Category: Commerce Notes PPT

Economies of scale may be defined as the cost advantages that can be achieved by an organisation by the expansion of their production in the long run. Therefore, the advantages of large scale expansion are known as Economies of Scale. The lower average cost per unit achieves the advantage in cost. 

Economies of Scale are a long term concept that is achieved when there is an increase in the sales of an organisation. Due to the lowering of production cost, the organisation can save more and invest it in buying a bulk of raw materials which can again be obtained at a discount. 

These are the benefits of Economies of Scale. When there is a massive expansion in an organisation, the cost per unit may increase with the increase in output. Diseconomies of Scale may arise due to internal issues resulting from technical, organisational, or resource constraints. 

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Types of Economies of Scale

The Economies of Scale may be divided into two categories-

 1) Internal Economies 

2) External Economies.

Internal Economies: Internal Economies are the real economies that arise from the expansion of the organisation. These economies are the result of the growth of the organisation itself.

External Economics: External Economics are the economies that originate from factors outside the organisation. These economies result in the increase in the main organisation by the increase in the quality of factors outside the organisation like better transportation, better labour, infrastructure, etc. Due to the betterment of these external factors, the cost of production per unit of an item in the organisation decreases. 

Types of Diseconomies of Scale

Similar to the Economies of Scale, Diseconomies of Scale is of two types- Internal Diseconomies of Scale and External Diseconomies of Scale.

Internal Diseconomies of Scale: Internal Diseconomies of Scale are the Diseconomies resulting from the internal difficulties within the organisation. The Internal Diseconomies are the factors that raise the cost of production of an organisation like lack of supervision, lack of management and technical difficulties.

External Diseconomies of Scale: External Diseconomies of Scale are the external factors that result in the increase in the production per unit of a product within an organisation. The external factors that act as a restrain to expansion may include the cost of production per unit, scarcity of raw materials, and low availability of skilled labours.

Solved Examples

Q1. What are the Factors which differ between Internal and External Economies of Scale?

Answer: Economies of Scale are of two types, namely Internal and External Economies of Scale. Internal Economies of Scale originate from internal factors within the organisation. The Internal Economies of Scale are the internal factors that can be controlled by the organisation to lower the cost of production. 

On the other hand, External Economies of Scale are the external factors that affect the cost of production per unit. The External Economies of Scale are the factors that reduce the cost of production. Unlike internal Economies of Scale, the External Economies of scale cannot be controlled by the organisation. They include factors like the availability of highly skilled labour, tax reductions, partnerships, etc. any factor that can reduce the cost of production per unit.

Examples of Internal Economies

Technical Economies of Scale: This occurs when an organisation invests in modern technology which helps in lowering the cost of production. It enables an organisation to produce a large number of goods in a lesser period.

Financial Economies of Scale: This occurs when large organisations take a loan with a low rate of interest. The banks easily give them loans since they have good credibility. 

Managerial Economies of Scale: This occurs when large organisations employ people with a special skill set that helps to maximize the profits of the organisation like an accountant or manager.

Marketing Economies of Scale: This occurs when large organisations increase their budget. They can then spread their market by setting up branches or buying more raw materials in bulk at a lower price.

Cournot Dilemma

It has also highlighted that in several industrial areas there exist several enterprises with varying sizes and organizational structures. This conflict, among the actual data and the conceptual opposition among economies of scale and competitiveness, has been termed the ‘Cournot dilemma’.  Whereas the study is expanded, including the issues involving the growth of information and the structuring of interactions, it is possible to infer that economies of scale do not necessarily result in dominance. In reality, the comparative benefits resulting from the growth of the firm’s competencies and from the administration of dealings with suppliers and consumers might offset those supplied by the scale. Thereby it neutralizes the inclination to a monopoly implicit in economies of scale. 

