Asset Schedule Part 2
We will examine the asset schedule.
Before constructing our schedules, let’s make sure we have a good grasp of the base rule. You’re likely already aware of it, but I might as well elucidate it now. Let’s take an example.
Electric vehicles have grown in popularity and Ola has set out to take advantage of this by developing and selling electric bikes. This is sure to create a stir in the industry.
Ola created 4000 electric bikes during their first year of functioning. Here are a few constructed facts –
To begin, the opening balance for Ola’s first year of operation was zero. This was followed by the total number of bikes that were purchased throughout the year. Lastly, it ended with a closing balance, which is an assessment of any remaining unsold bikes at the end of the year.
The total number of bikes is 4000, since the opening balance is at a tally of zero. This amount comprises all the bikes that were produced.
At the end of the year, we can calculate how many bicycles were not sold. This figure is known as the closing balance.
Let us suppose that Ola produces and distributes the same amount of bicycles in the second year.
Can you share what the commencement, quantity and ending numbers were for the 2nd year?
In this particular case, the opening balance for Year 2 is 250, which is the same as the closing balance of Year 1.
They produce 4000 new bikes, bringing their total to 4250. Of these, 3750 have already been sold – leaving a balance of 500 at the end of the year.
The opening balance for Year 3 is based on the closing balance of the previous year, and this applies every year.
The ‘Base rule’ of linking the closing and opening balance is a technique that’s often used in the schedules we build, particularly in the asset schedule. For now, just remember this base rule – we’ll be referencing it soon.
© 2021 BP Equities Pvt. Ltd.
All Rights Reserved
By signing up, you agree to receive transactional messages on WhatsApp. You may also receive a call from a BP Wealth representative to help you with the account opening process
Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by BP Equities Pvt. Ltd. Investors should consult their investment advisor before making any investment decision. BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst), CIN: U45200MH1994PTC081564. Please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI | ICF
Attention Investors
Issued in the interest of Investors
Communications: When You use the Website or send emails or other data, information or communication to us, You agree and understand that You are communicating with Us through electronic records and You consent to receive communications via electronic records from Us periodically and as and when required. We may communicate with you by email or by such other mode of communication, electronic or otherwise.
Investor Alert:
BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), INZ000030431 (MCX/NCDEX), IN-DP-CDSL-183-2002 (CDSL),
INH000000974 (Research Analyst) CIN: U45200MH1994PTC081564
BP Comtrade Pvt Ltd – SEBI Regn No: INZ000030431 CIN: U45200MH1994PTC081564
For complaints, send email on investor@bpwealth.com
