Business and Management Fundamentals: Accounting, Finance, Marketing, and Organizational Behaviour
Business and Management Fundamentals tests the vocabulary and basic mechanics of how organizations record money, make financial decisions, market products, and manage people. Expect definitions, short calculations, and applied judgment rather than advanced theory.
Core rules
- Accounting equation. Assets = Liabilities + Equity. Every transaction keeps it balanced. Debit and credit are equal and opposite entries, not good and bad.
- Financial statements. The income statement shows revenue minus expenses over a period; the balance sheet shows assets, liabilities, and equity at a date; the cash-flow statement explains changes in cash. Profit is not the same as cash.
- Break-even. Contribution per unit = selling price − variable cost. Break-even units = fixed costs ÷ contribution per unit. Each unit beyond that adds contribution to profit.
- Marketing mix. The classic 4Ps are product, price, place, and promotion; services add people, process, and physical evidence. Product life cycle: introduction, growth, maturity, decline.
- Organizational behaviour. Span of control is the number of subordinates reporting to a manager. Herzberg separates hygiene factors from motivators; Maslow arranges needs hierarchically.
Worked example
A firm has fixed costs of Rs 60,000, a selling price of Rs 50, and variable cost of Rs 30 per unit. Contribution per unit = 50 − 30 = Rs 20. Break-even units = 60,000 ÷ 20 = 3,000 units. At 3,000 units, total contribution is Rs 60,000, exactly covering fixed costs and giving zero profit. At 4,000 units, profit is 1,000 × 20 = Rs 20,000. Dividing fixed costs by selling price is wrong because it ignores variable cost.
Traps
- Treating owner's drawings as a business expense.
- Confusing gross profit (sales − cost of goods sold) with net profit (after all expenses).
- Counting the 4Ps as five or six items.
- Assuming a low price is always the best marketing strategy.
Exam focus
Memorize the accounting equation, the break-even formula, and the 4Ps. For OB, learn one definition and one example for each theory.