00:01
Okay, so let's understand the current solution for the given case.
00:06
First of all, we will write our basic accounting equation and from there we will start our main solution.
00:14
Okay, let's say we are very, very willing to deal in the business of selling clothes to our customer.
00:35
Okay to mainly textile business but at a retail level you know so i do not have sufficient money to start the business so what will i do i will go to the investors i will go to my relatives i will go to my friends to raise the capital to raise the finance to fund to fund my business purpose so what happens and asset is an amount the asset is what what are the elements first of all i'm talking about them then we'll move to the solution under assets under assets those are those amounts which are recoverable from anyone else such as customers depositors with whom we have deposited our money or the persons to whom we have advanced some of our cash reserves okay those recoverable amounts will be included in our assets and most importantly cash and bank balance cash and bank balances plus why i'm writing plus there is nothing there is nothing to confuse about it it is just i'm you know trying to rotate something else before i'm for writing anything cash bank balance plus tangible assets now what are tangible assets let me show you if i have to produce some clothes to sell to our customers customers we will have machines to produce clothes we have testing testing machine so that we can know that what type of what type of quality of clothes we are producing right now okay so these are the items we will be you know listing under the under the term assets in contrast to the assets the liabilities are in contrast to assets okay in contrast to recoverable amounts liability payable amounts are considered in the liability assets.
03:23
So there is no contrast against cash and bank balance but i can write very precisely there is short and long term debt like you take you know loan for loan to purchase the house okay your vehicles to purchase any type of property like that so these amounts which are payable after a certain period of time will be included in liabilities.
03:59
Like it is the amount you have to pay to someone for the benefits you have availed.
04:05
Now what is the term equity? it includes capital raised, profit or loss earned.
04:25
What is the meaning of capital raised? i will tell you very very shortly.
04:32
So capital raised means what? what amount of finance you have raised through internally or externally from within the organization or from outside the organization that amount will be considered in equity or we can also say we will include our profit and loss earned during the period in equity component we can also equity is also known as you can write it down what i'm writing here okay take away from business after paying all liabilities i'm asking to write you write you down all of this why because this becomes easier when you revise for your exams also okay so these are the terms okay now let's move to our main solution what is our main solution first of all we will draw our basic equation in exams also wherever you go in most of the accounting concept you will face accounting question as your complementary topic to help you throughout the subject.
06:05
Now the question is asking us what will be the effect of issuing stocks, okay? issuing capital, issuing stocks in exchange for assets.
06:20
First of all, i will draw a diagram for you so that you will be able to understand it better.
06:24
Let's suppose we have xn company.
06:27
Okay, willing to start new clothing business but short of funds as of now...