What's up everyone, welcome back to the channel. Guys, we had started Fundamentals. And in Fundamentals of Partnership, I had told you about some important concepts. I had told you about P&L appropriation. Today, we will discuss about Capital Account. In P&L appropriation, we have also learnt how to extract interest on capital. But there are some more new things that we are going to learn today. So today also, we will focus on some concepts. Get your notebooks quickly so that you can learn all the concepts. And then we will move forward to the questions which will be very helpful for us. So let's start quickly and see what new concepts are coming in front of us today. Let's begin. So guys, let's start all the things. See, you had learnt how to make this P&L appropriation account. See, what I had taught you in P&L appropriation account. That we have this firm's account in which firm is distributing profits. Sir, in which these profits are distributed? Guys, these profits are distributed in Partners. Right, so first of all, we have here buy P&L account which is your profit. After that, here the money which the firm will get from the partner. This money is received by the firm from the partner. Because the partner has withdrawn and the partner is giving interest on it. So the firm is getting. Interest on Drawings comes here. I guess this will be clear to you now. A, B, C's Interest on Drawings came here. After that, the total available profits of the firm is this much. Now the firm distributes this money to the partners. Whatever they want. Like if the partners have invested capital then they need interest on it. So we will write here 2 Interest on Capital of A, B and C. This Interest on Capital came here. Then we write here 2 Partner's Salary Bonus Commission. SBC is Partner's Salary Bonus Commission. I will write it completely. This is only for the partner. It is not for the outsider. It is only for the partner's Salary Bonus Commission. After that, if you have made any reserve, then it is reserved. Here comes the reserve. It is perfect. After that, what we call the remaining, Divisible Profit. We call it Divisible Profit. So Divisible Profit also comes here. And your total is complete here. So the account that you have made is called P&L Appropriation Account. Now see here, the thing to learn is that whatever things you have written here. All these things. What is this? This is that the firm has given money to the partner. The firm has given money to the partner. And if you look here very carefully. So what is this? What is all this? This firm has got money. The firm has earned profit. And took interest on drawing from them. So this firm has got money. So whatever things are happening here. This is happening between the firm and the partner. There is no talk of any outsider. Now a concept comes kids. We will put the heading. Charge Against Profits. Charge Against Profits. And. Appropriation Out of Profits. Kids get very confused in this. But this is a very simple concept. Charge Against Profits and Appropriation Out of Profits. See whatever item you will read in the partnership here. So all those things will be either charge or appropriation. Sir what is the meaning of appropriation? Appropriation means distribution. That is why P&L appropriation is its name. Distribution Out of Profits. Distribution Out of Profits means. These things will be distributed from profit. If there will be a profit. If there will be a profit here. Then only all these things will be there. If the firm does not have profit. Then the firm cannot give IOC. Cannot give salary. Cannot make a reserve. Only when there will be a profit. That's why the firm will give some money to the partner. He is the owner. The owner will not tell the firm. That brother bring me from anywhere. The firm is also his. Right. So this is different in an accounting sense. But if seen in actual. Then the firm is also his. So in the accounting sense. We tell different things. But in the actual sense it is his. So only when there will be a profit. All these things will be taken out. Otherwise it will not be taken out. But what is charge against profits? Charge means son. Those items. Items. To be paid. Which you have to give. Even if. You are in losses. Even if you are in loss. You will have to give. Sir, even if you are in loss. You will have to give. What does this mean? It means this. Children. Even if you do not have money. Even then you have to pay these items. Sir, from where will you pay? If there is no money. Son, then your firm will go to loss. But you will have to give. So sir, from where will you give? What are the things in this item? Like. Interest on loan. See if you have taken any loan. You will have to give interest on that loan. Son. You can't tell the bank. That brother. I don't have money. I can't give interest. Similarly. If the firm has taken any loan. Have taken from any partner. Have taken from any outsider. You will have to give interest on that. Whether you are in profit. Whether you are in loss. You can't run from that. You will have to give this. Second thing. Rent. If you have taken any rent. Have not taken rent. You have taken any asset on rent. If you have taken the asset on rent. So brother. The other person gave you his property. Now you use it. Whether you make a profit. Whether you are in losses. You can't say that. If I have a loss. So I don't give rent. You will have to give. Son you can't run from it. Third thing. Manager's commission. Manager is your employee. So he needs commission. What does that mean? Whether you are in profit or in losses. Employee's salary. If there is an employee's salary. See not the partner's salary. Employee's. Partner is the owner. So he will get money only. If you will be in profit. So see all these things are those things. which you have to pay, whether you are in profit or loss. So all these things are charged. Now all the things related to appropriation, where are they written? Recorded