What's up everyone, welcome back to the channel. Guys, today we are going to start our theoretical chapter no. 1 which is the first chapter of accountancy when you come to class 11th. So I will make you do it in a very simple language and you will understand the theory as well as you will do it practically. So you won't have any problem. Quickly get your copy of notes that you are making with me. Get a pen and keep writing together in two parts. Today and tomorrow our chapter no. 1 theory will also be completed. I have already done the basic accounting terms. If you haven't seen then go and see. Let's go quickly, let's begin. So let's see what is the name of the chapter. We will start understanding from the name only because I want to go to very basics. Meaning and objectives of accounting. What does accounting mean and what are its objectives? Why do we make accounts? Why are we studying this accounting? What are the reasons why we are doing this? Why do we study commercial accounting? So we are going to understand it very well. First of all, we will try to understand each line in the meaning. No. 1 Accounting is called as the language of the business. Now see everything is fixed on this. You start a new business. Nowadays it is a trend that we will do our business. Youth wants to do business, wants to become an entrepreneur. Wants to do something in life. Rather than doing jobs, our children want to create jobs. When we can create, then why should we do a job? We will make something of our own, we will build. So see what is business now? You are doing business. You have to read the business. You have to understand. You have to see how much inflow is there, how much outflow is there. The business will not speak to itself. How is the business performing? How will you know? Is your growth or not? Are the sales increasing or not? Is money coming in your bank or not? Cash flow, inflow, outflow is good or not? How will all this be known? Looking at accounting. We see all these things in accountancy. How much profit is happening? How much loss is happening? How much cash inflow is coming? So the business is not speaking to itself. Accountancy is speaking for it. So what is accountancy? What is this accounting we have? Accounting is often called as the language of the business. Now sir, you have taken accounting and accountancy in different words twice. Sir, accounting and accountancy. You are using these two words. Are these two the same? No kids. These two are different. What is accounting? Accounting is the language of the business. Language of the business means Which will tell things about the business. All the profits, losses, things about the business are being known. So accounting is called the language of the business. And its study. How will this profit come out? How will this loss come out? How will the journal entry be? What we are learning. This is called accountancy. That is why the name of our subject is not accounting. The name of our subject is accountancy. So we call the study of accounting as accountancy. We are going to read this in detail now. See, accounting is the science of. What does science mean? One way you can assume that how rules, regulations are done. What things? Recording. Recording business transactions. Classify. Classify means which asset is about. Which is about liabilities. That is why I first taught you the basic accounting terms. That you will understand it better. Okay. See the events. Which are of financial nature. Financial nature means in which money is being taken. And the art of making significant summaries. Define summary. That ultimately I have to take so much money from this. I have to give so much money to this. So see how much happens in accounting. Right. What am I doing in accounting? First of all, I am recording things. I am classifying. How much to Ram, how much to Chintu, how much to Chinti. What is the account book? Whatever the finances are. I am making their summary. Okay. Finally so much amount came out. I had to take so much money. I had to give so much money. Now net is left. Okay. Then analyze it. Whether my business is running properly or not. Then interpret. Interpret means to tell. What actually happened? All this comes in the definition of accounting. Okay. Sir, what will be the benefit to us by doing all this? See you will know about the business. How is your business performing? So you can make your policies good in future. In future you can do your planning well. So all these kids are the part of accounting. Did you understand what accounting is? So accounting is basically the language of the business. In which we record transactions. Classify. Summarize. Analyze. And finally do interpretation too. Okay. Let's go sir. He understood. Characteristics of accounting. Now see what are the characteristics? Like we say that that person is very smart. Is very beautiful. Is very handsome. Is the nature of a person. In the same way, what is the nature of accounting? Number one. It is an art as well as science. This is an art too. This is a science too. Sir, what is the difference between art and science? See kids, when do you call anything science? When first of all it has a well-defined body of knowledge. Well-defined body of knowledge means its rules and regulations are very simple. They