BASIC BOOK KEEPING AND ACCOUNTANCY PART 4

Discount:
An allowance or concession allowed or received on the sale or purchase activities of the business. It can be of  two types i.e. Cash Discount and Trade Discount

Cash Discount:
When Discount is given or received for spot payment, then it is Cash Discount. It is generally given by creditor to his debtors for immediate payment. It is shown in the book of accounts.

Trade Discount:
When discount or concessions allowed by trader for bulk purchases, then it is known as trade discount. Generally it is allowed by a manufacturer to a wholesaler or by wholesaler to a retailer.
It is deducted from invoice or printed price or catalogue price. It is not shown in the book of accounts.

Solvent:
When a person is in position to pay his all liabilities then he is known as Solvent person. In other words, When person's assets are more than his liabilities, he is known as solvent.
In such case, Assets > Liabilities.

Insolvent:

When a person is not in position to pay his all liabilities then he is known as Insolvent person. In other words, When person's liabilities are more than his assets, he is known as Insolvent.

In such case, Liabilities > Assets.

Contingent liabilities:

These are liabilities which may arise on happening or non-happening of a specific event in future. So these liabilities are not shown in the liabilities side of balance sheet until they arise.

For e.g. I am producer of body lotion product, one of our customer gets infected by skin allergy by using our product. He filed suit in Consumer Forum against our company claiming compensation amount Rs. 50000 for her skin treatment. Now Liability of Rs. 50000 depends on decision or order of Consumer Forum. until Forum will not pass an order, it is our Contingent Liability.

Bad Debts:

Bad  debts is the amount due from customer which is irrecoverable from him.

Events of Bad debts:

1. Sudden death of customer.

2. Customer declared insolvent by court.etc

Accounting year:

Accounting year means period of twelve months. It can be 1st January to 31st December or 1st April to 31st March next year.

Financial Year:

Financial year means period of twelve months starting/commencing from 1st April  and ending on 31st March next year.

For e.g. Current Financial year is 1st April, 2013 to 31st March, 2014.

BASIC CONCEPTS OF BOOK KEEPING PART 3

Debtors: A person who gets benefits/goods or assets without paying money at the same time, but liable to pay the value in the future time is known as debtor. In simple words, The person from whom the business has to receive money in future. E.g., Mr. Ashish purchased goods worth Rs. 5000 from Mr. Santosh. In this case Mr. Ashish is debtor of Mr. Santosh until he pays the full amount.

Creditors: A person who gives benefits/goods or assets without receiving money at the same time, but claim the value in the future time is known as creditor. In simple words, The person to whom the business has to pay money in future. E.g., Mr. Ashish purchased goods worth Rs. 5000 from Mr. Santosh. In this case Mr. Santosh is creditor of Mr. Ashish until he receives the full amount.

Stock: Stock means goods  remain unsold on a particular date. There are two type of stock i.e. opening stock and closing stock.

Opening stock means stock remain unsold in the beginning of the accounting period.
Closing stock means stock remain unsold in the end of the accounting period.

For e.g.
If 5000 units purchased @ Rs. 20 per unit remain unsold at the end of year, then closing stock is Rs. 80000. this will be opening stock of subsequent year.

BASIC CONCEPTS OF BOOK- KEEPING PART-2

CAPITAL: Money (cash) or Money's worth (means goods, furniture, land and building, premises, computers, motor vehicles, etc) invested by businessman/owner into the business to start business, is known as Capital.
Capital can be needed any time in the business, this is known as Additional capital.
Business is started with Some assets such as cash, goods, furniture, land and building, premises, computers, motor vehicles, etc and liabilities such as loan from bank, loan from relatives, supplier means creditors who supplied goods on credit, etc. Difference between value of assets invested in the business and liabilities is called Capital.
Thus, Capital = Assets - Liabilities.

Capital is permanent liability of  business, and Capital represents owner's fund in business.

