UPMSP High School Commerce cheat sheet

Sole proprietorship: one owner, unlimited liability, no separate legal entity; registration is not compulsory, so the business and owner are one in law.

Partnership (Indian Partnership Act, 1932): minimum 2 partners, maximum 50; a minor may be admitted only for the benefits of the firm, with liability limited to his share.

Company (Companies Act, 2013): private company needs minimum 2 members and 2 directors; public company needs minimum 7 members and 3 directors; liability is limited to shares held.

Cooperative society follows one member, one vote regardless of capital contributed, and is registered under state cooperative societies laws, not the Companies Act.

Line organisation gives unity of command with clear authority flow; line-and-staff adds specialists who advise but do not command line workers.

Functional organisation (Taylor) splits supervision by specialism, so a worker may receive orders from several foremen; this violates unity of command.

Span of control: narrow span gives tall structures with many levels; wide span gives flat structures with few levels and shorter communication chains.

Maslow's hierarchy order: physiological, safety, social, esteem, self-actualisation; a lower need must be reasonably satisfied before the next motivates.

Henry Fayol's 14 principles include division of work, authority and responsibility, unity of command, scalar chain, and esprit de corps.

Accounting equation: Assets = Liabilities + Capital; every transaction keeps this equality intact.

Double-entry rule: debit the receiver and credit the giver for personal accounts; debit what comes in and credit what goes out for real accounts; debit expenses/losses and credit incomes/gains for nominal accounts.

Trial balance totals must agree; a difference is posted to a Suspense Account until the error is located.

Errors of principle (e.g., capital expenditure debited to Wages) and errors of complete omission do not disturb trial balance agreement.

Depreciation straight-line method: (Cost − Scrap value) ÷ Useful life; written-down value method applies a fixed percentage to the reducing book value each year.

Bank reconciliation: balance as per cash book + cheques issued but not presented − cheques deposited but not credited = balance as per pass book (adjust for interest and charges).

Closing stock appears on the credit side of the Trading Account and as a current asset in the Balance Sheet.

Gross profit = Sales − Cost of goods sold; net profit = Gross profit + Other incomes − Indirect expenses.

Capital expenditure creates a long-term asset; revenue expenditure is charged to the Profit and Loss Account in the year incurred.

Simple interest = P × R × T ÷ 100; compound amount = P(1 + R/100)^n, so compound interest is the amount minus principal.

Percentage change = (New value − Old value) ÷ Old value × 100; a rise then equal fall does not return to the original value.

Mean of grouped data = Σfx ÷ Σf, where x is the class mid-value; median class is the one whose cumulative frequency first reaches N/2.

Mode of grouped data = L + [(f1 − f0) ÷ (2f1 − f0 − f2)] × h, with L the lower limit of the modal class and h its width.

Arithmetic mean is affected by extreme values; median and mode are positional averages and resist outliers.

Standard deviation is the positive square root of variance; a larger SD means greater dispersion around the mean.

Index number = (Current year price ÷ Base year price) × 100; a simple aggregative index uses ΣP1 ÷ ΣP0 × 100.

Correlation coefficient lies between −1 and +1; zero indicates no linear relationship, not necessarily independence.

Break-even quantity = Fixed cost ÷ (Selling price per unit − Variable cost per unit).

Law of demand: other things equal, quantity demanded rises as price falls; the demand curve slopes downward.

Price elasticity of demand = Percentage change in quantity demanded ÷ Percentage change in price; demand is elastic when the value exceeds 1.

Law of variable proportions: in the short run, adding more of a variable factor to fixed factors eventually yields diminishing marginal returns.

Internal economies arise from a firm's own growth; external economies arise from the growth of the whole industry or locality.

Money performs primary functions (medium of exchange, measure of value) and secondary functions (store of value, standard of deferred payment).

Commercial geography links production to location: iron and steel near coal and iron ore, cotton textiles near raw cotton and humid climate, ports near trade routes.

Balance of trade compares goods exported and imported; balance of payments includes goods, services, and capital flows.

Primary sector extracts, secondary sector manufactures, tertiary sector provides services; economic development shifts employment toward tertiary activities.

Reserve Bank of India (1935) is the central bank: it issues currency, acts as banker to government and banks, and controls credit through repo, reverse repo, CRR, and SLR.

Commercial banks accept demand deposits (payable on demand, no interest) and time deposits (fixed period, interest paid).

Cash Reserve Ratio is the share of net demand and time liabilities kept as cash with RBI; Statutory Liquidity Ratio is held in approved liquid assets.

Cheque crossing (two parallel lines) directs payment through a bank account; an account-payee crossing further restricts payment to the named payee.

Life insurance is a contract of indemnity-free assurance paying a sum assured on death or maturity; general insurance indemnifies actual loss up to the sum insured.

Principle of insurable interest requires the insured to gain from preservation and lose from destruction of the subject matter.

Utmost good faith obliges the proposer to disclose all material facts; non-disclosure can make the policy voidable.

SEBI regulates the securities market; IRDAI regulates insurers; these are financial regulators, not commercial banks.

A bill of exchange is a written unconditional order to pay a sum on demand or at a fixed future date; a promissory note is an unconditional promise to pay.

Entrepreneur performs four functions: risk-bearing, organising, innovating, and decision-making; profit is the reward for risk-bearing.

Small Scale Industry classification under MSME uses investment in plant and machinery (manufacturing) or equipment (services) plus annual turnover thresholds.

A business plan covers product, market, competition, operations, management, finance, and risk; the financial section projects cash flow and break-even.

Sources of finance: own capital, bank term loans, trade credit, retained earnings, angel/venture capital, and government subsidy schemes.

Working capital = Current assets − Current liabilities; it funds day-to-day operations and differs from fixed capital used for assets.

Market segmentation divides buyers by geography, demography, psychography, or behaviour to target a specific group.

A partnership deed records profit-sharing ratio, capital contribution, duties, and dispute settlement; oral partnership is valid but hard to prove.

Break-even point is where total revenue equals total cost; sales beyond it generate profit, sales below it generate loss.

Small businesses gain flexibility and personal service but face limited capital, weak bargaining power, and dependence on few customers.

Consumer Protection Act, 2019 defines a consumer as one who buys goods or hires services for consideration, including online and e-commerce buyers.

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

Three-tier redressal: District Commission, State Commission, and National Commission, with pecuniary jurisdiction set by the Act as amended.

A complaint may be filed within two years from the date the cause of action arises; delay may be condoned on sufficient cause.

Product liability lets a consumer claim compensation from a manufacturer or seller for defective goods or deficient services.

Indian Contract Act, 1872: a contract needs offer, acceptance, consideration, capacity, free consent, and lawful object; a contract without consideration is generally void.

A minor's agreement is void ab initio; a contract caused by coercion, undue influence, fraud, or misrepresentation is voidable at the aggrieved party's option.

Sale of Goods Act, 1930: a condition is essential to the contract's main purpose; a warranty is collateral, and breach of warranty gives damages only.

Consumer can approach consumer commissions, civil courts, or arbitration; the Consumer Protection Act provides a summary, low-cost remedy.