class 11 commerce online preparation material
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class 11 commerce online preparation material
class 11 commerce online preparation material:-Accountancy : Financial Accounting Part-2
class 11 commerce online preparation material:-Objectives of Preparing Financial Statements
The following are the objectives of preparing financial statements.
1. To ascertain profit earned or loss incurred by a business during an accounting period. This is estimated by preparing Trading and Profit and Loss Account.
2. To ascertain the true financial position of a business. This is reflected by the Balance Sheet.
3. To enable comparison of current year’s performance with that of the previous year’s, i.e., intra-firm comparisons. Also, to compare own performance with that of the other firms in the same industry, i.e., inter-firm comparisons.
4. To assess the solvency and credit worthiness of the business
5. To provide various provisions and reserves to meet unforeseen future conditions and to toughen the financial position of the business
6. To provide vital information to facilitate various users of accounting information in decision making process.
class 11 commerce online preparation material:-The Purpose of Preparing Trading and Profit and Loss Account
The purposes of preparing Trading Account are:
1. To calculate gross profit earned or gross loss incurred during an accounting period
2. To estimate the cost of goods sold
3. To record direct expenses (i.e., expenses incurred on the purchases and manufacturing of goods)
4. To measure the adequacy and reasonability of direct expenses incurred by comparing purchases with direct expenses incurred
5. To compare the realised efficiency and performance with the desired or proposed targets
The purposes of preparing Profit and Loss Account are:
1. To calculate net profit or net loss
2. To ascertain net profit ratio and to compare this year’s net profit ratio with that of the desired and proposed target in order to assess the efficiency and effectiveness
3. To measure the adequacy and reasonability of indirect expenses incurred by ascertaining ratio between indirect expenses and net profit
4. To compare current year’s actual performance with desired and planned performance
5. To provide various provisions and reserves to meet unforeseen future conditions and to toughen the financial position of the business
class 11 commerce online preparation material:-Concept of Cost of Goods Sold
Cost of goods sold (COGS) is the cost of merchandise that is sold to the customers. It includes cost of raw materials purchased, direct expenses incurred, value of opening stock, i.e., the value of the last year’s unsold stock and excludes closing stock if any, i.e., the value of current year’s unsold stock. The formula to calculate COGS is:
Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses – Closing Stock
class 11 commerce online preparation material:-What is a balance sheet? What are its characteristics?
Balance Sheet is a statement prepared to ascertain values of assets and liabilities of a business on a particular date. It is called Balance Sheet as it contain balances of real and personal accounts, which are not closed on a particular date.
Characteristics of Balance Sheet
1. It is a statement of assets and liabilities.
2. The total of Assets side must be equal to Liabilities sides.
3. It is prepared at a particular date.
4. It helps in ascertaining the financial position of the business.
class 11 commerce online preparation material:-Why is it necessary to record the adjusting entries in the preparation of final accounts?
It is extremely important to record the adjusting entries in the preparation of final accounts.
1. This is done in order to assess the true net profit or net loss of the business organisation.
2. It helps us record those adjustments which were left or omitted and were not recorded in the accounts.
3. It assists us to separate all the financial transactions into a year-wise category. The financial statements include only those entries which belong to the current year. It rules out the previous and forthcoming years’ entries which are the basis for accrual basis of accounting.
4. Further, it provides us the room for making various provisions which are made at the end of the year, after assessing the entire year’s performance.
class 11 commerce online preparation material:-What are adjusting entries? Why are they necessary for preparing the final accounts?
Adjusting entries are the entries of those adjustments which are given outside the trial balance and which help us reflect the true financial position i.e., profit or loss of an organisation. According to the double-entry system, all the adjustments given outside the Trial Balance are posted at two places. The adjusting entries are necessary they enable us to post and take into account those items which are omitted or entered with the wrong amount and/or recorded under wrong heads.
The treatment of adjusting entries is necessary.