E.g. Prakash’s total Assets in the business are Rs 1,50,000/- and total liabilities amounted Rs 1,00,000/- Thus, his capital is Rs 50,000/-. i.e.[Rs 1,50,000 - Rs 1,00,000] 

DRAWINGS: As owner invest money into business, in the same way when he needs money or some goods or assets (which is not used in the business), he withdraws the same from business for personal use/domestic use.

Money or money's worth is withdrawn from business by the businessman for personal use, then it is known as Drawings.

E.g.:

1. Paid daughter's school fees.

2. Sarees are taken from business for marriage of son.

3. cash withdrew for domestic purpose. 

BASIC CONCEPTS OF BOOK- KEEPING PART-1

BOOKEEPING:- B.K is an art of systematic recording, classifying and summarizing the financial transaction of the business for a particular period of generally 1 year.

Explainantion: A person starts business, he invests some money into it which is known as "Capital". As we know that there are number of business transactions during the course of business. No person can be able to remember all transaction date wise and amount wise. There for it become necessary to record these business transaction in systematic way so that one person can easily know what is daily/weekly monthly sales/purchases/expenses/other incomes/losses/gains.

It is possible when records are in systematic, classified and in summary form.

Thus a business transaction recorded through BOOK - KEEPING.

Book-Keeping  Objectives: 1) To keep systematic record 2)  To protect business properties 3) To know the profit or loss 4) To know the financial position of the business. 5) To know one’s tax liability.

Some important terminologies used in accounting and book keeping.

Transaction: Exchange of goods and services for money or money’s worth between two or more persons or parties is known as transaction.

There are two types of transaction.

Cash transaction: When goods are exchanged for cash it is known as cash transaction. E.g. A purchased goods from B and paid cash.

Credit transaction: When cash is not paid or received for exchange of goods and service it is known as credit transaction.

E.g. A purchased goods from B on two months credit. 

Goods: All the commodities or articles in which a businessman deals are called goods. in other words, the products/things which trader buys and sells in business are called goods.

E.g. Cloth will be goods for cloth merchant. Gold will be goods for goldsmith.

Profit: When income of a business is more than its expenditures, then the excess amount left after paying all expenses is known as 
Profit. 

E.g. Mr. X’s total business income is 4, 00,000/- for the year ending on 31/3/2006. His total business expenses is Rs 3,50,000/- for the same year. Hence for the year 2006, Mr.  X’s profit is Rs 50,000/- i.e. Income-Expenses.

Loss: When expenses of a business is more than its incomes, then the difference between expense and income is known as Loss.

Mr. A Dealing in a business for the year ending 31/12/2005. His total business Income is   Rs 3, 00,000/- and total Expenses is Rs 4, 25,000/-. Hence he has a loss of Rs. 1, 25,000/- i.e. Expenses-Income.

Assets: All properties of businessman used in the business to produce/provide goods and services and which helps in trade of goods and services and there is not any intention of selling the properties at profit until its productive capacity become unsatisfactory are called Assets. Assets are shown at Right hand side of Balance sheet

E.g. Cash, land & Building, Plant & Machinery, furniture and fixture, Debtors, Bills receivable, goods(stock), Goodwill, Copyright, patents etc.

Assets are further classified into:

a) Fixed Assets - used in the business/stayed inn the business more than 1 year. E.g. Machinery, Land and Building, Furniture, Motor vehicle, etc

b) Current Assets - used in the business /stayed in the business less than 1 year. E.g. Goods, Cash in Hand, Cash at Bank, Bills receivable etc.

c) Tangible assets-  which has physical existence and can be seen and touched. E.g. Cash, land & Building, Plant & Machinery, Furniture and Fixture, Debtors, Bills receivable, Goods(stock) 

d) Intangible assets- which does not have physical existence and can not be seen and touched. E.g. Goodwill, Copyright, patents etc.

