Assam ASSEB HSLC Elective Commerce cheat sheet

Commerce covers trade and aids to trade (transport, banking, insurance, warehousing, advertising); industry covers production of goods and services.

Business environment = internal (manpower, finance, machinery) + external (economic, social, political, legal, technological, natural, demographic).

Economic environment factors: inflation, interest rates, taxation, exchange rates, government policy, business cycles.

Non-economic environment: customs, values, education, legal framework, technology, ecology, demographics.

Primary sector extracts natural resources; secondary sector manufactures; tertiary sector provides services; quaternary supports knowledge work.

Liberalisation (1991 New Economic Policy) reduced licensing, opened sectors to private and foreign investment, and integrated India with world trade.

Features of business: economic activity, production of goods/services, profit motive, continuous process, risk-bearing, exchange of value.

Globalisation effects: larger markets, foreign competition, technology transfer, and greater exposure to external shocks.

Utility types: form (manufacturing), place (transport), time (warehousing), possession (trade).

Sole proprietorship: single owner, unlimited liability, no separate legal entity, minimal registration, full control and profit.

Partnership: 2–50 partners under the Indian Partnership Act 1932; liability unlimited and joint; registration optional but advisable.

Limited Liability Partnership (LLP): partners' liability limited to agreed contribution; body corporate; at least 2 designated partners, one resident in India.

Joint Hindu Family business: governed by Hindu law, controlled by karta, membership by birth, coparceners' liability limited to share.

Cooperative society: minimum 10 members, voluntary, one member one vote, service motive, registered under state cooperative acts.

Joint Stock Company: separate legal entity, perpetual succession, limited liability, common seal; private company needs 2 members, public company 7.

Public sector: departmental undertaking, statutory corporation, government company (51% or more government shareholding).

Choice criteria: capital need, liability, control, continuity, legal formalities, secrecy, scale of operations, tax treatment.

Finance functions: estimating capital requirements, choosing sources, raising funds, and deploying them for maximum return.

Fixed capital funds long-term assets (land, plant); working capital funds day-to-day operations (stock, debtors, cash).

Owned sources: equity shares, preference shares, retained earnings. Borrowed sources: debentures, loans, public deposits, trade credit.

Equity shareholders are owners, bear residual risk, get dividends only from profits, and enjoy voting rights.

Preference shareholders get fixed dividend and priority in repayment but normally no voting rights.

Debentures are debt: fixed interest, priority over dividends, secured, and interest is a charge against profit.

Gearing (capital structure) = debt/equity; high gearing raises financial risk but may raise EPS when return on capital exceeds interest cost.

Short-term sources: bank overdraft, cash credit, trade credit, bill discounting, factoring, commercial paper.

Public deposits are unsecured, raised directly from the public for a fixed term, and governed by company law limits.

Internal (home) trade occurs within one country; international trade occurs between countries and uses foreign exchange.

Wholesaler buys in bulk from producers and sells to retailers; retailer sells to final consumers.

Functions of wholesaler: assembling, grading, storage, financing, risk-bearing, market information.

Import trade buys goods from abroad; export trade sells abroad; entrepot trade re-exports imported goods.

Balance of trade = visible exports − visible imports. Balance of payments includes visible, invisible and capital flows.

Documents: indent (order), proforma invoice, commercial invoice, bill of lading, certificate of origin, shipping bill, letter of credit.

Incoterms define cost and risk transfer: EXW (buyer bears most), FOB (risk passes at ship's rail), CIF (seller pays cost, insurance, freight).

Favourable balance means exports exceed imports; adverse balance means imports exceed exports.

Channels of distribution: direct (producer to consumer) or indirect via wholesaler and retailer.

Central bank (RBI) functions: note issue, banker to government, banker to banks, credit control, custodian of foreign reserves.

Commercial banks accept deposits and lend; primary deposits create deposits, derived deposits arise from lending.

Credit control: quantitative (repo rate, reverse repo, CRR, SLR, open market operations) and qualitative (margin, moral suasion, rationing).

CRR is cash held with RBI as a percentage of net demand and time liabilities; SLR is liquid assets held by the bank itself.

Types of accounts: savings, current (no interest, for business), fixed deposit, recurring deposit.

Functions of commercial banks: accepting deposits, lending, agency services (collection, payments) and general utility services (lockers).

Development finance institutions: IFCI, IDBI, SIDBI, NABARD, EXIM Bank, each with a defined sector mandate.

Negotiable instruments: promissory note, bill of exchange, cheque; cheque validity is three months from date.

NPA (non-performing loan) arises when interest or principal is overdue beyond the prescribed period.

Insurance transfers risk from insured to insurer in exchange for a premium; it is a contract of utmost good faith.

Insurable interest must exist at the time of contract; it is the legal right to insure that gives financial loss on damage.