are very clear and well-defined. Okay. There are no assumptions in it. Everything is clear. After that, what is the second thing? All these principles or all these things of science are made. These are all observations and experimentations. Made over a period of time. Not made in a day. Third. All the principles of science or all the things you read in science. All that is universally applicable. Universally applicable means everything runs the same. In the same way, this also happens in accounts. Accounts also have a well-defined body of knowledge. What you are reading. Accounts also have the same accounting principles. Accounts also have the same knowledge. Right. And those principles are also not made in a day. Over a period of time, they have slowly developed. So see, accounting has become very similar to science. Along with that, all the principles of accounting. Like you will read further. How is the calculation of the stock done? What is the stock in your shop? What is the stock in your warehouse? How is it calculated? There are different ways of doing it, children. Calculating it is an art. Every individual, every manager does it in his own way. So see, this is art. What is art? Everyone's own. Like suppose you have to teach accounts. So teaching accountancy is an art. I will teach separately. Your school teachers will teach separately. There are many teachers on YouTube. Everyone will teach in their own way. So what is accounting? There is also an art. There is also an art. Because everyone has their own. And there is also a science. Because in this, like scientific principles. Accounting principles are also followed. Accounting is an art of what? Recording, classifying and summarizing business transactions. Along with that, there is also an organized body of knowledge. That's why we consider it equal to science. No. 2 What kind of transactions do you record in accounting? Only and only financial transactions. We do not record any non-financial transactions in accounting. See, it can also happen that my mood is bad today. So maybe I can't convince my customer to buy goods as well as I normally do. So there is a loss. But I do not record it. Because I am not able to measure how much loss is happening. So what is accounting? In this, we only record financial transactions. We do not record non-financial transactions. Recording in terms of money. All the transactions recorded in this will be recorded in terms of money. Now see, a lot of things come in such a business. Electricity cost 200 units. Fuel cost 10 liters. Furniture cost 10 chairs. In this way, everything is measured in different units. So if I write so many units, there will be confusion. So in accounting, we just say that there is no use of units. Tell me how much money was spent. Tell me how much money has come and how much money has gone. So we will record everything in terms of money only. So whatever the recording will be, it will be in terms of money only. So understand three points. There is art and science as well. The second point is to record only financial transactions. The third is to record only in terms of money. What is number four? Then you also classify in this. Classify means we tell which assets are there, which liabilities are there, which expenses are there, which incomes are there, which profits are there, which gains are there. We classify things of similar nature. Write things related to Ram in place of Ram. Write in place of Shyam related to Shyam. Classify everyone. Write according to their nature. So we also classify in this. Then we make a summary. That is, we also make a summarized statement. Which you will read ahead, we call it trial balance. There is a whole chapter, we will read in detail. What does it mean to make a summary? Look, it means to make a summary like you read the whole chapter. There is a quick revision at the end. There is a summary. In the same way, when you did everything in detail in accounting, then at the end we also make some such statements which you can call a quick summary. Which you can call a final that you saw it and you got to know everything. So in accounting, we also make a summary. We also do summarizing. Then we do interpretation. Interpretation means we present accounting information in such a way that everyone understands. Sir, who has become everyone? Brother, it has become an owner. It has become management. It has become bankers from whom we have made money. It has become investors. It has become our creditor from whom we have bought goods on loan. They all remain interested to see our accounts. Because by looking at our accounts, they will get an idea that how sound we are. How good we are financially. Understood. So that is why interpretation is also very important. So classifying, summarizing, interpretation. And lastly communicate that how well the business is working or not. Because what is the language? What is the language of the business? It is accounting. So what is the use until it does not communicate? Understood. So all these pointers come to us in characteristics. What is coming after this? Then we have objectives of accounting. Sir, what is the purpose? Why did we make it? What is the objective? What is the purpose, sir? Why is it made? What is the objective hidden behind it? Why are we