Category: Commerce Notes PPT

A contract can be defined as an agreement validated by law under Section 2(h) of the Indian Contract Act, I872. According to Section 2(e) of the Act, an agreement is “every promise and every set of promises forming consideration for each other.” It also creates and defines several obligations between the two parties. All the conditions enforcing the validity of a contract are mentioned under Section 10 of the Act.

Contracts can be of different types, including unilateral, bilateral, contingent, voidable, express, implied, executed, and executory contracts. It can be broadly classified based on quasi-contract.  On the other hand, contracts can be either unilateral, bilateral, executed, or executory based on their performance and executions. When it comes to contract validity, it can be void, voidable, valid, unenforceable, or even illegal.

Different Types of Contracts Based on Performance

A contract specifies all the terms on which both the parties had mutually agreed while agreeing. Until the expiry or termination of that contract, neither party contracts are allowed to defy the terms. They are bound to perform and abide by the contract provisions.

Here are the different types of contracts classified on a performance basis:

Executed Contracts

This is a type of contract where both the parties involved in the contract have fulfilled their respective obligations as specified in the agreement. Executed contract meaning is when an agreement has been carried out exactly how it was supposed to be carried out. In such contracts, the parties have fulfilled their promises and also performed their duties soon after entering the contract.

Buying and selling of goods or services usually fall under the category of executed contracts. Here, there is hardly any trouble regarding the date of execution because these contractual duties are fulfilled instantly.

Executory Contracts

This is a kind of contract where both the parties in a contract are yet to perform their respective obligations and duties. Executory meaning is the contractual promises and agreements made between the people are to be carried out sometime in future. Thus, it also has time agreements or deadlines mentioned in the contract.

A lease can be cited as an example of an executed contract. In a lease, the specified conditions cannot be fulfilled immediately. They are performed and fulfilled over a stipulated time. Both executed and executory contracts are performance-oriented classifications of a contract. However, one requires immediate fulfillment of duties while the other has eventual fulfillment of duties.

There is also something called ‘partly executed and partly executory contract’. In such contracts, one party has already fulfilled his share of duties while the party will have to perform his obligation after a certain period.

Executory contracts can again be divided into types based on the presence and performance of the parties included. These are unilateral and bilateral contracts.

Difference Between Bilateral and Unilateral Contract

Bilateral and unilateral contracts can be said to be two different types of contracts based on execution.

As the name itself denotes, these are one-sided contracts. In such contracts, only one party vows to perform a duty. The agreement is then open to anyone who wishes to vow the same and enter into the contract. A unilateral agreement is, however, complete only when one of the parties fulfills the promise.

A unilateral contract is a one-sided agreement in which one party promises to do something while the other does not follow through immediately. The opposing party, on the other hand, will act in the future. Contests are one example of unilateral contracts.

Furthermore, after the acting party fulfills the agreement’s promise, the other party is obligated to follow suit because the promise is now enforceable. The unilateral contract will be breached if the side does not behave as promised.

Suppose, a person has announced a reward of Rs.1000 for anyone who finds him his lost puppy. Here, a unilateral offer is formed where only this person is in the contract initially. When someone finds the puppy and hands it over to that person, he is bound to pay him the reward. Once this is done, the unilateral contract is fulfilled.

These are two-sided or mutual contracts. Unlike a unilateral one, the bilateral contract definition is a dull subject. In these contracts, the promises made by both parties are yet to be fulfilled. One promise is exchanged for another promise in this agreement. Owing to its mutuality of obligation, bilateral contracts are also called reciprocal contracts.

To put it in easy language, this is the most common and simple type of contract. Many personal and business contracts can be categorized under bilateral contracts. As the name suggests itself, a bilateral contract is a two-way contract resulting from the exchange of reciprocal promises. A counter-promise accepts an offer in the form of a promise. 

Any contract of sale where a certain seller sells a product and the buyer pays the purchase price is an example of a bilateral agreement. Such agreements are often a source of legal complications known as bilateral mistakes. It happens when both the parties involved in a contract misunderstand the terms and operate on incorrect information.

The sale of a car to a friend is another classic example. You offer to buy your friend’s car for suppose USD1400 while talking to them, and they accept. There are two pledges in this section, making the agreement bilateral. The first promise is that in exchange for the money, the car would be provided. The friend’s second promise is to supply the funds in exchange for the car. As a result, both sides must follow through on their promises.

