UPMSP High School Commerce flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Sole proprietorship liability

The owner has unlimited liability, meaning personal assets can be used to pay business debts. The business has no separate legal identity, and registration is not compulsory in India.

Private company minimum members

Under the Companies Act, 2013, a private company requires at least two members and two directors. Its shares cannot be offered to the general public.

Unity of command

Fayol's principle that each employee should receive orders from only one superior. Violating it creates confusion and divided responsibility in the organisation.

Span of control

The number of subordinates a manager can effectively supervise. A narrow span creates a tall structure; a wide span creates a flat structure with fewer levels.

Maslow hierarchy order

Needs ascend as physiological, safety, social, esteem, and self-actualisation. A reasonably satisfied lower-level need stops motivating behaviour, and the next level becomes active.

Accounting equation

Assets equal liabilities plus capital. Every transaction changes at least two elements while keeping this equality intact, which underlies double-entry book-keeping.

Suspense account

A temporary account opened to carry forward the difference in a trial balance when errors are not immediately located. It is closed once the errors are found and corrected.

Straight-line depreciation

Annual depreciation equals cost minus scrap value, divided by useful life. The same amount is charged every year, so book value falls evenly.

Bank reconciliation statement

A statement explaining the difference between the cash book bank balance and the pass book balance, caused by cheques in transit, unpresented cheques, interest, and bank charges.

Closing stock treatment

Closing stock is credited in the Trading Account to reduce cost of goods sold and shown as a current asset in the Balance Sheet. Opening stock is debited in the Trading Account.

Compound interest formula

Compound interest equals P(1 + R/100)^n minus P, where n is the number of conversion periods. Interest is added to principal each period before the next calculation.

Median of grouped data

Find the class where cumulative frequency first reaches N/2. Median = L + [(N/2 − cf) ÷ f] × h, with L the lower limit and h the width.

Price elasticity of demand

Percentage change in quantity demanded divided by percentage change in price. Demand is elastic when the value exceeds one, inelastic when below one, unitary at exactly one.

Standard deviation

The positive square root of variance, measuring average dispersion of values from the mean. A larger value indicates that observations are more spread out.

Break-even quantity

Fixed cost divided by contribution per unit, where contribution is selling price minus variable cost per unit. At this quantity total revenue equals total cost.

Law of demand

Other things remaining equal, quantity demanded rises when price falls and falls when price rises. This inverse relationship gives the downward-sloping demand curve.

Balance of payments

A systematic record of all economic transactions between residents of a country and the rest of the world, covering goods, services, income, and capital flows.

Internal versus external economies

Internal economies arise from a firm's own expansion, such as specialisation and bulk buying. External economies arise from industry or locality growth, such as skilled labour pools and better transport.

Cash Reserve Ratio

The share of a bank's net demand and time liabilities that must be kept as cash with the Reserve Bank of India. It is a quantitative credit-control tool.

Insurable interest

The insured must benefit from the continued existence of the subject matter and suffer loss from its destruction. It must exist at the time of the contract or of loss.

Utmost good faith

Both parties must disclose all material facts honestly. Non-disclosure or misrepresentation of a material fact can make an insurance contract voidable by the insurer.

Crossed cheque

Two parallel lines on the face of a cheque mean it cannot be paid over the counter. Payment must be credited to a bank account of the payee.

Bill of exchange

A written, unconditional order signed by the maker, directing another to pay a stated sum on demand or at a fixed future date to a named person or bearer.

Working capital

Current assets minus current liabilities. It funds day-to-day operations such as stock and receivables, unlike fixed capital used to buy long-term assets.

Business plan essentials

A written document covering product, market, competition, operations, management, finance, and risk. Its financial section projects cash flow, funding needs, and break-even.

Entrepreneurial risk-bearing

The entrepreneur accepts uncertainty about future returns and bears possible loss. Profit is treated as the reward for this risk-bearing function in business organisation.

Market segmentation

Dividing a market into groups of buyers with similar needs by geography, demography, psychography, or behaviour, so that a small firm can target a specific segment.

Consumer Protection Act 2019

Indian law protecting buyers of goods and services, including online buyers. It provides three-tier redressal commissions and recognises rights such as safety, information, and redressal.

Condition versus warranty

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

Minor's agreement

Under the Indian Contract Act, 1872, an agreement with a minor is void from the beginning because a minor lacks capacity to contract. A minor cannot ratify it on attaining majority.

Consumer complaint limitation

Under the Consumer Protection Act, 2019, a complaint should be filed within two years of the cause of action. A later complaint may be admitted if sufficient cause is shown.

Product liability

A manufacturer or seller can be held liable to compensate a consumer for harm caused by defective goods or deficient services, as provided under the Consumer Protection Act, 2019.