In other words, the variability of the organizational forms and of the size of the firms functioning in a field of business can be decided by variables concerning the reliability of the goods, the manufacturing flexibility, the contractual methods, the educational opportunities, the heterogeneity of choices of clients who convey a distinguishable requirement with respect to the reliability of the product, and aid before and after the sale. Such as, for instance, flexible production on a large scale, small-scale adaptable production, mass production, industrial production predicated on strict technologies affiliated with flexible organizational systems and related artisan production.

Solutions to Diseconomies of Scale

Approaches to the diseconomies of scale for large organizations may entail separating the corporation into smaller groups. This can either occur by consequence when the firm is in financial problems, sells off its successful sections, or closes down the remainder. It can also happen intentionally if the management is willing. To prevent the adverse consequences of diseconomies of scale, a business must keep to the lowest average production cost. It must strive to detect any external diseconomies of scale. Furthermore, on obtaining the lowest average cost, a business must either extend to other nations to generate demand for its products or explore new markets or manufacture new items that do not conflict with its original products. Nevertheless, neither of these activities would definitely eradicate connectivity and management challenges commonly associated with huge firms.

A comprehensive examination and redesign of business operations, in order to minimize complication, can offset diseconomies of scale. This allows for greater productivity. Better management systems and more effective supervision of labour and activities can decrease costs.

The holder of a negotiable instrument may sign his or her name on the back of that instrument, which replicates the transfer of title or ownership of that negotiable instrument, this process is termed as an endorsement. An endorsement can be done by keeping another individual or an entity in a favorable position. Thus, we can say that an endorsement helps in the transfer of the property to another individual or a legal entity. In this context, we will know about the types of endorsement of instruments done in the legal world. 

An Endorser and an Endorsee

In an act of endorsement, there are mainly two persons – Endorser and Endorsee who initiates the act overall. 

The person to whom the instrument is being endorsed is known as the endorsee. While the person who is making the endorsement is known as the endorser. 

Types of Endorsement

An endorsement is basically of two sorts:

1. The Endorsement in Blank 

2. The Endorsement in full

As indicated by Section 16 of the Negotiable Instrument Act, 1881, if the endorser signs his name just, the underwriting is supposed to be in the clear, and on the off chance that he adds a heading to pay the sum referenced in the instrument to, or to the request for, a predetermined individual, the Endorsement is supposed to be in full, and the individual so determined is known as the endorsee of the instrument. There are some different sorts which are established, however, not well known, which are given underneath. 

There are six types of endorsement. These are applicable for endorsement in banking and various types of endorsement cheques: 

•  Blank or General Endorsement.

• Full Endorsement or Special Endorsement.

• Conditional Endorsement.

• Restrictive Endorsement.

• Partial Endorsement.

• Facultative Endorsement. 

In the following section, we are going to discuss each endorsement in detail. 

Blank or General Endorsement

An endorsement is supposed to be blank or general endorsement when the endorser puts his unmistakable just on the instrument and doesn’t compose the name of anybody to whom or to whose request the installment is to be made. 

 

Full Endorsement or Special Endorsement 

A special Endorsement or full Endorsement is when the endorser, notwithstanding his mark, additionally notices the name of the individual to whom or to whose request the installment is to be made. There is a heading added by Endorsement to the individual indicated called the endorsee of the instrument who presently turns into its payee qualified to sue for the cash due on the instrument. 

 

Conditional Endorsement 

The restrictive endorsement is an arrangement that produces results on the occurrence of an expressed occasion, or not something else. Segment 52 of the Negotiable Instrument Act 1881 gives the endorser of a debatable instrument may, by express words in the Endorsement, reject his own risk subsequently, or make such obligation or the privilege of the endorsee to get the sum due consequently rely on the occurrence of a predetermined occasion, albeit such occasion may never occur. Where an endorser so prohibits his risk and a short time later turns into the holder of the instrument, all intermediates endorsers are obligated to him.

 

Restrictive Endorsement 

Restrictive Endorsement tries to end the chief qualities of a Negotiable Instrument and seals its further debatability. This may sound somewhat unordinary, yet the endorsee is especially inside his privileges on the off chance that he so signs that its resulting move is limited. This forestalls the danger of unapproved individuals acquiring installment through misrepresentation or falsification and losing their cash. 