For any statistical analysis of large amounts of data, it is not always possible to evaluate every element. In such cases, several approaches are made to simplify data measurement to cope with limited resources. One of the most common methods used for analyzing and measuring data on a large scale is Sampling. There are various types of Sampling and Sampling methods used in statistical analysis. 

What is Sampling?

Sampling is a type of method used in a statistical analysis where a selected number of elements are taken from a comparatively more extensive population. The idea and work process behind taking a sample from a more significant population depends on the type of statistical analysis being conducted. 

In simple terms, it is a statistical process that concerns the predetermined elements of a specific data set that facilitates further analysis and inferences about that entire group. 

For Example:

If any vaccine is made for the betterment of health conditions then it is important to test it first, to check its side effects and advantages. The test cannot be held on every single person hence what is possible is to take individuals from each state to test that vaccine so that effects according to place can be determined.

Why is Sampling Important?

In the case of a large population, gathering data about every single element can be time consuming and expensive. A population is defined as a whole or a mass, which involves all elements and their characteristics for studying a particular data set.

 

With the help of Sampling, an arbitrary section of a population is taken as a sample for analysis. It helps analysts to make inferences about an entire population quicker than the manual observation strategy. 

So, for statistical analysis of a large population, it is a common practice to take a sample. Thus, Sampling makes the study much more efficient and cost-effective, thereby showcasing its importance in statistics. 

There are different types of Sampling techniques, each applying a unique strategy to gain knowledge about a broad set of near homogeneous elements. 

Different Types of Sampling Methods

Sampling methods can be broadly categorized into two types – random or probability Sampling methods and non-random or non-probability Sampling methods.

 

Random or probability Sampling methods can be further subdivided into 2 types, i.e. restricted or simple random Sampling and unrestricted random Sampling. 

Restricted random Sampling can be further classified as systematic Sampling, stratified Sampling, and cluster Sampling. 

Meanwhile, non-random or non-probability Sampling consists of 3 types : judgment Sampling, quota Sampling, and convenience Sampling. You can get a clear understanding of the various methods of Sampling and its types from the illustration below –

Restricted Random Sampling

• Systematic Sampling

• Stratified Sampling

• Cluster Sampling

Non-Random Sampling

• Judgment Sampling

• Quota Sampling

• Convenience Sampling 

Random or Probability Sampling 

Among the different types of Sampling in statistics, random or probability Sampling method deserves mention. In the case of random or probability Sampling methods, every individual element or observation has an equal chance to be selected as samples. 

In this method, there should be no scope of bias or any pattern when drawing a selected group of elements for observation.

As per the law of statistical regularity, a random or probable sample of an adequate size which has been taken from a large population tends to have the same features and characteristics as those of the entire population as a whole. 

In a population of 1000 people, each person has a one-in-a-thousand probability of being selected for a sample. Random Probability Sampling restricts population bias and ensures that all individuals of the population have an equal opportunity of being included in the sample.

Random or Probability Sampling can be broken down into 4 types, they are –

1. Unrestricted or Simple Random Sampling

Such type of Sampling is done with the random number generator technique.  It is also termed as unrestricted random Sampling for its lack of predeterminants in picking a sample from a population. 

It is considered the most reliable method as individuals are chosen randomly which is why there is a chance for everyone to get selected for the Sampling process. This works in a manner like suppose in an office if there is a team-building activity then the HR can conduct a chit selecting activity through which every employee will get a chance to take part in that activity.

Thus, simple random Sampling is also called unrestricted random Sampling. This method has two types of procedures, samples drawn with replacements and without replacements.

2. Systematic Sampling

Systematic Sampling falls under the category of restricted random Sampling, which means that it is not purely random. Samples are taken when elements meet certain criteria.

In the case of systematic Sampling, the entire population is arranged in a specific order. Then, every nth element of that population is selected as a sample. 

This Sampling method is used by researchers to select samples of members of a selected community at regular periods. It is necessary for this method that the choice of sample and the sizing be done properly so that it can be used again when needed. This method has a predetermined range which is why it is the least time-consuming. 

