Maharashtra HSC Organisation of Commerce and Management cheat sheet

Commerce covers trade (buying and selling of goods and services) plus auxiliaries that support trade: transport, banking, insurance, warehousing, advertising and communication.

Industry = production/extraction of goods (primary, secondary, tertiary); Commerce = distribution of goods and services; the two together form business activity.

Primary industry: extractive (mining, fishing, agriculture) and genetic (breeding, poultry); Secondary: manufacturing, construction, processing; Tertiary: services.

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

Business objectives split into economic (profit, market share, growth, innovation) and social (employment, consumer satisfaction, community welfare, environmental protection).

A profession requires specialised knowledge, formal training, a service motive, an association, and a code of conduct; employment is contractual work under an employer.

Business risk is the possibility of loss due to uncertainty; it is unavoidable, shared by owners, and increases with the scale and time horizon of operations.

Human activities divide into economic (business, profession, employment) and non-economic (social, religious, cultural, charitable); only economic activities aim at earning a livelihood.

Business finance sources split into owner's funds (equity share capital, retained earnings) and borrowed funds (debentures, loans, bonds); equity capital is permanent but carries risk.

Short-term finance (up to 1 year): trade credit, bank overdraft, cash credit, commercial paper, factoring; medium-term (1-5 years): loans, leases, hire purchase; long-term: shares, debentures, retained earnings.

Fixed capital is needed for land, buildings, and machinery; working capital is needed for current assets such as stock, debtors, and cash.

Gross working capital = total current assets; net working capital = current assets minus current liabilities.

Debenture holders are creditors who receive fixed interest; equity shareholders are owners who receive dividends only when profits permit.

Internal trade: wholesale (bulk purchase, links producer and retailer) and retail (sale to final consumers); retail formats include departmental stores, chain stores, and mail order.

External trade documents: indent, proforma invoice, trade discount, letter of credit, bill of lading, shipping bill, mate's receipt, and certificate of origin.

Types of external trade: import, export, and entrepot; export promotion measures include duty drawback, export credit, and special economic zones.

Banking and insurance are trade auxiliaries: banks finance trade and insure goods against risk in transit; warehousing stores goods until sale.