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class 11 commerce revision materials – complete details

class 11 commerce revision materials – complete details

class 11 commerce revision materials:- We provide class 11 commerce revision materials include Accountancy , Economics and Business studies in this articles.

class 11 commerce revision materials

class 11 commerce revision materials

class 11 commerce revision materials

class 11 commerce revision materials:- Accountancy

class 11 commerce revision materials:-Meaning of Accounting

The American Institute of Certified Public Accountants (AICPA) had defined accounting as the art of recording, classifying, and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof’.With greater economic development resulting in changing role of accounting, its scope, became broader. In 1966, the American Accounting Association (AAA) defined accounting as ‘the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of information’.

In 1970, the Accounting Principles Board of AICPA also emphasised that the function of accounting is to provide quantitative information, primarily
financial in nature, about economic entities, that is intended to be useful in making economic decisions.

Accounting can therefore be defined as the process of identifying, measuring, recording and communicating the required information relating to the economic events of an organisation to the interested users of such information.

Generally Accepted Accounting Principles (GAAP)

Generally Accepted Accounting Principles (GAAP) refers to the rules or guidelines adopted for recording and reporting of business transactions, in order to bring uniformity in the preparation and the presentation of financial statements.

For example, one of the important rule is to record all transactions on the basis of historical cost, which is verifiable from the documents such as cash receipt for the money paid. This brings in objectivity in the process of recording and makes the accounting statements more acceptable to various users.

Basic Accounting Concepts

The basic accounting concepts are referred to as the fundamental ideas or basic assumptions underlying the theory and practice of financial accounting and are broad working rules for all accounting activities and developed by the accounting profession. The important concepts have been listed as below:

  • Business entity
  • Money measurement
  • Going concern;
  • Accounting period;
  • Cost Concept
  • Dual aspect (or Duality);
  • Revenue recognition (Realisation);
  • Matching;
  • Full disclosure;
  • Consistency;
  • Conservatism (Prudence);
  • Materiality;
  • Objectivity.

Business Entity Concept
The concept of business entity assumes that business has a distinct and separate entity from its owners. It means that for the purposes of accounting,
the business and its owners are to be treated as two separate entities.

Money Measurement Concept

The concept of money measurement states that only those transactions andhappenings in an organisation which can be expressed in terms of money
such as sale of goods or payment of expenses or receipt of income, etc. are to be recorded in the book of accounts. All such transactions or happenings
which can not be expressed in monetary terms, for example, the appointment of a manager, capabilities of its human resources or creativity of its research department or image of the organisation among people in general do not find a place in the accounting records of a firm.

Going Concern Concept

The concept of going concern assumes that a business firm would continue to carry out its operations indefinitely, i.e. for a fairly long period of time and would not be liquidated in the foreseeable future. This is an important assumption of accounting as it provides the very basis for showing the value of assets in the balance sheet.

Accounting Period Concept

Accounting period refers to the span of time at the end of which the financial statements of an enterprise are prepared, to know whether it has earned profits or incurred losses during that period and what exactly is the position of its assets and liabilities at the end of that period.

Cost Concept

The cost concept requires that all assets are recorded in the book of accounts at their purchase price, which includes cost of acquisition,transportation, installation and making the asset ready to use.

Dual Aspect Concept

Dual aspect is the foundation or basic principle of accounting. It provides the very basis for recording business transactions into the book of accounts. This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places.

The duality principle is commonly expressed in terms of fundamental Accounting Equation, which is as follows :

Assets = Liabilities + Capital

Matching Concept

The process of ascertaining the amount of profit earned or the loss incurred during a particular period involves deduction of related expenses from the
revenue earned during that period. The matching concept emphasises exactly on this aspect. It states that expenses incurred in an accounting period should be matched with revenues during that period.

Full Disclosure Concept

Information provided by financial statements are used by different groups of people such as investors, lenders, suppliers and others in taking various
financial decisions.