(i) It helps us assess the true financial position of an organisation based on accrual basis of accounting.
(ii) It helps us know the actual figure of profit or loss.
(iii) It records the omitted entries and rectifies the errors made.
(iv) It helps in providing depreciation and making different provisions, such as Bad Debts and depreciation.
class 11 commerce online preparation material:-State the meaning of incomplete records?
Accounts that are not recorded as per the double entry system are known as incomplete records. According to Kohler (Dictionary for Accountants), single entry system is defined as, ” A system of book-keeping in which as a rule, only records of cash and of personal accounts are maintained; it is always incomplete double entry, varying with circumstances.”
Many small-sized business firms maintain incomplete records of their business transactions. They do not maintain proper books of accounts and mainly prepare books like, Cash Book, personal accounts (of debtors and creditors) and Balance Sheet at the end of the year. They maintain books as per their needs. This system is also known as defective double entry system. The preparation of financial statements is neither as easier nor as effective, as it is under double entry system. Consequently, accurate profit or loss is not possible to ascertain.
class 11 commerce online preparation material:-What are the possible reasons for keeping incomplete records?
The possible reasons for keeping incomplete records are:
1. Simple method: Proprietors, who do not have the proper knowledge of accounting principles, find it much convenient and easier to maintain their business records under this system.
2. Less time consuming: Maintaining books according to the single entry system is less time consuming, as only few books are to be maintained. Further, the books are not as comprehensive as they are under double entry system.
3. Less expensive: It is an economical mode of maintaining records, as there is no need to appoint specialised accountant.
4. Flexible: Owner may record transactions as per his/her own needs. It can be easily adjusted or changed whenever needed.
class 11 commerce online preparation material:-Class 11 Business Studies online preparation material
class 11 commerce online preparation material:-How do small scale industries contribute to the socio-economic development of India?
Small-scale industries (SSIs) play an important role in ensuring the progress of developing countries such as India. The following points highlight their contribution.
(a) Market share: SSIs make up 95 percent of the industrial units in India. They contribute about 40 percent of the ‘gross industrial value added’ and 45 percent of India’s total exports.
(b) Employment generation: As SSIs use labour-intensive production techniques, they have a greater employment generation potential than large industries. Moreover, the skills required to perform jobs in SSIs are usually not very specific, which further increases their scope for generating employment.
(c) Wide range of products: Small-scale units produce a large variety of consumer products, such as stationery items, safety matches, handicrafts, vegetables and processed food. Besides, SSIs also produce a few items by using technology, such as calculators, televisions and engineering goods.
(d) Regional balance: SSIs produce simple products and use basic technology. In addition, these industries do not require heavy capital investment, and therefore, they can be set up by anyone anywhere across a country. Small units not only benefit the particular region where it is established but also help reduce the regional disparities in industrial development among different regions of a country.
(e) Customised goods: Small industrial units adapt perfectly to specific needs of consumers. As SSIs use simple and highly flexible production techniques, they can provide their customers with goods best suited to the customers’ tastes and preferences.
Describe the role of small business in rural India.
The following are some of the major roles played by small-scale businesses in rural India.
(a) They generate employment opportunities: Cottage and rural industries play a significant role in providing employment opportunities, particularly to people in rural areas. This proves to be a boon especially for the economically weaker sections of the rural society.
(b) They mitigate disguised unemployment and alleviate poverty: Small-scale businesses use labour-intensive production techniques, and are, therefore, able to provide employment to the excess/surplus rural labour. Thus, small-scale businesses remove disguised unemployment from the agriculture sector and at the same time provide livelihood to the rural people. Hence, they contribute to alleviating rural poverty.
(c) They enable equitable income distribution: The capital requirements of small-scale businesses are low, mainly because of their use of labour-intensive production techniques, and this encourages entrepreneurs to start units on a small scale. Small-scale businesses are, therefore, set up all over the country, many of them providing employment opportunities to people in rural areas. This triggers the redistribution of wealth and income, and enables the equitable distribution of income in rural areas.
