have = selling your stuff - what you owe. How is this reduntant simplistic stupidity at the core of a profession ? Are accountants really so stupid they need to concoct something called equity just to make a useless convention add up ?
My point is....this statement of assets = liabilites + equity .....doesn't really mean anything. It doesn't contribute to a business understanding if it is making money. Income and expenses....now that's useful. How much money do I make and how much does it cost me. If that adds up and I can take a wage then the business is worth doing. Please explain the point of assets = liabilities + equity.
What is "journal" exactly? Some sources say: 1) "daybooks" come first, which is where you post prime entries i.e. follow single-entry accounting 2) "journals" are next which groups the transactions into accounts, posting journal entries i.e. following double-entry accounting Other sources say: 1) "journals" come first, which is where you post journal entries i.e. follow single-entry accounting 2) "ledgers" are next which groups the transactions into accounts, posting entries that follow double-entry accounting So I know daybooks are 1st with single-entry, and ledgers come after with double-entry......but journals...different people seem to use this word very differently. Why???
Daybooks, journals and ledgers are ancient terms, from before the days of computing. I wouldn't get too worked up about them, hardly anybody uses these in the real world. The main thing in today's world is transactions that are made in subledgers (which get posted to the general ledger through accounting transaction tables: if a sale is made on credit to a customer (subledger) then post journal entry debit accounts receivable credit revenue (general ledger)). My video on the general ledger discusses that: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Wda0K93Nk0c.html