 

Partial Endorsement

An endorsement is supposed to be a partial endorsement when the endorser indicates to move to the endorsee, just an aspect of the sum payable. In straightforward terms, support which permits moving to the endorsee an aspect of the sum payable is known as halfway underwriting.

 

Facultative Endorsement 

Facultative Endorsement is an underwriting where the endorser defers some privilege to which he is entitled. For instance, the endorsee is subject to pull out of disrespect to the endorser, and typically inability to pull out will vindicate the endorser from his risk.

To master Business Communication Skills, it is very important to be flawless and error-free. For that, we might need to acquire some basic business communication codes that will be your gateway to take your business to new pinnacles.

As the business is now growing digitally, giving a chance to get recognition throughout the world, it is vital to have a command over World International Language, i.e. English to compete and pace with the challenges posed by the 21st century.

Being competent and fluent in English is going to open various pathways for you and the growth of your business or company. One cannot stress enough on the advantages of brushing up our English Skills and as to why it is an essential element to work first thing on for the entrepreneurs. Due to the increase in international exposure, good English plays a vital role in the presentation of a person’s personality. 

To make your way into the world a slightly more comforting, here are all the topics that one should have a virtuoso on! We shall discuss the essentials of English grammar as well as the importance of fluent English.

Choice of Words

One of the most obvious and yet difficult to master phenomena is choosing the right and appropriate words while addressing any thought or idea to an audience. It seems so fundamental and straightforward, but is still not everybody’s cup of tea! 

The kind of words we choose reflects our personality and our overall intentions. It can create wrong perceptions in case of the wrong choice of words but excellent ideas and whereas, it may do wonders in case of the right of choice of words picked that plays around the magic and scores you a credit!

It also reflects your style of expression. One should always remember that the words chosen shall be-

Six Principles of Word Choice

1. Choose Understandable Words

2. Use Specific, Precise Words

3. Choose strong words

4. Emphasis positive words

5. Avoid Overused Words

6. Avoid Obsolete Words

Selecting the right words is necessary to prevent hostile events or the ones which might cripple you and your company’s reputation in situations when the message delivered is not understood properly. Thus, appropriate and adequate choice of words is important to prevent misunderstandings, awkwardness, faulty impact, false perception etc. Don’t be stuck with questions like how can I be good in English. Rather, practice well and you can get a hands-on the language.

Homonyms

Homonyms are the words that have the same or similar spellings or pronunciations but with different meanings and make the English language even more interesting and for some, confusing and difficult!

Thus, it is an important aspect to learn these to avoid any kinds of awkward situations in the professional world.

Types of  Homonyms

Synonyms and Antonyms

If you are familiar with a thesaurus, i.e. the dictionary of synonyms and antonyms of all the words, it is fair to say that you might have a good command over English!

Synonyms 

Synonyms are the words or phrases that have the same or similar meanings in the context of the same language as any other word. For example, the synonyms of the word ‘good’ in the English language are great, nice, pleasant, etc.

Antonyms

Antonyms are the words or phrases that mean opposite to any given word in the same language. 

Parts of Speech

The most essential and fundamental of grammars is known as Parts of Speech. Every word can be classified into the following eight categories that are called the Parts of speech. 

These eight fundamental pillars are-

•  Noun-

• Nouns are names of people, things, places or ideas. 

• Nouns are further classified into-

1. Proper Nouns- Specific names, starts with Capital Letter.

2. Common Nouns- Generic names which can start with small letters.

3. Abstract Nouns- Names of ideas or emotions

4. Collective Nouns- names of unions or groups, things which can be counted together.

5. Possessive Nouns– Words with an apostrophe (‘) attached to them to show possession of something to that noun.

6. Compound Nouns- When two nouns come together, they are known as Compound Nouns.

• Pronoun-

• Words that replace any noun are called pronouns.