(d) They help accelerate growth: Small-scale businesses have been considered as a major propeller for the acceleration of economic growth and as an employment generator, particularly in the rural and backward areas of India.
(e) They facilitate rural development and reduce migration from rural to urban areas: It is well known that a large number of people migrate from rural to urban areas in search of better employment opportunities and improved living standards. Small-scale businesses help reduce this migration by providing employment opportunities to rural people in their own regions. By doing so, small units also help mitigate the excessive pressure on urban infrastructure.
How would you differentiate between an ancillary and a tiny unit?
|Basis of difference||Ancillary industrial units||Tiny units|
|Definition||Industrial units that have to supply a minimum of 50% of their production to their parent industries are termed ancillary industrial units.||Industries that have a maximum investment of Rs. 25 lakh in their plant and machinery are regarded as tiny industrial units.|
|Investment limit||The maximum level of investment is Rs. 1 crore.||The maximum level of investment is Rs. 25 lakh.|
|Obligation||Such units have to supply at least 50% of their production to their parent industries.||No such obligations.|
|Examples||Industries engaged in the production of machine parts, tools and other intermediate products.||Business units such as small shops, boutiques, STD (subscriber trunk dialling) booths and photocopy centres.|
Discuss the problems faced by small scale industries.
The following are the major problems faced by small-scale industries (SSIs) in India.
(a) Inadequate finance and credit: The SSIs have always faced the problem of inadequate finance and credit. This is partly because of the scarcity of capital available with the entrepreneurs in the sector and partly because of their lack of assets for offering as collateral/mortgage to secure bank loans. As a result, these businesses have to rely on local financial resources and moneylenders for funds.
(b) Problem of procuring raw materials: Due to inadequate finance and credit, SSIs face a shortage of funds for procuring raw materials and for carrying out their day-to-day business activities. In addition, the poor transportation system and the faulty supply mechanism often result in irregular supply of raw materials. For these reasons, SSIs face a severe shortage of raw materials, which hinders their smooth functioning.
(c) Lack of skilled labour: As SSIs cannot afford to pay high salaries to their employees, they usually employ semi-skilled or unskilled labourers. Hence, they face a lack of skilled and talented manpower, which adversely affects their efficiency.
(d) Marketing: Efficient systems for marketing and promoting products have remained an unfulfilled dream of small-scale industries. The main reason is the shortage of funds. Because of the lack of efficient marketing systems, small units are forced to sell their products in the markets through the middlemen, which further leads to the exploitation of the small scale entrepreneurs.
(e) Obsolete/outdated technology: Many small-scale industries use production techniques which are outdated and obsolete. This lowers their productivity and makes their operations unfeasible.
Itinerant traders have been an integral part of internal trade in India. Analyse the reasons for their survival in spite of competition from large scale retailers.
Itinerant traders are retailers who do not have a fixed place of operation. That is, they do not have a shop from where they sell their products. They are also known as mobile traders as they keep moving from place to place in order to sell their products. They are generally found on street sides, and they shift their place of operation in search of more customers. They usually sell low-priced and non-standard goods.
The reasons that itinerant traders survive in spite of the tough competition from large-scale retailers can be attributed to the following factors:
(a) Low price of goods: Itinerant traders generally deal in low-priced goods that are of daily use to customers, such as toiletries, vegetables, fruits, etc. These traders do not have to spend on storage and advertising, and they keep their inventories short and limited. Hence, the prices of their goods are lower than the prices of goods sold by large-scale retailers.
(b) Personal attention to customers: Itinerant traders deal directly with consumers and are, therefore, able to give more attention to them. As they supply goods to customers at their doorstep, they provide greater customer-care services by eliciting proper feedback and passing on the information to manufacturers.
(c) Easy availability at short notice: Itinerant traders move from place to place and provide goods at the customer’s doorstep. On the other hand, large-scale retailers have shops in central locations away from residential areas, and it is often difficult for customers to buy goods at the time they require them. Therefore, they depend on itinerant traders.