in P&L appropriation account. But the charged items are recorded in P&L account. Recorded in P&L account. These children are in P&L account. Sir, why is this? This is because you have to pay these things beforehand. For example, we are making a P&L account. Now I have written here in P&L account, buy gross profit. Now I will spend this before net profit because I cannot run away from them. So there are some selling expenses. Two selling expenses. Two administration expenses. Two interest on loan. You have to pay the interest on loan. You have to pay the rent. You have to pay the manager's commission. You have to pay the manager's commission. After that, what do you get? You get profit or loss. If this is more, then net loss will come here. If this is more, then net profit will come here. So anything can come. So what do we write here? Either net profit or net loss. Anything can come to you. Net profit can also come and net loss can also come. Now see kids, if net loss comes, then it will not be made. Because these are appropriation items. If there is profit, then we will give. If there is no profit, then we will not give. But if net profit comes, then we provide all these items as per the partnership deed. Whatever is written in the deed, then we provide. Now you understand the difference between charge and appropriation items. Charge items are written before calculating profit. So it doesn't matter if you go to profit or loss later. Because you have to spend it. You can't save it. You reach the appropriation items later. Because they are dependent on profit. If there is profit, then we will give. If there is no profit, then we will not give. It's a simple thing. But you have to give the charge items. Now take a screenshot of this first. Because this is an important concept. You should understand. Now what happens with us? This is also done. You have also taken a screenshot of this. See, what will happen many times? Many times it will happen that your appropriation will be more. Appropriations more than profits. One case also comes that your appropriations are coming more than profits. For example, see it is like this. You have written here by P&L. You have a profit of 60,000. Suppose you have a profit of 60,000. Now you got an interest on drawings of 20,000. Interest on drawings A and B from 10,000 A to 10,000 B. So you got an interest on drawings of 20,000. So how much money do you have? You have 80,000. Now you have to give the appropriation items here. Like the partner asked for interest. So suppose interest on capital. To interest on capital. 50,000 of A is sitting. 50,000 of B is sitting. I am assuming this anyway. It will be given to you in the question. I am showing to explain. 1 lakh rupees interest is sitting. After that both have salary. Salary of A. 25,000. And salary of B. 25,000. So see here the appropriations are only this. Your appropriations are sitting more. Because you need money in appropriations. 1,50,000. Partner is asking for 1,50,000. You only have profit of 80,000. Now what will you do? According to partner's deed, 1,50,000 rupees have to be given. Interest on capital has to be given. Salary has to be given. You only have available 80,000. Now what will you do? So if appropriations are greater than profits. So what will we do? We will write. The available profit is distributed to partners in the ratio of appropriations. So whatever is the available profit. We distribute it in the ratio of appropriations. Please remember. If appropriations are more than profits. So whatever is the available profit. Distribute it in the ratio of appropriations. Sir what is the meaning of ratio of appropriations? Ratio of appropriations means see what all A got and what all B got. So first of all A is getting this interest and one salary is getting. So A is getting 50 plus 25, 75,000. B is getting 50 plus 25, 75,000. So the ratio of appropriations of A and B is 75,000. Ratio is 75,000. Means 1 ratio is 1. Means these people were distributing equally. So kids what will you do here? Whatever available profit you have. How much is the available profit? 80,000. So what will we do? We will say brother. It will not be like this. It will not be like this. We will say that we have only 80,000. By P&L 60. By IOD 20. So we have only 80,000. We will distribute this 80,000 in A and B. To profit transferred to A and B. A will get 40,000. B will get 40,000. So 80,000 is yours. When appropriation is more, then distribution is like this. Understood? Because you can't give more than the money you have. So if appropriation is greater than profit, then just distribute as much as is available in the ratio of appropriations. Okay kids? So this is also an important concept that I had to make you do. Now you understood charge and appropriation. You understood what happens when appropriation comes more. Okay? Now our work is that you will need one more basic class to teach. Then we will do questions. Look, there is nothing in P&L appropriation. I taught you this. I taught you this. There is no question from reserve. Now only this is left. Interest on Drawings. In tomorrow's class, we will do all the questions of interest on drawings. Tomorrow's class will be a little big. Because interest on drawings is a little detailed topic. It takes time to do it. So tomorrow we will do interest on drawings. It will take 30 to 35 minutes very easily. Let's do that. And then we will do all its important questions. And we will finish things. Okay? Keep the basics strong. Only 2-3 classes have been done now. Watch all the classes properly. Don't miss the previous classes. If you haven't seen, then please see. Today I will also make a playlist. According to that, start watching. You will not have any problem in finding videos. Okay? Alright. That's all for today, ladies and gentlemen. I am gonna see you all super soon. Till then see ya. Take care. Bye-bye. Do like the video. And share it with all your friends. Bye-bye.