Consistency Concept

The accounting information provided by the financial statements would be useful in drawing conclusions regarding the working of an enterprise only
when it allows comparisons over a period of time as well as with the working of other enterprises.

class 11 commerce revision materials:- Economics

Food for Work’ programme

Food for Work (FFW) programme was started in 2000-01 with the objective of generating ample employment opportunities for unskilled labourers concentrated in the drought-affected states of Chattisgarh, Gujarat, Himachal Pradesh, M.P, Orissa, Rajasthan, Maharashtra and Uttaranchal. This programme provides food in exchange of work done by labourers. This programme was aimed to protect poor people against reduction in their purchasing power capacity in the natural calamities prone areas. The work done by the labourers includes watershed development works, water harvesting and construction of metal roads connecting rural and urban areas. This programme not only provides labourers with food but also creates semi-durable assets that facilitate economic and social development of the backward areas.

The three dimensional attack on poverty adopted by the government has not succeeded in poverty alleviation in India.

In order to alleviate poverty, government has adopted the following three dimensional approaches:

(i) Trickle-down Approach- This approach is based on the expectation that the positive effects of economic growth will be trickled down or benefit all sections of the society and also the poor people.

(ii) Poverty Alleviation Approach- This approach aimed at the creation of income-earning assets and employment generation opportunities.

(iii) Providing Basic Amenities- This approach aimed at providing the basic amenities like proper medical and health care facilities, better education, proper sanitation etc. to the poor people. These basic amenities positively affect health, productivity, income-earning opportunities and, thereby, alleviate poverty.

A thorough analysis of the three dimensional approach yield the following conclusions:

  1. Although there has been a reduction in the percentage of absolute poor in some of the states but still the poor people lack basic amenities, literacy, and nourishment.
  2. Secondly, there has not been significant change in the ownership of income-earning assets and productive resources.
  3. Thirdly, land reforms do not have high successful records (except West Bengal and Kerala) that further added to the inequality of income from land.
  4. Fourthly, lack of capital and availability of easy credit, lack of modern technology and poor access to information and marketing became the major bottlenecks for the small productive houses like cottage industries and other small scale industries.
  5. Fifthly, improper implementation of poverty alleviation programmes by ill-motivated and inadequately trained bureaucrats further worsened the situation.
  6. Sixthly, corruption along with the inclination towards interest of elites led to an inefficient and misallocation of scarce resources.

Therefore, it can be summed up that although various poverty alleviation programmes were well planned on papers but these were not implemented properly.

The two major sources of human capital in a country.

Human capital is a stock of skill and expertise of a nation at a particular point of time. The contribution of human skills and expertise towards economic growth and development is invaluable. This is because a stock of quality enriched human capital raises individual efficiency and productivity thereby raising the aggregate production and economic well being of a country. Thus, the importance of investment in enriching human capital is immense and long lasting. The following are the two prime ways o to develop human capital qualitatively:

i. Investment in Educational Sector: Education not only raises the standard and quality of living but also encourages modern attitude of the people. Moreover, education increases the productive capacity and productivity of a nation’s workforce by honing their skills. Further, education increases the acceptability of modern techniques and also facilitates a primitive economy to break the shackles of tradition and backwardness. An investment in educational sector has two fold benefits. It not only increases the income earning capacity but also reduces the skewed distribution of income thereby forming an egalitarian society. The investment in educational sector has long lasting returns. It not only enhances the present economic condition but also improves the future prospects of a country. The importance of education is not only limited to making people educated. but also in facilitating an underdeveloped economy to solve different but interrelated macro economic problems like, poverty, income inequality, population, investments, under utilisation of resources. Therefore, investment in education must be accorded high priority in an underdeveloped country as it leads to the enhancement of human capital qualitatively.

ii. Investment in Health Sector: There is a saying “The greatest wealth is health”. The wealth of a country can be increased with the efforts of healthy workforce. Investment in health sector increases efficiency, efficacy and productivity of a nation’s workforce. In contrast to an unhealthy person, a healthy person can work better with more efficiency and, consequently, can contribute relatively more to the GDP of the country. Good health and medical facilities not only increase life expectancy but also improves quality and standard of life. Investment in health sector ensures the perennial supply of healthy workforce. Some of the common expenditures incurred in the health sector are on providing better medical facilities, easy availability of life saving drugs, common vaccination, spread of medical knowledge, provision of proper sanitation and clean drinking water, etc. Thus, the expenditure incurred on health is important in building and maintaining a productive work force that in turn leads to the development of quality human capital in a country.