• For example- I, her, she, them, theirs, they, etc.

• Verb- 

• Adverb-

• Adjective-

• Adjectives describe the nouns or pronouns in a sentence.

• They are usually used to beautify any sentence.

• They can be in the form of quality or shape or size or number.

• Conjunction-

• Preposition-

• Prepositions act like connectors.  

• They join different elements of a sentence and define their relationships.

• For example- with, to, from, on, in, beneath, between and so on.

• Interjection-

Tenses

Tenses express the time of the verbs. They help in understanding whether an event has happened in the past, is happening right now or will happen in the future.

Tenses can be Broadly Classified into-

• Past Tense – This tense is used to refer to something that happened in the past.

• Present Tense – This tense is used to refer or indicate something that occurs in the present or is occurring while being spoken or written.

• Future Tense – This tense is used to refer to or indicate something that hasn’t happened at the time of speaking or writing but is indicative of happening in the near future. 

These Three are further Associated with-

Accumulating all of the above, our tenses in English can be classified into 12 categories. 

Sentence Structuring

Framing the sentence in the correct grammatical structure is the most important thing when conveying your message in English.

It can either create your image or diminish it! There is a standard set by the grammar to structure the sentences in a beautiful and meaningful form. 

Sentences are Created to-

• Make a statement

• Pose a question

• Give a command

• Make an exclamation

All Sentences are divided into-

• Subjects and

• Predicates  

Subject-

In a sentence, a subject acts like a ‘Who’ or ‘What’. It comprises a person or thing that carries out a ‘Verb’ or an ‘Activity’.

Predicate-

In a sentence, the activity or ‘Verb’ which is carried out by the ‘Subject’ or person or thing is called a Predicate. It also describes the Subject. 

Sentences are structured by bringing together different parts of speech in a variety of patterns.

Spelling & Pronunciations

• Spelling- 

• It refers to a proper and adequate arrangement of letters to form a meaningful word. 

• Though spellings can be learned and guessed based on pronunciations, that’s not always the case.

• COMMON ERRORS-

1. ‘ei’ and ‘ie’ 

2. Repetition of alphabets or letters in a word like Tomorrow. 

3. Including extra alphabet in a word can change its meaning, like to and too.

4. Be careful while retaining and dropping the letter ‘e’—for example- whole & wholly, sincere & sincerely.

5. Words that have the same pronunciation but with different spellings. For example- principle & principal.

6. Use of the letter ‘z’ and ‘s’.

Prefixes & Suffixes

Prefix- letters or group of letters added to the starting of any word. For example- organized or reorganized, production or reproduction.

Suffix- letters or group of letters added to the end of any word. For example- resentful, forgetful, forgetfulness. 

Punctuations

Punctuations beautify our expression and way of speaking or writing. Adequate and correct use of punctuation can be very effective to leave our message in the right form. 

Types of Punctuation-

Abbreviations

Abbreviations are short forms or shorter versions of long words and lengthy phrases. Their use is easy and convenient.

Types of Abbreviations–

• Acronyms- It is formed from the first letters of a multi-word term, name or phrase. Example- NASA, RAM, PIN

•  Initialisms- Examples- FBI, CEO, USA, UFO

• Shortenings- Rhino, Doc, App, Ad

• Contractions- Dr., Mr., Govt, I’ve

Idioms & Phrases

Idioms and Phrases are the most interesting tool to make our message or content creative and glueing. 

Idioms- These are a collection of words or phrases which have a figurative meaning that is generally well established and known. 

Phrases- Phrases are a small group of words that make a unit that is a part of a bigger sentence. 

There are broadly eight types of phrases-

• Noun

• Verb

• Infinitive

• Gerund

• Appositive

• Participial

• Preposition

• Absolute

Proverbs

Proverbs are expressions or traditional sayings which are metaphorical in nature and advocate truth. It explains the truth or principles. They have universal use.