making it? Look, it is very easy. First of all, to keep a systematic record. We have a lot of transactions in business. A lot of people do transactions in cash. A lot of people do it on loan. They took the goods from us. They are asking for money. We will give. Now so many people are engaged in unknowingly. Lending is engaged. So we cannot keep everything in mind. We have memory. We do not have a memory card. We will forget. So in this scenario, dear, First of all, we have to keep in mind that What is the basic objective in accounting? Keeping a systematic record. Keeping records in a proper manner So that we all give money timely. And we will also have a record How much money do we have to take from whom? So the first objective is to keep a systematic record. No. 2 is to calculate profit or loss. The second most important objective is See if we are in profit or loss. I want to know that The hard work I am doing from morning to evening. I put all the money in my business every month. I am working with 100% dedication. So what am I earning? If I am going to loss by putting 100 rupees So it would have been better if I had kept 100 rupees in the bank. That bank would have given me 103, 104, 106 with interest. 6% interest comes on FD. FD means fixed deposit. So if I had kept it in the bank So the bank would have made it from 100 to 106 without doing anything. If I am making 100 by putting 100 in my business Then it is useless. So it is very important for me to see Whether I am going in profits or not. I am not going in losses. So this thing also has to be taken care of. The third is to know the exact reasons. Why did this profit happen? Why did the loss happen? What good did I do when I made a profit? What bad did I do when I made a loss? Its reasons will also be found from here. After that, to ascertain the financial position. What do we see in the financial position? In the financial position, we try to calculate Or we try to just understand the wealth of the party. Wealth means how many assets do I have? How many properties have I made? You must have seen that there are many people Who earn a lot of money but they are not wealthy. Why are they not wealthy? Because they did not make any property. A lot of money came and went like this. They could not make anything for the future. So what are you making for the future? If you are making assets for the future. For the future, land, building, property, This kind of thing is gold. You have made investments. So you are getting wealthy. Your wealth is developing. So in accounting, we also see How much is a person's wealth? Don't worry, you will learn to calculate all this. Now you have started. You have to play in money for the next 2-3 years. After that, when you do your own business in life, Even if you move forward, My prayer will always be that You earn a lot of money and become very wealthy. So the systematic record has been made. Profit and loss have been made. Exact reasons have been made. Financial positions mean checking wealth. Then check the progress of the business. How much are you progressing? Are you doing well or not? How much growth is happening year on year? This is also known from accounting. After that, there is no error or fraud. You can also see this from accounting. After that, give information to different parties. Where did so much money come from? Where did so much money go? We get all this information from accounting. Then we have functions of accounting. Functions and objectives are almost similar. What you have read above will also work here. Because functions are also the same. What are the accounts doing? The objective is working. First of all, maintaining complete and systematic records. You can take a screenshot of this. Communicating financial results to different parties. Preparing financial statements. Some statements calculate profits and losses. These are called statements of profitability. Some statements tell wealth. These are called statements of financial position. Two statements will be ready. Along with that, protecting assets. Protecting assets means recording everything well. Keeping everyone's details so that there is no error. Take a screenshot of this for functions. Same. Then give assistance to management. Assistance means when accounting will be done, you will know. What are you doing right and wrong? You will make policies accordingly for the future. So your personal assistant in business. Compliance of legal needs. Compliance of legal needs means the laws made by the government. You do accounting according to those laws. So this is also a function that you have to follow the law. Fixing responsibility. Another function of accounting is that you have to take responsibility of profitability. What does trusteeship mean? In case the companies, the management is entrusted with the task of controlling the resources. So this trusteeship point is more relevant for companies. Because the company is a separate legal entity. Separate legal entity means the company is a separate identity. And there is someone to keep an account of the company. So what do we normally do? All the people of finance or board of directors, don't be too confused. All the board of directors have a responsibility to look at the company's finances well. So accounting helps. Because