For example, for evaluating the marks in language subjects of all the students of standard 6, every 5th student’s mark sheet is selected as a sample. Here, n = 5. 

3. Stratified Sampling

In this method of statistical analysis, the whole population is segregated into multiple homogenous groups or strata. From each stratum, samples are picked at random.

For example, if measuring the number of winter clothes with hoodies in a garment store, firstly all clothes might be separated as men’s, women’s, and kids’ and then random hoodies picked from each group act as samples for analysis.

4. Cluster Sampling

For cluster Sampling, the whole population is divided into clusters and then selected as samples. These samples are divided multiple times into smaller fractions until the sample size is reduced to a state that is reasonable for statistical analysis. That is why it is also known as multi-stage Sampling. 

Based on demographic criteria such as age, sex, location, and so on, clusters are found and included in a sample. This makes it very easy for a survey developer to extract useful results from the research.

For example, departments of a business can be clusters as well as the number of roads within a city. 

In case of a non-probability sample, the elements and observations from a broader population are selected based on non-random criteria. So, each element of a population does not possess equal chances of being in a sample. 

However, in the case of such a sample, it is not possible to make a valid judgment on the whole population. Researchers use this kind of Sampling method to develop an initial understanding of a small or semi-analysed population. 

But, there are times when non-probability Sampling is far more valuable than the other type, such as during the basic stages of study or while performing research on a budget.

In qualitative research which is related to exploring, non-probability Sampling methods are widely used. The goal of this form of research is to get a thorough understanding of a tiny or not researched community, rather than to test a sample of a large population that has been researched many times.

Such methods are mainly of 3 types based on the choice of element selection, which are judgment Sampling, quota Sampling, and convenience Sampling. 

Sampling Errors

Sampling error is a type of statistical error, which differentiates the analysis of samples with the actual value of the investigated elements and observation of a population. There are different types of Sampling errors, among them the important ones being biased and unbiased errors. 

The magnitude of both types of Sampling errors can be reduced by drawing a bigger sample.

How to control Sampling Error?

Statistical theories assist researchers in calculating the intuition of Sampling errors based on sample size and population. 

The amount of the Sampling error is mostly determined by the size of the sample taken from the population. Larger sample sizes are related to reduced error rates. 

To understand and analyze the amount of error, researchers use a statistic known as the margin of error. A confidence level of 95 per cent is usually considered to be the normal level of confidence.

Ways to Reduce Sampling Errors?

Sampling errors are simple to spot. To reduce sample error, one should:

Increase the Size of the Sample: A larger sample size has a more accurate conclusion because the study is more related to the actual population.

Instead of a random sample, divide the population into groups and test groups based on their size in the population. For example, if a given place makes up 20% of the population, make sure this fact is included in the study.

Know the Basics: Examine your population and learn about its population. Know who uses the product or service and make sure to only target the right people.

At , we offer other study materials on Class 11 Commerce Topics. Make sure to visit our official website to join our fun and interactive online tutoring experience!

Vocabulary forms an integral part of the process of reading and readers’ comprehension. It refers to the words needed for communicating effectively. It implies receptive vocabulary and expressive vocabulary. Receptive vocabulary refers to the words that we hear and read while expressive vocabulary implies the words that we speak and write. It is rightly said that without vocabulary, it is not possible to convey anything. A broader idea of vocabulary is discussed below.

Vocabulary Definition

Vocabulary is denoted as “the group and collection of words that are known and used by a particular person”. It can also be defined as “a list or collection of words or phrases that are normally alphabetically arranged and defined or explained”.

Vocabulary is also commonly called wordstock, lexis, and lexicon.

Importance of Vocabulary

Vocabulary is an essential part of anyone’s life and the following points describe the importance of vocabulary.

1. Vocabulary is critical for communication and expression

2. Vocabulary forms the basis of reading comprehension

3. Linguistic vocabulary and thinking vocabulary work parallel

4. Vocabulary also forms a basis for judgment many times

5. For conveying anything, vocabulary is important

What is Vocabulary in English?

The answer to ‘what is vocabulary in English?’ is all the words that form a language to be understood by a specific person or maybe a group of people. Vocabulary in English can be categorized into two types, namely- active and passive. The words that we use and understand in day-to-day language are termed as active vocabulary while the ones which we know but use rarely are said to be passive vocabulary.

