Recently one of my student requested me to coach her Tally.ERP 9 remotely. She was feeling nervous and told me that she is very confusing because she is graduated in Art stream and doesn’t know anything about accounts or commerce. Her confusion wasn’t an exceptional because during my long-term accounting career, I have seen people scaring most for the debit and credit in accounts.
I never teach people in the ordinary way like our professional coaching institutes. I design a special course for each of my student. To design special course for a student, first I talk with my student. I talks about what student likes. What is the motive of the student in his/her life. Where he/she want to see himself/herself after a few years. This makes students feels comfortable with me. They talks with me about them and I can evaluate the student and can design the best way to teach him/her.
So, first I talked to her. I assured her I won’t talk with her about basic accounting rules
or any debit and credit
stuff because I hate this debit and credit stuff. I asked her if ever she have a chance to do business then what type of business she would like to do ? I got an amazing idea from her. Then I explained her if she has to start a business she needs to understand the accounting principles
and Balance Sheet is the best document to understand a Business’s financial position.
Then I asked her Is she able to prepare her first balance sheet?
Her reply was a big no with a surprising tone. I can understand that a person who never seen balance sheet how can it be possible for them to prepare a balance sheet? but as I said, I teach differently and here is how She prepared her Balance Sheet with my help.
I said she can surely prepare her First balance sheet in just 20 minutes.
and within 20 minutes she prepared her first balance sheet and it was awesome. She was so happy and had a feeling of confidence that she too can learn accounts
So, how did she prepared her First Balance Sheet ?
It was very simple
How to Create your First Balance Sheet
I said her suppose I Vision Info Tech give her a loan of Rs. 20,000 then just list down the expenses she would like to spend ?
she make the list in excel. She is great in excel. and here is the list she prepared. I have advised her to show the loan amount in one side of the Excel Sheet and her planned expenses on the other side of the sheet
She made the list in excel now I asked her to add a column after the amount and bifurcate the expenses between recurring and non recurring. Some expenses we need to do every month or again and again monthly/weekly etc while some expenses we need to do only once or two times in a month
so, here is the her list after bifurcating into recurring and non recurring expenses and name it as “Consolidated Expenses Statement”
The bifurcation she done is perfect Now how to prepare the Balance sheet on this bifurcate ?
I asked her to prepare two more statement in excel and take the items from the consolidated Statements based on the nature of expenses.
1) Recurring Expenses Statement
2) Non Recurring Expenses Statement
and here are the statements prepared by her:
1) Recurring Expenses Statement
2) Non-Recurring Expenses Statement
now, as you can see that both side of this statement are not matching! One important rule of Balance sheet is that both of its side must tally with each other. In other words, total of both the side must be same.
In the Excel file which you can download from the below link, I have adjusted The difference of Rs. 3500.
Note : For any reason if you are not able to preview the content of the excel file, you may please download it.
So, What do you think? After reading the above tutorials do you still think you can’t prepare a balance sheet?
Let’s try it
I Vision Infotech is giving you Rs. 50,000 as a start-up capital as an unsecured loan.
Now select your dream business line and make a list of expenses which you need to do to start your dream business then list down the same in Excel as shown in tutorials
Next, bifurcate them into recurring and non-recurring and prepare 2 statements accordingly. and your Balance Sheet is ready.
If you have any confusion, you can post your query in the comment section.
I am early waiting to see your first Balance Sheet