(d) Lower possibility of losses: Large-scale retailing involves a higher probability of incurring losses, because the retailers concerned deal in high-priced goods. Thus, in case the tastes and preferences of customers change, large-scale retailers are forced to sell the goods that have fallen out of favour. These goods are often sold at low prices in clearance sales, causing huge losses to the retailers. On the other hand, as itinerant traders deal in consumer goods that are low priced and of daily use, the probability of their incurring losses is minimised.
Discuss the features of a departmental store. How are they different from multiple shops or chain stores.
Department stores are basically large, fixed establishments that deal in a wide variety of products. The following points highlight the features of a department store:
(a) Central locations: Department stores are generally located in central areas so as to attract a large number of customers.
(b) Defined hierarchy: The management in department stores follows the same hierarchy that is generally followed in any joint stock company. That is, the top management consists of a board of directors, with the managing director, the general manager and the department managers under it in that order.
(c) Absence of middlemen: Department stores purchase goods directly from manufacturers and sell them to customers. Thus, they eliminate the role of middlemen.
(d) Centralised purchase with decentralised sales: In a department store, the purchases from manufacturers are handled by a single division that follows a centralised purchase policy. On the other hand, the sales are handled by the respective sections of the department store, which follow a decentralised policy for sales.
Differences between department stores and multiple shops
|Basis of difference||Department stores||Multiple shops|
|Variety of products||They offer a wide variety of products to customers.||They deal in a single line of product and specialise in it.|
|Customer services||They offer a wide variety of customer services.||They offer limited customer services.|
|Location||They are located in central parts of cities so as to attract a large number of customers.||They have multiple locations – that is, they are spread across cities or towns.|
|Pricing policy||They do not follow a fixed pricing policy as the prices of products vary across departments.||They follow a fixed pricing policy across all the shops that are part of a particular chain.|
|Cost of failure||They have a very high cost of failure because of the huge initial and operating expenses.||They have a limited cost of failure because the initial investment is not very large and the losses of one shop can be covered by the profits of others.|
class 11 commerce online preparation material:-Economics : Indian Economic Development
Explain the term infrastructure.
The term infrastructure refers to the underlying tangible and organisational structures that are essential for the smooth and prosperous functioning of an economy. In other words, infrastructure is regarded as a core support system that enables an economy to grow and develop. Generally, the term infrastructure means technical structure such as roads, transport, communication, bridges, dams, power, public institutions like schools, hospitals, etc. These structures not only serve as basic input for various economic activities like production, investment, but also enable an economy to break the shackles of traditional and primitive social structures and customs. The difference between a developed country and an underdeveloped country can be mainly attributed to the lack of sufficient and technically advanced infrastructure in the latter. Infrastructure has two-fold benefits- as an input and as a support system. Infrastructure as an input (roads, bank and power) facilitates the production process and attracts investment from domestic as well as from foreign investors. Infrastructure as a support system (such as schools, hospital) develops the quality of human capital by imparting quality and technical education and health facilities. This raises the standard and quality of living and helps the economy to eradicate major economic problems like poverty, unemployment and inequality. Hence, it can be concluded that the presence of quality and sufficient infrastructure is a necessary and sufficient condition for accomplishing economic growth and development.
class 11 commerce online preparation material:-Explain the two categories into which infrastructure are divided. How are both interdependent?
Infrastructure is broadly classified under two categories:
a. Economic infrastructure
b. Social infrastructure
Economic Infrastructurerefers to the elements of economic change that aid in the process of production and distribution. It improves the quality of economic resources and, thus, raises the productivity of the economy as a whole. In this way, it serves as a support system to economic growth. Energy, transportation, communication, banking and financial institutions are some of the examples of economic infrastructure. Greater the economic infrastructure, greater will be the production and more generation of employment opportunities. Thus, expenditure incurred on the economic infrastructure can be regarded as a necessary condition for economic growth.