Three Tiers of Vocabulary

Vocabulary is described with the following three tiers:

1. Basic Vocabulary

The basic words form the first tier of vocabulary. These words normally have a single meaning and do not require instruction. Early reading words, sight words, adjectives, verbs, nouns, etc are portrayed in this tier. 8000-word families in English comprise this tier.

2. High-frequency Vocabulary

Also called the multiple meaning vocabulary tier, this tier comprises words used in a variety of domains, adult communication, literature, etc. It influences reading and speaking. 7000-word families comprise this tier. The characteristics for tier two words are as follows:

• It has multiple meanings

• Vital for reading comprehension

• Typical mature language

• Descriptive vocabulary

• A diverse environment use these words

• Used for direct instruction

3. Low-frequency Vocabulary

The words that are used only when specifically required or in a particular domain like weather, technology, geographical region, occupation, hobbies, school, etc. comprise this tier. About four lakh words in vocabulary in English comprise this tier.

Types of Vocabulary

The types of vocabulary can be categorized based on spoken and written vocabulary. Children start vocabulary-building through listening and speaking even before writing and reading. Every type of vocabulary has a different aim and purpose. However, the development of one type of vocabulary facilitates another.

The types of vocabulary are discussed below briefly.

1. Listening Vocabulary

Listening vocabulary comprises words that we understand through hearing. A fetus may start recognizing some words when in the womb. Learning new words is a continuous process, and by the time you reach adulthood, almost fifty thousand words are understood and recognized by you. Deaf people can be exposed to visual listening vocabulary for learning.

2. Speaking Vocabulary

Speaking vocabulary consists of words that we actually speak. It has a horizon of around 5000 to 10000 words. These are used for giving instructions and conversations. The number of words in this category are comparatively lesser than the listening vocabulary.

3. Reading Vocabulary

The major ingredient of vocabulary building is reading. Reading grows and develops your vocabulary. The words we get to learn while reading a text are termed as reading vocabulary. It may happen that we understand words through reading vocabulary even if we don’t use it in speaking vocabulary.

4. Writing Vocabulary

Words we recoup while expressing ourselves through writing are termed as writing vocabulary. Writing vocabulary is normally influenced by the words we are able to spell. We find it easy to express verbally, through facial expression, or intonation, but writing vocabulary depends upon our expertise in vocabulary.

5. Final Vocabulary

Richard Rorty discovered this term ‘Final Vocabulary’. It is a collection, set, or group of words that every person applies to justify their actions, beliefs, and lives. Final vocabulary comprises words a person avails to praise, contempt, express deep feelings, hopes, doubts, etc.

Ways to Improve Your Vocabulary 

Students can adopt several ways to improve their vocabulary. A few important ways to improve vocabulary are given here:

• Develop a Reading Habit: Students can improve their vocabulary if they develop a reading habit. It is easy to improve vocabulary when they come across new words while reading a novel or a newspaper article. They can add new and unfamiliar words to their list. 

• Dictionary and Thesaurus: Students can use online dictionaries and thesauruses for improving vocabulary. They can find synonyms to the words that are far better than the words used by them. Dictionaries can help students to learn about root words, related words, and antonyms.

• Word Games: Word games such as scrabble are useful for students to expand and enhance their vocabulary. Students can note down the important words that they learn while playing the game and can use them in their writing. 

• Flashcards: Students can use flashcards to learn different words. There are many smartphone apps that can help students to make flashcards and they can make a number of words everyday to increase their vocabulary.

• Use new Words in Conversation: Students must try to use new words in their conversation. They can use the words that they learn from reading or while watching TV in their conversation to remember them.

Conclusion

People struggle with vocabulary due to lack of instruction, learning strategies, poor memory skills, or learning disabilities. Response to Intervention program (RTl) assists in vocabulary-building.

Learning and exploring new words and then applying them in different contexts improves your communication skills. Always keep learning antonyms, synonyms, connotations, idioms, phrases, and keep reading various books to develop your vocabulary.

What is a Non-profit Organisation?

Non-profit organisations can be defined as an organisational setup which functions mainly to promote welfare in the society. Mostly, these organisations set up as charitable institutions and operate to render service to society. Notably, these organisations may generate revenue through their course of operations, but it is not their ultimate objective.