All organizations, commercial or non-commercial, face the need to address regulatory issues. Like other administrative functions, the need for control arises in order to maximize the use of rare resources and achieve meaningful behavior for members of the organization. In the planning phase, management determines how resources will be used to achieve organizational goals; in the control phase; managers try to visualize that resources are being used in the same way as planned.

Thus, control eliminates the entire management system. One-time control is needed so that the best plans can go wrong. But control also helps managers monitor environmental changes and their effects on organizational progress. Given the pace of change in the organizational environment in recent years, this aspect of control has grown exponentially.

In simple word it is the process of comparing the actual performance with the standards set by the company to make sure that activities are performed accordingly, if not, then take appropriate measures to correct them. Controlling is one of the important functions of management.

Definition

Robert N.Anthony states that “Management control is the process by which managers assure that resources are obtained and used effectively and efficiently to accomplish the organizational goals”.

Concept

The process of Controlling verifies that the tasks allotted to the employees are performed on time. It also ensures that the activities are carried out as per the plans and strategies. 

Controlling leads back to the first function in the management cycle which is planning, revising and taking proper measures if activities are happening incorrectly. It is executed at all levels in the organization.

Different types of control

There are three different types of control:

• Feedback Control: Gathering information on finished activity, assessing it, and enhancing such efforts in the future are all part of this procedure.

• Real-time control is another name for concurrent control. Before any loss occurs, it investigates any problem and takes appropriate action. The control chart is an example.

• Feedforward control: This type of control can help predict problems before they happen. As a result, action can be made ahead of time to avoid a situation like this.

In today’s ever-changing and complex world, controlling is a crucial part of every firm.

Features and Characteristics of Control

The purpose of control is to create positive effects on both the organizational and individual levels. At the organizational level, it aims to achieve organizational goals. At the individual level, control strives to increase productivity and make individuals more profitable. Therefore, control has a good purpose in every way.

1. Control is a Management Function:

In management, there are various functions like planning, directing, staffing, organizing and controlling. Controlling is one of the essential functions without which all other functions are rendered meaningless.

2. Control is Embedded at each level of the Hierarchy:

All managers follow the practices of control management to accomplish their tasks and keep a check on their reporters to ensure the attainment of goals. Although control exists at every level, it differs, for example, the top management involves strategic control, middle management in tactical control and lower management in operational control.

3. Control is a Continuous Activity:

Controlling is not a single time activity but instead a continuous process that involves a timely review of performances and results in corrective action.

4. Control is both Backward and Forward-Looking:

We compare the performance with the standards which are set during the planning and processing. The past data or activities are used for the analysis of deviations, hence control is backwards-looking. Control is also related to the future as past activities cannot be controlled. The data analyzed is used to take corrective measures in the future.

5. Control is Closely Linked with Planning:

Planning and Controlling are closely linked and run hand in hand. Planning sets the action course while controlling keeps track of it. If there is any deviation in the course, controlling helps to find errors and design new strategies to get it back on track. The findings from the process of controlling act as an input to the planning process.

6. Control is Related to Results:

The assessment of progress is based on the results. Any deviation from the required results control has to be incorporated to take corrective actions.

Controlling Measures

There are three steps to control:

1. Establishment of Standards:

The first step in management is to control the Standards, which are the standards set by an organization in which performance should be directed. They are available to the organization’s objectives based on what is measured. Standards may be set in various areas of the organization such as production, marketing, sales, personal development, profit and so on.

2. Performance Measurement and Comparison:

Once the levels are set, the next step is to measure actual performance and compare the levels required to find any deviation. If there is a fraud, your reason must be found. The final report from this step contains the deviation and its causes which will be referred to the team which will take the necessary remedial action.

3. Corrective Actions When Deviations Occur:

The last step in control is to take steps to correct the deviation. Deviations are first investigated and appropriate action should be taken. The reason for the deviation may be errors in the levels that need to be reviewed and adjusted.

Steps in Controlling

There are three steps in controlling:

1. Establishment of Standards:

The first step in control management is establishing standards.