Indicators of educational achievement in a country.

Education makes a person well equipped with skills. An educated person is more skillful and productive than an uneducated person. Consequently, the former enjoys higher income earning capacity than the latter. Therefore, the prime indicator of educational achievement is the income earning capacity of an individual. Besides this, there are other essential indicators whose scope is even wider. These are:

1. Adult Literacy Rate: This rate indicates the percentage of the literate adult population who are aged 15 years and above. The word literacy in this context is confined only to the ability to read and write. It provides a measure of the stock of literate persons within the adult population. This rate is expressed in terms of percentage. Higher the percentage of adult literacy rate, higher the educational achievement in a country. This rate is the most important indicator for a country as it indicates the percentage of the population that can participate in the economic activity of the country.

2. Youth Literacy Rate: This rate indicates the percentage of literate people between the age of 15-24 who can read and write. It denotes the stock of literate population within the youth population. This is an important indicator of educational achievement in a country. This is because of the fact that majority of a country’s population is not able to continue their education till this age. Therefore, higher the youth literacy rate, higher will be the achievement of a country in terms of education.

3. Primary Education Completion Rate: This rate indicates the percentage of students completing the last year of primary school. Primary education includes students of the class group 1 to 8 in the age group of 6-14 years. It includes basic education in reading, writing and mathematics along with an elementary understanding of other subjects such as history, geography, natural sciences, social sciences, art and music. Lower primary education completion rate leads to lower youth literacy rate and, hence, lower adult literacy rate.

Differences between human capital and human development.

Human capital and human development are interrelated concepts but they are not identical. While human capital refers to the stock of a nation’s human skills and expertise at a particular point of time human development refers to holistic development and well being of a nation’s human capital. On one hand, human capital considers education and health as a means (skills and expertises) to enhance productive capacity, on the other hand human development considers human beings as end in itself. The important difference between human capital and human development is associated with the difference in the motive of investment. While human capital focuses on t investment in education and health sector to increase productivity and efficiency of workforce,on the other hand, human development focuses on investment in education and health sector to increase the general well being and standard and quality of living of human capital. If investment fails to increase the efficiency and income earning capacity, then human capital regards the investment to be unproductive. But, human development advocates in favour of such investments even though these had failed to bring out higher productivity and efficiency. Human development protects every individual’s right to get education and lead a healthy life.

Factors contribute to human capital formation

Human capital formation is an aggregateoutcome of the investments in education, health, transport and communication sector, technical know-how and on-the-job training and migration. These factors are explained below.

i. Education

Education not only raises the standard and quality of living but also encourages modern attitudes of people. Moreover, education increases the productive capacity and productivity of a nation’s workforce by honing their skills. Further, education increases the acceptability of the modern techniques and also facilitates a primitive economy to break the shackles of tradition and backwardness. An investment in educational sector has two fold benefits. It not only increases the income earning capacity but also reduces the skewed distribution of income, thereby, forming an egalitarian society. The investment in educational sector has long lasting returns. It not only enhances the present economic condition but also improves the future prospects of a country. The importance of education is not only limited to making people educated but also in facilitating an underdeveloped economy to solve different but interrelated macro economic problems like, poverty, income inequality, population, investments, under utilisation of resources. Therefore, investment in education must be accorded high priority in a country.

ii. Health

There is a saying “The greatest wealth is health”. The wealth of a country can be increased with the efforts of healthy workforce. Investment in health sector increases efficiency, efficacy and productivity of a nation’s workforce. In contrast to an unhealthy person, a healthy person can work better with more efficiency and, consequently, can contribute relatively more to the GDP of a country. Good health and medical facilities not only increase the life expectancy but also improve quality and standard of living. Investing in health sector ensures the perennial supply of healthy workforce. Some of the common expenditures incurred in the health sector are on providing better medical facilities, easy availability of life savings drugs, common vaccination, spread of medical knowledge, provision of proper sanitation and clean drinking water, etc. Thus, the expenditure incurred on health is important in the building and maintaining a productive work force.