Principles: indemnity (general insurance), subrogation, contribution, proximate cause; life insurance is not a contract of indemnity.

Life insurance covers human life, pays a sum assured on death or maturity, and has an investment/savings element.

General insurance covers fire, marine, motor, health, crop and liability risks.

Marine insurance covers hull, cargo and freight; perils of the sea are the core insured risk.

Premium depends on sum insured, risk class, term, age (life), and past claim record.

IRDAI regulates insurance in India; agents and brokers must be licensed.

Reinsurance is insurance of insurers; double insurance means the same risk insured with more than one insurer.

Modes of transport: road (door-to-door, flexible), rail (bulk, long distance), water (cheapest for heavy goods), air (fastest, costliest), pipeline (liquids/gas).

Functions of transport: movement of goods and people, creation of place utility, wider markets, employment, national integration.

Warehousing creates time utility by storing goods between production and consumption.

Types of warehouses: private, public, bonded (customs-controlled), government, cooperative, cold storage.

Functions of warehousing: storage, price stabilisation, risk protection, financing (warehouse receipt as security), grading and packing.

Communication means transmitting information; elements are sender, message, medium, receiver, feedback.

Forms of communication: postal, courier, telephone, internet, broadcasting, print media.

Barriers to communication: physical, semantic, psychological, organisational and cultural.

Warehouse receipt can be pledged to obtain bank finance against stored goods.

Advertising is paid, non-personal, sponsored communication through mass media; salesmanship is personal, face-to-face selling.

AIDA model: Attention, Interest, Desire, Action - the sequence a sales message should follow.

Functions of advertising: informing, persuading, reminding, creating demand, building brand image.

Media choice depends on reach, cost, target audience, product type and message life; common media are newspapers, TV, radio, internet, outdoor.

Objections of advertising: higher cost, misleading claims, creates artificial wants, encourages monopoly.

Qualities of a good salesman: product knowledge, courtesy, communication skill, honesty, persistence, empathy.

Selling process: prospecting, pre-approach, approach, presentation, handling objections, closing, follow-up.

Advertisement copy should be brief, clear, truthful, attention-catching and legally compliant.

Advertising agencies handle copywriting, media planning, artwork and campaign measurement for clients.

Consumer Protection Act 2019 replaced the 1986 Act; it covers goods, services and e-commerce transactions.

Consumer rights: safety, information, choice, being heard, redressal, consumer education.

Three-tier redressal: District Commission (up to ₹50 lakh), State Commission (above ₹50 lakh to ₹2 crore), National Commission (above ₹2 crore).

Complaint may be filed where the consumer resides or works, or where the opposite party has a branch.

Unfair trade practice: false representation, misleading advertisement, defective goods, deficient service, overcharging.

Product liability lies with manufacturer, product service provider and product seller for harm caused by defective goods.

Consumer Protection Councils at district, state and national levels advise on consumer welfare.

Pecuniary jurisdiction figures are revised by government notification; check the current limit before applying.

Reliefs include replacement, refund, compensation, removal of defect and discontinuation of unfair practice.

Entrepreneur: person who organises resources, bears risk and innovates to earn profit.

Functions: idea generation, feasibility study, resource mobilisation, risk bearing, innovation, management.

Qualities: initiative, self-confidence, risk tolerance, perseverance, leadership, decision-making.

MSME classification (India) uses investment in plant/machinery and annual turnover; micro, small and medium thresholds.

Udyam registration is the current online registration for MSMEs, replacing earlier EM-II/UAM processes.

Business plan contents: product, market analysis, marketing plan, operations, management team, financial projections.

Sources of finance for small business: own savings, friends and family, bank loans, SIDBI, mudra loans, angel investors.

Startup India and Stand-Up India are government schemes supporting new and small enterprises.

Small business advantages: flexibility, personal service, local employment; limitations: limited capital, low bargaining power.

Book-keeping records transactions; accounting summarises, analyses and interprets them.

Accounting equation: Assets = Liabilities + Capital.

Golden rules: debit the receiver and credit the giver (personal); debit what comes in, credit what goes out (real); debit expenses/losses, credit incomes/gains (nominal).

Journal entry format: date, particulars, debit account (Dr), credit account (Cr), narration.

Ledger is a collection of accounts; trial balance tests arithmetical accuracy of ledger postings.

Final accounts: Trading Account (gross profit), Profit and Loss Account (net profit), Balance Sheet (position).

Gross profit = Sales − Cost of Goods Sold; Cost of Goods Sold = Opening stock + Purchases + Direct expenses − Closing stock.

Net profit = Gross profit + Other incomes − Indirect expenses.

Accounting conventions: going concern, consistency, accrual, prudence, materiality, matching.

Double-entry rule: every transaction affects at least two accounts with equal debits and credits.