Typically, the members of a non-profit organisation elect trustees who are entrusted with the managerial responsibility of the organisation. Usually, such organisations raise funds from the general public and also from their members to meet their objectives. 

Let’s quickly check out the characteristics of non-profit organisations to become more familiar with their fundamental aspects.

Characteristics of Non-profit Organisations

Main Features are as Follows –

1. Motive

Non-profit organisations operate with the motive of public service and not profit generation. Typically, such organisations extend services for free or at negligible cost. Education, healthcare, food, clothing, recreation, shelter, etc. are some examples of services extended by such organisations.

2. Member and Management

Since they operate as trusts or charitable societies, their subscribers are their members. Generally, the executive committee is responsible for their functioning and are elected by the organisation’s members. 

3. Income Source and Revenue

Donations, legacies, subscriptions, grants, returns on investments, etc. are among their sources of income.  The surplus thus accumulated is usually distributed among the organisation’s members.

4. Access to Accounting Information

Existing, prospective contributors and statutory bodies can access accounting information of a non-profit organisation.

With that being said, let’s now proceed to check the accounting for non-profit organisations.

Accounting Treatment of Non-profit Organisations

Maintaining non-profit making organisation accounts is vital as it enables trustees to understand their financial needs and devise ways to lower unwarranted expenses.

Since these organisations are not involved with the process of manufacturing and sale of goods and service, they do not maintain a Trading or Profit and Loss Account. Regardless, they tend to credit all their receivable funds to their General Fund Account or Capital Fund. These organisations also have to maintain stock registers to record their consumables, fixed assets and also prepare a final account.

As per law, these organisations are required to maintain a record of all their assets, liabilities, income and expenses so that the government can monitor their grants accordingly. Also, the organisations are accountable to both their members and contributors and must provide information as and when required. Additionally, all these records come in handy for curtailing the risk of embezzlement and fraud. 

Components of Final Accounts

Final accounting for not for profit organisation include these –

1. Receipt and Payment Account or Cash Flow Statements

It serves as a summary of the non-profit organisation’s all bank and cash transactions. Furthermore, it comes in handy for the preparation of both Income and Expenditure Account and Balance Sheet.

2. Income and Expenditure Account

In practice, it is similar to an organisation’s Profit and Loss Account and helps to identify surplus or deficit accurately. It helps to keep track of the changes in its net assets, which further helps to compare the organisation’s aggregate of income, expenses, gains, etc. in a particular fiscal year.

3. Statement of Financial Standing

Typically a balance sheet shows shareholder or owner’s equity, which represents the net worth of the organisation. Since there is no owner in case of a non-profit organisation, their balance sheet is known as the statement of financial position. 

It is formulated in the same manner a profit-making organisation expresses its balance sheet. The only difference lies in the fact that after liabilities are subtracted from total assets; the remainder is termed as net assets. This represents non-profit organisations’ net worth and can be further divided into – permanently restricted, temporarily restricted and unrestricted net worth. 

Test Your Knowledge: Premdaan is a non-profit organisation which works for the betterment of orphans and street children. The organisation provides them with food, clothing and basic education. List down their main sources of income and also highlight the procedure of accounting for not-profit organisations.

Let’s check out the fundamental differences between financial statements accounting for non-profit organisations and profit organisations.

Both profit and non-profit organisations rely on several statements and reports to track their earnings.  

Enroll at ’s live online classes to learn more about accounting for non-profit organisations. Also, check out our compact study materials to get all your doubts and queries cleared and to pick the best techniques of solving challenging problems easily. You can also check our study solutions for other related concepts from our online learning portal.

Download and install App on your device now!

Agriculture Diversification refers to either a change in cropping pattern or the farmers opting for other non-farming options like poultry farming, animal husbandry, etc. This practice allows farmers to expand the production, which helps generate a higher level of income. 

Changing a cropping pattern implies the Diversification between food and non-food crops, conventional crops and horticulture, high value and low-value crops, etc. 

After the emergence of Golden Revolution (1991-2003), diversification has started to flourish rapidly across the country,

Types of Diversification

There are mainly two types of agricultural diversification prominent in India. They are: 

1. Horizontal Diversification – This relates to multiple cropping or mix of crops instead of cultivating a single crop. Horizontal Diversification is especially useful for small farmers who hold a small piece of land. This allows them to earn more by escalating cropping intensity. 