Social Infrastructure refers to all those facilities and institutions that enhance the quality of human capital. Educational institutions, hospitals, nursing homes, housing facilities etc. are some of the examples of social infrastructures. The availability of such infrastructures raises the human productivity, thereby, improves the quality of standard of living. Unlike, economic infrastructure, social infrastructure indirectly increase the productivity and production of goods and services. For example, availability of better health care and medical facilities enable a perennial supply of healthy workforce that in turn is reflected in the form of increased production levels.
Both economic and social infrastructures are interdependent on and complementary to each other. While economic infrastructure fosters economic growth, social infrastructure enhances the quality of standard of living and thereby leads to the welfare of the economy as a whole. The combined effect of these two infrastructures contributes to the prosperity of the economy. The economic growth attained with the help of economic infrastructure is imperfect without t human development which is attained by means of social infrastructure. Thus, one infrastructure supports the other.
class 11 commerce online preparation material;-How do infrastructure facilities boost production?
Infrastructure-social and economic, facilitates production. The role of infrastructure in economic production can be understood with the help of an example. If agriculture is devoid of irrigation facilities, then it would entirely depend on the monsoon that may hamper its production and productivity. As irrigation is essential to enhance productivity of agricultural sector, in the same manner, infrastructure is essential for smooth and efficient production of all sectors of the economy. Similarly, industrial production in the absence of proper means of transportation may lead to delays in the movement of raw materials, capital goods and finished goods. This,in turn, leads to delays in the production process and, thereby, hampers industrial production. Thus, infrastructure is the necessary condition for higher productivity and higher production.
class 11 commerce online preparation material:-Discuss the reforms which have been initiated recently to meet the energy crisis in India.
The following reforms have been initiated by the government to meet the energy crises:
- Privatisation in Power Generation Sector: The government earlier had the monopoly in the generation and distribution of electricity. Now, private sector has been given the rights to generate power.
- Privatisation in Power Transmission:The Indian government has approved Tata Power and Powergrid Corporation of India for constructing transmission networks in joint venture.
- POWER for ALL by 2012: The Ministry of Power has set up an objective of ‘POWER for ALL by 2012’ to achieve the target of 1000 KwHr (Units) of per capita consumption of electricity in India. This objective is aligned with the objective to achieve an economic growth of 8% p.a. The main motive of this target is to improve the quality of power, improve the commercial viability of power industries and to provide power to all.
- Setting up Regulatory Mechanism: The Central Electricity Regulatory Commission (CERC) along with State Electricity Regulatory Commissions (SERC) has been established in 19 states under the Electricity Regulatory Commissions Act, 1998. These commissions and authorities regulate tariff, promote efficiency and competition.
- Encouraging FDI: In order to achieve the target of POWER for ALL by 2012, the Ministry of Power aimed at attracting US $250 billion of Investment (FDI and Domestic Investment Combined) into the power sector.
- Accelerated Power Development and Reform Programme (APDRP): APDRP has been initiated in the year 2000-01 with the motive of improving financial viability, reducing transmission and distribution losses and promoting transparency through computerization.
- Awareness: The government is encouraging people to increase the use of renewable resources and also creating awareness among the people to reduce the conventional resources. During the Eight Five Year Plan, government has set up National Energy Efficiency Programme (NEEP) that aimed at conservation of petroleum products.
- Improving Productivity: The Indian government has been emphasising on the measures to improve the productivity of the existing power generating industries.
class 11 commerce online preparation material:-Differentiate the six systems of Indian medicine.
The following are the six systems of medicines constituted by ISM (Indian Systems of Medicines).
Ayurveda is one of the traditional systems of medicine that is still used in India. It is a holistic way to achieve health through body, mind and spirit. The ayurvedic practitioners recommend diet and lifestyle changes along with drug therapy. They have identified a number of medicinal preparations and surgical procedures for curing various ailments and diseases that cannot be completely curable in other medical systems. The methods of ayurveda such as applying herbs and massage can also be applied along with other systems.
