BSEB Matric Commerce cheat sheet

Business is any human activity directed at producing or exchanging goods and services for profit; it excludes non-economic work such as charity.

Industry (extractive, genetic, manufacturing, construction) produces goods; commerce (trade plus auxiliaries to trade) distributes them.

Auxiliaries to trade are transport, banking, insurance, warehousing, advertising and packaging - they support trade but do not create goods.

Trade is classified as internal (wholesale, retail) and external (import, export, entrepot); entrepot trade re-exports imported goods.

Objectives: economic (profit, market share, innovation) and social (employment, quality goods, environment, community service).

Profit is the reward for risk-bearing; risk and uncertainty are inseparable from business because returns are not guaranteed.

Business risk is classified as insurable (fire, theft) and non-insurable (demand changes, competition, government policy).

Industry vs commerce test: if the activity changes the form of a product it is industry; if it only moves ownership or place it is commerce.

Sole proprietorship: one owner, unlimited liability, no separate legal entity, minimum legal formalities, business and owner are one in law.

Partnership under the Indian Partnership Act 1932: 2–50 partners, agreement may be oral or written, liability is joint and several and unlimited.

A minor may be admitted only to the benefits of partnership with consent of all partners; such a partner's liability is limited to his share.

HUF (joint Hindu family) business is governed by Hindu law; Karta manages it; coparceners' liability is unlimited except in Kerala.

Cooperative society: minimum 10 adult members, one member one vote, registration under Cooperative Societies Act, service motive and limited return.

Joint stock company: separate legal entity, perpetual succession, limited liability, common seal, artificial person created by registration.

Private company: minimum 2 members, maximum 200; public company: minimum 7 members, no maximum; both need at least 2 directors.

Choice rule: unlimited liability and small scale favour sole proprietorship; large capital and limited liability favour a company.

Accounting equation: Assets = Liabilities + Capital; every transaction keeps it balanced.

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

Journal entry format: date, particulars (debit account first, credit account indented), L.F., debit amount, credit amount, then narration.

Compound entry records more than two accounts in one entry; the totals of debit and credit columns must be equal.

Capital expenditure creates an asset or increases earning capacity; revenue expenditure is routine expense of running the business.

Opening entry records the assets and liabilities brought forward at the start of a year, the balance being capital.

Trade discount is deducted on the invoice and never recorded; cash discount is recorded and allowed for prompt payment.

Drawings reduce capital and are debited to Drawings account; goods taken for personal use are credited to Purchases.

Ledger is the principal book; each account has a debit side and a credit side, and postings are made from the journal.

Balancing rule: the excess of the debit side over credit is a debit balance; the excess of credit over debit is a credit balance.

Trial balance lists debit and credit balances on a given date; total debits must equal total credits if the ledger is arithmetically correct.

A trial balance cannot reveal errors of principle, complete omission, compensating errors, or wrong posting with equal effect.

Closing entries transfer nominal accounts to Trading and Profit & Loss account; real and personal accounts appear in the Balance Sheet.

Trading account gives gross profit = Net sales − Cost of goods sold; cost of goods sold = Opening stock + Purchases + Direct expenses − Closing stock.

Net profit = Gross profit + Other incomes − Indirect expenses; it is added to capital in the Balance Sheet.

Balance Sheet is a statement of assets, liabilities and capital on a date, not an account; it must balance.

Suspense account is opened for the difference in the trial balance and closed when errors are located and rectified.

Simple interest: SI = P × R × T / 100; Amount = P + SI.

Compound amount: A = P(1 + R/100)^n; compound interest = A − P.

Profit percentage is normally calculated on cost price: Profit% = (SP − CP)/CP × 100; Loss% = (CP − SP)/CP × 100.

If an article is sold at a discount d% on marked price M, SP = M(1 − d/100).

Percentage change = (New value − Old value)/Old value × 100; a rise of x% followed by a fall of x% gives a net fall.

Mean = Sum of observations / Number of observations; median is the middle value of an ordered series; mode is the most frequent value.