who is the trustee of the company? Trustee means the company that the company trusts that it will do all this well. Board of directors. Who helps the board of directors? Accounting. To manage the finances well in the accounts. So for companies, trusteeship happens well when the accounting is proper. Okay? Let's go. After this, kids, we have a small difference. Bookkeeping and accounting. You just take a screenshot of this here. Because I have written all this in the form of a difference below. The screenshot of bookkeeping is done. Now take the screenshot of accounting. Okay? Now read here what is bookkeeping and accounting, sir. See kids. Bookkeeping and accounting are such that when you start reading, then first you read basic small things. Then you read the rules in detail. You read big things. Like the child reads about 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th basic science. As soon as it comes to 9th, the level changes. He is reading a different level of science in 9th, 10th, level, 12th. So in the same way, bookkeeping is a very primary stage. That is, keeping only records. Only writing accounts in a copy. Only knowing this much that what came, what went. This is bookkeeping. What is accounting? It becomes the next level stage. When you learn everything with proper rules. Which you will learn. Which you are making. You know the accounts of debit and credit. You classify very well. You summarize, analyze, report. All the financial transactions. That is accounting. So bookkeeping is at a small level. Accounting is at a very big level. What is bookkeeping? In bookkeeping, you only identify the transactions. Right. What do you do? You identify which transactions are of financial nature. You do measurements. You record and classify. That's it. Basically. This is the limit of recording. What happens in accounting? After doing so much, you will also make a summary. You will also analyze. You will also do interpretation. You will also do communication. You will also take final decisions. So bookkeeping is the next stage of accounting. Right. So look, bookkeeping is a primary stage. Accounting is a secondary stage. Now what kind of staff do you need to do bookkeeping? Look, you need junior staff. What kind of staff do you need for accounting? You need senior staff. What is the main objective of bookkeeping? Just maintain record. Just keep a systematic record. You have come back to the objectives of accounting a lot. Its objective is to get results. Get profits and loss. Look at the financial position. Right. What is the nature of bookkeeping? Routine nature. That you just do it and leave it. What is the nature of accounting? Analytical. Analytical means you have to keep everything proper, step by step, date wise. So its nature is analytical. Knowledge level for bookkeeping will also work with basic limited knowledge. Higher level of knowledge is required for accounting. In bookkeeping, you don't need to compare any basic skills or higher level skills. You have limited knowledge, limited skills, it will work. So in bookkeeping, work is done with limited skills. There you should have proper analytical skills. So this was a difference between bookkeeping and accounting. We will see one more small difference. Which is in accounting and accountancy. I have already told you this. What is accounting? Whatever work you are doing in business. It is the language of the business. What is accountancy? Which you are studying. How is it done? Right. So see what is accounting? Recording, classifying, summarizing transactions. This is accounting. How is it done? Their study. It is a body of knowledge. Prescribing the rules to be observed while recording, classifying and summarizing. That's why the name of your subject is this. Because you are going to learn all this in this. So there is a narrow scope of accounting. That is, this is a small concept. And accountancy is a wider scope. It is quite big as compared to accounting. What is the relation? See accounting is dependent on bookkeeping. And both will be studied on accountancy. Both bookkeeping and accounting. What is its main function? Get net results. Get profit or loss. There you learn decision making. You take knowledge. So that is a very big concept. So you understood accounting accountancy. You also understood bookkeeping accounting. Objectives of accounting. Functions of accounting. You must have learned a lot about accounting today. I am giving you a small homework. Whatever book you have been taught. Whatever book has been used in your school. Open it. All the topics I have taught you today. Go through it once. If there is any doubt, then come and write in the comments. I will cover it in the next video. Because I make one more video. That's why I make two parts. If the children have any problem in the first part. So I read in the comments. And in the second part, I will clear it very well. So I will teach you this chapter in a great way. Keep remembering along. If there is any problem in today's topic. Feel free to reach out to me in the comments. I will fix it soon. So that's it for today. See you tomorrow. We will finish the chapter. Then we will start a new chapter. Thank you so much everyone for joining in. I am gonna see you all super soon. Till then see ya. Take care. Bye Bye.