2. Vertical Diversification – It refers to the incorporation of industrialisation along with multiple cropping. In this kind of Diversification, farmers take a further step and invest in activities like horticulture, agroforestry, livestock rearing, culture of aromatic plants, etc. 

Major Features of Diversification

• Introduction of multiple or mixed cropping systems. 

• Shift from sole agricultural activities to other allied enterprises like fishery, forest products, poultry and other non-agriculture sectors.

By every means, Diversification in agricultural activities proves to be extremely beneficial for small farmers to increase their incomes. 

Reasons for Agricultural Diversification

The demand for high-value crops is increasing in India, and this paves the way for farmers to experiment with several cropping combinations. Apart from that, some other reasons make diversification an excellent choice for small and marginal farmers of India.

These include:

• Climate Change – Diversification reasonably controls the damage that can occur from the unfavorable weather condition. This process safeguards the farmers from the loss of crops in such a situation. 

• Facilitate Several Employment Alternatives – Almost half of the employment of India revolves around the agriculture sector. Diversification creates new job opportunities for rural people other than traditional farming. 

• Increases of Income – Opting for Diversification will undoubtedly increase the income and will let the farmers live a comfortable life. 

• Exportation – Diversification, especially of non-farming products, makes a sizable export provision for its unique characteristics. India is now on the front line in exporting several agricultural products to multiple countries. This contributes to the overall growth of the economy. 

Along with this, you can also read about the Agricultural Revolution of India and how that impacted this essential sector of the country. 

Benefits of Diversification

The benefits of employing Diversification are mentioned below.

• Since multiple crops can be harvested from a small field, the production increases ten-fold, which ensures a substantial amount of income. 

• The agriculture sector is already crowded in India; therefore, it makes provision for additional employment in rural areas. 

• The importance of crop diversification lies in the fact that it effectively increases soil fertility and controls pest incidences. 

• The boost in rural employment impacts the overall economy of the nation, as agriculture in India falls into the primary sector of the country. 

Kinds of Non-farm Employment in Rural Areas

The scope for employment in non-farm sectors in India is immense. Some of these are listed below. 

1. Livestock – It includes breeding, raising and nurturing the pastoral animals for food or raw material (like meat, milk, wool, skin, etc.) that can be used for commercial purposes. It provides livelihood to over 70 million rural farmers. Livestock is also used by farmers as an instrument in a farm for transport and carrying agricultural inputs, and animals like cows are used in the field for conventional plowing methods. 

2. Horticulture – Horticulture refers to the cultivation of garden crops like fruits, flowers, vegetables, etc. India is a significant exporter of different fruits like bananas, mangoes, sugarcane, etc. across the globe. This sector employs almost 19% of the country’s workforce. 

3. Fisheries – It involves catching, sorting, selling and distributing fishes, prawns, oysters, crabs and other marine and fresh-water fishes. The coastal states like Orissa, Andhra Pradesh, Maharashtra, Tamil Nadu, and Kerala are the key regions to supply fishes across the country and export to other countries. This sector contributes to 1.9% of Indian GDP. Since mostly women are employed in this sector, the scope for women empowerment in the field is prominent. 

4. Dairy – In this industry, cattle like cows, goats, buffaloes, and sheep are reared for milk. The process comprises collecting, preserving and distributing the milk and its by-products like butter, raw-milk powder, ghee, etc. 

Impact of Diversification

• Increase in production of high-value crops.

• Better livelihood for farmers and instrumental for lowering the poverty level.

• Scopes for varied employment.

• Empowerment of women.

• Sustainable water usage.

Do your research on the high-value crops (HVC) cultivated in India and how it contributes to the economical growth of the country.  

Almost 43.21% of people are associated with Agriculture in India, making it one of the most vital service sectors of the nation. Also, the possibilities and scopes are unlimited in Agricultural Diversification in India using advanced farming apparatus.

To know more about farming and its allied topics, go through the study materials available on our website today! Also, check out ’s app for an integrated learning experience.