Arithmetic mean of grouped data: Mean = Σfx / Σf, where x is the mid-value of each class.

Range = Highest value − Lowest value; it is a crude measure based on only two observations.

A consumer buys goods or hires services for consideration, excluding goods bought for resale or commercial purpose.

Consumer responsibilities: check quality, price and date of expiry; insist on a cash memo; read labels and warranties.

Standardisation marks in India: ISI for industrial goods, AGMARK for agricultural produce, FPO for processed fruit products, Hallmark for gold.

A cash memo is the basic proof of purchase and is generally required to file a complaint.

Misleading advertisement, adulteration, short weight, and sale of spurious goods are unfair trade practices or adulteration.

Right to be informed covers price, quantity, purity, potency and standard of goods; it is met by labelling and packing.

Consumer awareness is spread through consumer organisations, media, government campaigns and consumer courts.

A consumer may complain where the opposite party has its office, where the consumer resides, or where the cause of action arose.

Consumer Protection Act 2019 replaced the 1986 Act and created the Central Consumer Protection Authority (CCPA).

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

Complaint must normally be filed within two years of the cause of action; delay may be condoned on sufficient cause.

Six consumer rights: safety, information, choice, be heard, seek redressal, and consumer education.

Product liability lies against a manufacturer or seller for defective goods or deficient services causing harm.

Unfair contract terms and misleading advertisements are actionable; the CCPA can order recall, refund and penalty.

E-commerce transactions are covered; rules require disclosure of seller details, return policy and grievance officer.

A complaint may be filed by the consumer, a registered consumer association, or the Central/State Government in the public interest.

Entrepreneur is a person who organises factors of production, bears risk and introduces innovation for profit.

Functions: idea generation, arranging finance, employing and managing people, marketing, and bearing uncertainty.

Entrepreneurship is the process of setting up and running an enterprise; self-employment means earning by one's own enterprise rather than a wage.

Qualities commonly cited: initiative, risk-taking, self-confidence, perseverance, and ability to spot opportunity.

Business plan elements: product or service, market, competition, operations, finance, and projected profit.

Sources of finance for small ventures: own savings, friends and relatives, bank loans, and government schemes such as PMEGP and Mudra.

MSME classification uses investment and turnover limits; micro, small and medium enterprises get concessional credit and subsidies.

Startup India and Standup India support new ventures; a startup is a new entity working on innovation or scalable business.

Primary functions of a commercial bank: accepting deposits and lending; secondary functions include agency and general utility services.

Deposit types: savings, current (no interest, meant for business), fixed or term deposit, and recurring deposit.

RBI is the central bank: issues currency, acts as banker to government and banks, controls credit and regulates the banking system.

Credit control tools: bank rate, repo rate, reverse repo, CRR and SLR, and open market operations.

Insurance is a contract of indemnity for most general insurance; life insurance is not a contract of indemnity but of assurance.

Principle of insurable interest, utmost good faith, indemnity, contribution, subrogation and proximate cause govern insurance.

Types: life, fire, marine (the three traditional branches) and others such as health, motor and crop insurance.

Banking Ombudsman handles complaints against banks free of charge after the bank's own grievance redressal fails.

Sectors: primary (agriculture, mining), secondary (manufacturing), tertiary (services); India's GDP is dominated by the tertiary sector.

Business environment includes economic, social, political, legal, technological and natural factors, both internal and external.

1991 economic reforms: liberalisation, privatisation and globalisation (LPG), with removal of industrial licensing for most sectors.

NITI Aayog replaced the Planning Commission in 2015 as a policy think tank; Five-Year Plans ended with the 12th Plan.

Make in India, Skill India, Digital India and Startup India are schemes affecting business conditions.

GST, introduced in 2017, replaced multiple indirect taxes with one destination-based tax on supply.

Globalisation increases foreign trade, investment and competition; it also raises risk from external shocks.

Business must comply with laws such as Companies Act, Factories Act, Consumer Protection Act and environmental rules.