Liabilities: all amounts which is payable by business firm to outsiders are known as liabilities. E.g. Capital, Creditors, Outstanding Expenses, Bills payable, Bank Loan, Bank Overdraft etc. All liabilities are shown at left hand side of Balance Sheet.

They are further classified into: (Responsibility to Repay the Amounts) 

a) Fixed liabilities: Owings of business of permanent nature are called fixed liabilities. E.g. Capital, Debenture etc.

b) Current liabilities: Owing of business towards outsiders for short term duration is called current liabilities. E.g.Creditors, Outstanding Expenses, Bills payable, Bank Loan, Bank Overdraft etc. 

Contingent liabilities: These are liabilities which may arise on happening or non-happening of a specific event in future. These liabilities are not recorded in the books of accounts until they arise.

e.g. Pending suit of claim by customer for adverse affect of product of our company. if court ordered to claim the amount then business has to pay. so this liability is depend on future event.

Learn From Past, Work on Construct your attitude and Make You success in future

sometime i feel, person should not depend on other and do his or her work by own capability and self trust. but when person wants to be a big and want expansion he needs some people like him who believe and cooperate his vision of success.

Person makes so many mistakes and failed in their business or career, it just because he doesnot realise his mistakes and does again and again.
to be more successful in future, he should follow some TIPS:
1. analyse your capability and strength
2. Make a list of areas where you are weak.
3. search for how to improve yourself where you are weak.
4. make a list of resources which you want to do your business/work.
5. plan for acquire that resources from where it can be acquired.
6. if you feel that there is need of large amount, then start small work from where you can earn adequate money and adopt this formula " INCOME - SAVINGS = EXPENDITURE"
Save fixed Money for few months or planned months if you make big effort then you save big amount vice versa.
7. staff yourself with all resources,start your business/work.
8. consistency, improvement in work, and customer satisfaction are the big tool for big success.

If You want after some time that you want expansion, search talent/trustworthy person who can understand you.
then follow again same tips.

"Patient, Calmness, And Dedication towards work make you Tension Free Successful Entrepreneur". ASHISH SHUKA
    

Commerce Question Paper Of AVS Private Tutorial- 10th ICSE

AVS PRIVATE TUTORIAL

ICSE-COMMERCE-10^TH CLASS.

TEST- 1                                                                                   Chapter: 1, 2, 4, 5, 15, 16

Marks: 80marks                                                                        Time: 2hours

Notes: Section – I  is compulsary.

Section – II  Attempt any 4.

SECTION- I

1.     Briefly explain the difference between:                                                 (14)

Stakeholder and customer.

Market research and marketing research.

Internal stakeholders and external stakeholder.

Shareholder and a creditor.

Verbal communication and non verbal communication.

Formal communication and informal communication.

Public warehouses and bounded warehouses

2.     Write brief answer.                                                                             (26)

Explain the term logistics.

What is meant by marketing Research?

Give two example of audio-visual communication.

Mention two uses of a bonded warehouse.

How are advertising and personal selling interlinked?

Explain 2 the expectations of general public from a business concern?

Mention the interpersonal skills required for effective communication.

Mention any two differences between advertising and publicity.

Briefly explain “Outdoor Advertising”

Mention two benefits which advertising provides to society.

What do you understand by Formal communication?

Explain “Chipko Movement” in brief.

Why Trees are Important? Explain.

SECTION- II

3.     Explain any two methods of conducting “ Market Research”.

Give any five reasons why people consider advertising a social waste.

4.     State any five advantages of Road Transport over Water transport.

Give any five Expectations of employees from business enterprise.

5.     Explain the elements in the process of communication.

Suggest any five ways society benefits from advertising.

6.     What is marketing Demand? Explain any 4 objectives of marketing research.

Explain any five principles of Insurance.

7.     Advertising encourages artificial leaving. Do you agree with this statement? Why?

Explain essentials of good communication.

8.     Explain the five expectation of customer from business organisation.

What is advertising? Explain any four factors to be consider while selecting a suitable medium of advertising.