UPMSP High School Commerce key terms

A business owned and controlled by one person, who bears all risks and receives all profits, with unlimited liability and no separate legal identity.

A business relationship between two or more persons who agree to share profits and losses, governed by a partnership deed, with unlimited liability unless registered as an LLP.

A voluntary association of persons registered under the Companies Act, having a separate legal entity, perpetual succession, and limited liability for its shareholders.

The principle that a shareholder's financial risk is capped at the unpaid amount on their shares, protecting personal assets from company debts.

A condition where the owner or partner is personally responsible for all business debts, risking personal assets beyond the capital invested.

The total amount of money raised by a company through the issue of shares, divided into units called shares, representing ownership in the company.

A written acknowledgment of debt issued by a company, carrying a fixed rate of interest and repayable after a specified period, without voting rights.

The funds required for day-to-day operations, calculated as current assets minus current liabilities, ensuring smooth running of business activities.

A method of book-keeping where every transaction has two aspects-debit and credit-recorded in separate accounts of equal amount, ensuring the accounting equation stays balanced.

The book of original entry where transactions are recorded chronologically with narration, before being posted to ledger accounts.

A book containing all accounts in a classified form, where journal entries are posted to determine balances of each account.

A statement listing debit and credit balances of all ledger accounts on a particular date to test the arithmetical accuracy of books.

A financial statement showing the assets, liabilities and capital of a business at a specific date, reflecting its financial position.

The systematic allocation of the cost of a fixed asset over its useful life, reflecting wear and tear, passage of time or obsolescence.

An estimated amount set aside from profits to cover debts that may become irrecoverable, created by debiting profit and loss account.

Amounts owed by customers that are considered irrecoverable and written off as a loss in the profit and loss account.

A statement prepared to reconcile the cash book balance with the bank passbook balance, identifying causes of difference such as cheques issued but not presented.

A subsidiary book that records all cash and bank receipts and payments, serving as both journal and ledger for cash transactions.

A book maintained under the imprest system to record small, routine expenses, with a fixed amount advanced to the petty cashier.

A record maintained by a bank showing all deposits, withdrawals and charges in a customer's account, used to verify the cash book balance.

Interest calculated only on the original principal for the entire period, using the formula SI = P × R × T / 100.

Interest calculated on the principal plus accumulated interest from previous periods, resulting in interest on interest, computed as A = P(1 + R/100)^n.

A measure of central tendency calculated by dividing the sum of all observations by the number of observations, also called arithmetic average.

The middle value of a data set arranged in ascending or descending order; for an even number of observations, it is the average of the two middle values.

The value that appears most frequently in a data set, useful for categorical data and identifying the most common item.

The principle that, other factors remaining constant, quantity demanded of a good falls when its price rises and rises when its price falls, showing an inverse relationship.

A measure of the responsiveness of quantity demanded to a change in price, income or price of related goods, calculated as percentage change in quantity divided by percentage change in price.

The principle that, other things being equal, quantity supplied of a commodity rises with an increase in its price and falls with a decrease, showing a direct relationship.

The study of the spatial distribution of economic activities, resources and trade, explaining how location and environment influence production and commerce.

The apex monetary institution, such as the Reserve Bank of India, responsible for issuing currency, controlling credit and regulating the banking system.

A financial institution that accepts deposits from the public and lends money to businesses and individuals, also providing services like overdraft and remittance.

A bank account meant for businesses, offering no interest but unlimited withdrawals and overdraft facility, suitable for frequent transactions.

A deposit account for individuals earning modest interest, with restrictions on the number of withdrawals per month, encouraging thrift.

The rate at which the central bank lends short-term funds to commercial banks against government securities, used as a tool of monetary policy.

A contract in which one party agrees to compensate another for specified losses in exchange for a premium, based on the principle of risk pooling.

The periodic amount paid by the insured to the insurer to keep an insurance policy in force, calculated based on risk and coverage.

A financial stake that the insured has in the subject matter of insurance, such that loss or damage would cause monetary loss, essential for a valid contract.

The process of identifying opportunities, mobilising resources and taking calculated risks to start and manage a new business venture.

A manufacturing or service enterprise with investment in plant and machinery below prescribed limits, enjoying government support and simplified compliance.

A written document outlining a business's objectives, target market, operational strategy, financial projections and funding requirements, used to guide and secure finance.

A law enacted to safeguard consumers against unfair trade practices, defective goods and deficient services, providing redressal through consumer commissions.

The entitlements of buyers, including the right to safety, information, choice, be heard, seek redressal and consumer education, as recognised by law.

A deceptive or fraudulent business practice, such as false advertising or misleading representation, that harms consumers and is prohibited under consumer law.