iii. On-the-Job Training

Training refers to the act of acquiring skills, knowledge and competency required to perform a particular job efficiently and effectively. On-the-job training is the most effective kind of training to a trainee, imparting him the technical skills and know-how at the actual work site. In this type of training, a trainee is assisted (or hands on) and trained by a trainer (usually by an experienced employee) when the trainee is actually doing the job. This helps the trainee not only to acquire the theoretical and practical skills simultaneously but also enables him to learn from the experiences of his trainer and, thereby, can increase his efficiency and productivity. This is the most common type of training programs because the returns in terms of increased productivity far exceed the cost of the training. Thus, the expenditures on such training improve the quality of human capital by enhancing its productivity, efficiency and income earning capacity.

iv. Migration

Migration refers to the movement of people from underdeveloped or developing countries to developed countries in search of better avenues. Migrations contribute to human capital formation as it facilitates the utilisation of inactive or underdeveloped skills of an individual. The cost of migration involves cost of transportation and cost of living at the migrated places. Usually, the cost of migration is very high due to the high cost of transportation and high cost of livelihood in the developed countries. But still, people migrate in search of better job opportunities and handsome salaries. Migration of human capital helps the underdeveloped countries to acquire technical skills, efforts reducing methods and efficient way of performing tasks. These skills and know-how are transmitted by the migrated people to their home country that not only add to the economic growth and development but also enhance the human capital of the home country.

v. Information

The degree of availability of jobs, salaries and admissions related information also play an im

class 11 commerce revision materials:- Business Studies

Name the stages in the formation of a company.

The formation of a company is a complex process which involves various stages. The following are the sequential stages.

(a) Promotion: This involves taking the initiative to form a company and promoting it.

(b) Incorporation: This step involves the formation of the company as a separate legal entity.

(c) Subscription of capital: In this stage, funds are raised in the form of shares and debentures.

(d) Commencement of business: This stage implies the completion of the formalities and the commencement of business by the company.

List the documents required for the incorporation of a company

An entrepreneur needs to submit the following documents for the incorporation of a company.

(a) Memorandum of association.

(b) Articles of association.

(c) Written approval of the proposed directors to function as directors and an undertaking to buy the qualification shares.

(d) An agreement naming the proposed managing director or a manager or a full-time director, if any.

(e) A copy of the letter obtained from the registrar concerned approving the company name proposed.

(f) A legal confirmation by the law stating the submission of all documents and requirements for registration.

(g) The exact address of the registered office.

(h) Documentary evidence of payment of the registration fee.

Distinguish between ‘preliminary contracts’ and ‘provisional contracts’.

Preliminary contracts: These contracts are signed by the promoters of a company with the third parties during the promotion of the company. These contracts are also called pre-incorporation contracts as they are created before the company is incorporated. Preliminary contracts are non-binding, as the company cannot ratify them. Therefore, these contracts are not enforceable unless fresh contracts are created on the same terms and conditions after the company comes into existence.

Provisional contracts: These contracts are signed after the incorporation of a company and before the commencement of business. They are different from preliminary contracts as they are enforceable automatically once the company obtains the certificate of commencement of business.

Steps taken by promoters in the promotion of a company.

A promoter is a person who takes the initiative to form a company with reference to a given idea or a project and also takes the steps necessary to fulfil this purpose. Besides discovering the business opportunity, the promoter is also responsible for analysing the future prospects of the company and acquiring the inputs necessary, such as labour, capital and machinery, to run the company successfully.

The following steps are taken by the promoters for the promotion of the company.

(i) Conceiving a business idea: First, a promoter discovers the idea for the formation of a company. If this idea is good enough to be considered and worth investing in, then its profitability or economic feasibility is analysed.

(ii) Checking the feasibility of the idea: As the idea may or may not be feasible enough to be converted into a successful business, it has to be studied in detail depending on its nature. In this regard, the following studies are made with the help of charted accountants, engineers, accountant, etc.