Yoga as an art originated and was practised in India from thousand years. It has references in ‘Upanishads‘ and ‘Puranas‘ composed by Indian Aryans in the Vedic period. The main credit for systematising yoga goes to Patanjali who wrote ‘Yoga Sutra‘, two thousand years ago. Yoga Sutra is the most important basic text on Yoga. It is through this means that the essential message of yoga is spread throughout the world. It is defined as an art of righteous living or an integrated system for the benefit of the body, mind and inner spirit.
Siddha comes from the word Siddhi which means an object to attain perfection or heaven. This is the oldest among the Indian Medical Systems namely Ayurveda and Unani. It is also known as Siddha Vaidya in India and also the oldest medical system in the world. As nowadays, people’s preference to natural health remedies and herbal health remedies is increasing day by day, Siddha has emerged as an important and unique system of Indian medicine when compared to other traditional medical systems in existence.
Naturopathy deals with the healing power of nature as it assumes that all healing powers are within our body. This means that within every human organism there is a healing energy. Naturopathy regards that when we go against nature only then we fall ill. ‘Fasting’ has been described as Nature’s way to recover. A thorough rest that includes fasting is the most favorable condition in which an ailing body can purify and recover itself.
Unani has a long and impressive record in India. It was introduced in India around 10th century A.D. with the spread of Islamic civilisation. Now Unanipathy has become an important part of Indian Systems of Medicine. India is one of the leading countries in terms of its popularity. It is very much similar to our Ayurveda. Unani established that disease is a natural process and that the symptoms are the reactions of the body to the disease.
Homeopathy consists of two words ‘Homeo’ meaning similar and ‘Pathos’ meaning suffering or treatment.In this system, a drug and a disease that produce similar symptoms cancels each other. It is popular among the people due to its remarkable healing capacity. Also, its remedies are free from side effects.
class 11 commerce online preparation material:-Discuss the main drawbacks of our health care system.
In recent years, India has embarked upon the development of vast health infrastructure.. This is evident from the fall in the death rate, infant mortality rate and rise in life expectancy. But more need to be done in the field of health care. The following are some of the deficiencies in the Indian health care:
a. Unequal Distribution of Health Care Services: The health care services are unequally distributed across rural and urban areas. Rural areas that supports 70 % of the population, has only of the hospitals. Further, the doctor-population ratio is as worse as 1:2,000. This implies that for every 2,000 people, there is only one doctor in India. Only half of the dispensaries are set up in villages. Most of the health care facilities have been confined mostly to the urban areas.
b. Communicable Diseases: various communicable diseases like AIDS (Acquired Immune Deficiency Syndrome), HIV (Human Immune Deficiency Syndrome), and SARS (Severe Acute Respiratory Syndrome)have made their way to India.. All these deadly diseases pose serious threat to t human capital reserve, thereby,impeding economic growth.
c. Poor Management: The health care centres lack trained and skilled personnel in the rural areas. Therefore, rural people have to rush to the urban health care centres. This becomes worse in the absence of proper roads and other cost-effective means of transportation.
d. Lack of Modern Techniques and Facilities:The government health centres are usually devoid of the basic facilities like blood testing, X-rays, etc. These centres lack modern techniques and medical facilities like, CT-scan, sonography, etc. In order to avail these services, people need to depend on the private hospitals that charge exorbitant fees.
e. Privatisation: The inability of the government to provide sufficient health care centres and other medical facilities paved the way for the private sector to step in. The private sector is governed by price signals, thereby, catering to the need of the higher income group, leaving the low income group and the poor at their own mercy. This is due to the privatisation of the health care sector The private hospitals are attracting more patients than the government hospitals as the government hospitals are devoid of facilities.
class 11 commerce online preparation material
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class 11 commerce online preparation material
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