• Read Agricultural Diversification – Meaning, Types, Features, Benefits u0026 Impact on

• This page needs to be gone through well to understand the material that’s there

• Write notes using your own words

• Do not include everything from the page

• Keep your sentences brief

• Highlight all the crucial portions using a coloured pen

• Use drawings to better understand all the subtopics

• Revise from these before sitting for an exam on the same

In general terms, Authority is all about power. Responsibility is the commitment to fulfilling work. Accountability refers to the Responsibility to answer for duty. These terms hold deep meaning and are equally vital in management. These terms showcase the basic etiquette of management. Without Authority, a manager cannot assign work to the staff and oblige them to do the work. This will lead to a mismanaged work structure with zero output. Without holding anyone accountable, an organization cannot function entirely. An individual requires to be answerable for any work. This piece is all about Authority, Responsibility, and Accountability and how Authority differs from Accountability and Responsibility.

 

Introduction:

It might seem easy to work in an organization but managing it? Well, that takes a lot more than just working on the tasks and submitting them on time. It needs three main factors so that an organization goes on smoothly. The three main factors that are needed to be followed are Authority, Responsibility, and Accountability. Without these three factors, it might have been a mess inside any organization.

These three factors are also important for the employee and the superior to complete their tasks. If these factors are not exercised well, the employee will slack out and not work on their tasks and hence leading to a pile of work in no time. Students will now get to understand all about the Authority, Responsibility, and Accountability – Explanation and Solved Examples through while also being able to prepare for exams.

Authority

Definition of Authority in Business:

Authority is all about rights or powers with the managers which the organization empowers them for achieving a common organizational goal. Thus, it involves the power of assigning duties to workers and asking them to accept and pursue the assigned work. An organization can never stand without ethical assignment and detailing Authority. 

 

According to Henry Fayol, Authority is the power to give orders and garner obedience. Authority streams downwards as the board of directors provides it to executives and managers at various management levels.

 

Responsibility

According to McFarland, Responsibility is the duties or responsibilities allocated to a position or executive. Responsibility is the obligation that comes with a job. It simply means the person needs to commit to the job and complete it. It is their Responsibility to finish the task in a given time frame. Also, it shows that the Authority was well implemented and the task is completed accordingly. 

 

Beneath this, an individual is qualified to delegate the task to associates but not to definitive Accountability.  This means that even if the person has the power to transition the work, he/she will still be held responsible for the task. Responsibility flows from bottom to top and is in the form of constant obligation.

 

Accountability 

McFarland defines Accountability as, “the obligation of a person to register formally to their senior executives about the task to discharge the Responsibility.” Accountability definition in management goes, “It is all about the liability created to handover the Authority”. Accountability makes an individual answerable about the task or job he/she has done. 

 

Hence, it makes an employee answerable for the performance of the assigned work. An individual who has accepted Authority, he/she deems to approve Accountability and Responsibility at that time itself.

  

Authority, Responsibility and Accountability: Disparities

Authority, Responsibility, and Accountability are important parts of management and have distinct characteristics. However, there is a relation between these three terms but differs from each other in business terms.

 

Authority is the power delegated by senior executives to assign duties to all employees for better functioning. Responsibility is the commitment to fulfill a task given by an executive. Accountability makes a person answerable for his or her work based on their position, strength, and skills.

 

Responsibility is task-specific, every individual in a team can be responsible for an assigned task to complete a project. Accountability arises after an incident has happened regarding the work. It is the way to establish ownership of the results

 

Solved Examples

Q. What are the Key Differences Between Accountability and Responsibility?

Ans: Despite having many similarities, Accountability and Responsibility differ in management. Their distinct characteristics separate both in the business world.  Responsibility can be shared by many, you can work with a team to divide responsibilities. Whereas Accountability is specific to an employee or person based on their position, skill-set, and strength.

 

Even in bad times, true leaders stand by the results and own the whole incident.

 

Fun Facts

• Authority is delegated from senior executives to subordinates.

• Authority flows from top to bottom.

• Responsibility streams from bottom to top.

• Responsibility is swift whereas Authority is long-lasting.

Tips on How to be Accountable:

To be accountable the following tips must be considered:

1. Talk about the risks that are being noticed in the team. Assess the risks and check whether you are willing to accept these or change the strategies.

2. Take part in the decision-making process and check whether there are any details that you have skipped while forming the strategies.