(a) Technical feasibility: In some cases, the idea may be good enough but technically unfeasible. This may happen if the technology or raw material required to execute the project is not easily accessible. Therefore, the technical feasibility of the idea has to be considered before proceeding further.

(b) Financial feasibility: Every organisation requires capital to start functioning and sustain itself. The promoters have to assess the cost of implementing the idea. Thus, in case the cost of the project is huge and the project cannot be financed within the funds available, then the idea may have to be dropped.

(c) Economic feasibility: In some cases, the project may be technically and financially feasible but the probability of its success may be very low. In such cases, too, the idea will have to be given up.

(iii) Selecting the company’s name: Once the decision to establish a company is made, the promoters need to select a name for it. For securing approval for the proposed name, an application has to be submitted to the registrar of companies of the state concerned. This application must contain at least three names in the order of their preference. This is because, in some cases, it may happen that the name most preferred may not be approved if another company by the same name already exists. Thus, in such cases, an alternative name that is proposed is approved.

(iv) Selecting the members to sign the memorandum of association (MoA): The promoters are required to select the members for signing the MoA. In this regard, the members who generally sign the MoA become the first directors of the company.

(v) Appointing professionals: The promoters are required to appoint professionals—bankers, brokers, solicitors and underwriters—for preparing the documents necessary for the company. The details of the number of shares allotted to each shareholder, along with his or her addresses for correspondence, are submitted to the registrar.

(vi) Preparing all the documents necessary: After the appointment of professionals, the promoters are required to submit the legal documents necessary (such as the MoA, articles of association and consent of directors) to the registrar of companies.

Memorandum of Association

A memorandum of association (MoA) is the most essential document in the formation of a company as it highlights the company’s main objectives and goals. The MoA regulates the activities of the incorporated company in such a manner that the company can legally undertake only those activities that are mentioned in the MoA. This document must be signed by at least seven members in the case of a public company and by two persons in the case of a private company.

Clauses of Memorandum of Association

The following are the main clauses of the MoA.

(a) The name clause: This includes the name of the company which has already been approved by the registrar of companies. It is the name by which the company will be known.

(b) Registered-office clause: This clause mentions the name of the state where the registered office of the company is situated. It is not mandatory to submit the exact address of the registered office at this stage. However, the address needs to be submitted within 30 days of incorporation of the company.

(c) Objects clause: This is the most important clause in the MoA as it defines the main objective of the company for which it was formed. The company cannot undertake activities that are not stated in the objects clause. The objects clause is divided into the following two sub-clauses.

(i) The main objects: This sub-clause lists the main objects for which the company is formed. Any clause that is essential for the achievement of the main objectives is considered valid even if it is not contained in the sub-clause.

(ii) Other objects: Objects that are not included in the main-objects clause can be included in this sub-clause. If a company wants to initiate a business activity that is mentioned in this clause, it is required to pass either an ordinary resolution or a special resolution to get the consent of the central government.

(d) Liability clause: This clause states the liability of each shareholder according to the amount unpaid by them for the shares they own.

(e) Capital clause: This clause defines the authorised capital of the company which it can raise through the issue of shares. It also states the division of the number of shares.

(f) Association clause: This clause contains the statement by the signatories to the MoA giving their approval to be a part of the company. They also give their consent to buy the qualification shares of the company.

Distinguish between ‘Memorandum of Association’ and ‘Articles of Association.’

Basis of differenceMemorandum of Association (MoA)Articles of Association (AoA)
ObjectiveThe MoA defines the character of a company and the scope of its activities.The AoA defines the rules and regulation of the company.
PositionIt is the main document of a company which is subordinate to the Companies Act.It is the subsidiary document of a company which is subordinate to both MoA and the Companies Act.
Relationship The MoA establishes the relation between the company and outsiders.The AoA defines the relation of the company with its members.
AlterationAltering the MoA requires the approval of a statutory authority.The AOA can be easily altered by passing a resolution.
RatificationActs beyond MoA cannot be ratified.Acts beyond the AoA can be ratified by the members if they do not violate the MoA.
NecessityIt is a necessary document.It is a secondary document.

class 11 commerce revision materials

Recommended post :-class 11 commerce revision materials

class 11 commerce revision materials

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