Standards are the paths that are planned by the organization towards which the performance has to be directed. They are obtained from the objectives of the organization based on which performances are measured. Standards may be set for different areas of the organization such as production, marketing, sales, personality development, profitability and so on.

2. Measurement and Comparison of Performance

Once the standards are set, the next step is to measure the actual performances and compare them with the desired standards to find any deviations. If there are deviations, then the reason for it must be found. The end report from this step consists of deviations and their causes which will be forwarded to the team who will be taking further necessary corrective actions.

3. Corrective Actions when Deviations Occur

The final step in controlling is taking corrective actions for deviations. The deviations are first investigated and appropriate actions have to be taken. The reason for deviations could be the flaws in standards that have to be revised and changed.

Importance of Control

The following are some of the factors that contribute to the importance of control:

Since managers at all levels of the organization are supposed to be in control, the process of control leads to the division of countries. This enables middle and lower-level managers to be independent in decision-making. An organization that distributes authority at all levels is always effective and efficient.

By empowering all managers to have independent decision-making, management improves their management skills. With these skills, managers can further the goals of their organization by adapting to different situations and problems. In addition, this also helps managers to grow and develop at each level by providing them with new information.

The most important function of control is to compare actual performance with expected results. This, in turn, helps managers understand where they are lacking and how they can improve their operations. By using this information, administrators can use all available resources efficiently and prevent damage to them.

In all business organizations, managers and employees should always communicate and work collaboratively. Control enhances this integration by basically separating all activities and efforts into fixed boundaries. It integrates all the resources of the organization and enables its employees to work together in a concerted effort.

Since all organizations have to rely on people to operate, they need to control the human behavior of their employees. Control regulates this human behavior and prevents employees from behaving recklessly and negatively. It does this by imposing sanctions if employees do not meet the expected ethical standards. For example, managers often take disciplinary action against employees who take unauthorized leave.

A good control system can always greatly enhance the efficiency and effectiveness of an organization. It usually does this by identifying flaws in the organization’s performance and suggesting ways to improve. Managers use control to achieve their goals in this way.

Importance of Control in Management 

Control measures the progress of organizational goals and accentuate deviations, if any, and lays out the basis for corrective measures. It ensures that the organizational goals are on track.

Wastage and spoilage of resources are reduced. For example, in damage control, the defective products are examined and the production will be modified to reduce errors and produce error-free products and thereby reducing further wastage of materials. Thus it ensures that resources are used in the most effective and efficient manner.

The management will be able to verify whether the standards set by the organization are accurate. According to the changes in the environment, the standards can be reviewed and revised by exercising control.

When standards are set by the organization, employees will know beforehand as to what is expected from them and perform accordingly, based on their performance, they will be appraised. When control is practised to check the tasks, the performances will be better and so will be the appraisals which in turn will motivate the employees.

Controlling keeps a close check on the employee’s activities and ensures the activities are performed honestly. It fosters a sense of discipline and order in the organization.

At every level in the management, the activities of the subordinates will be checked and coordinated by the managers which lead towards the accomplishment of organizational goals.

Limitations of Control Management

The organizations do not have control over the changes in the external environment for example changes in technology, competition and changes in consumer requirements. 

Employees tend to oppose certain control procedures because it may limit their freedom. For example, time tracker machines or CCTVs may not be accepted by all employees.

It gets difficult to measure performance because standards cannot be defined quantitatively which arise due to different problem areas such as human behaviours, employee morale and job satisfaction.

Controlling incurs a lot of expense, time, and effort hence gets costlier. It must be ensured by the management that the cost involved in running a control system should not exceed the benefits gained from it.

One of the main aims of the field of accounting is to ensure that a proper and systematic record is kept of certain financial transactions. These records are supposed to be communicated to different stakeholders, which in turn helps the company in the best way. So, in order to properly communicate these pieces of information, there are certain statements that are made by the parties. These are known as Financial Statements. With the help of our notes, students will be able to gain knowledge about Financial Statements meaning and much more.

An Overview of Financial Statement

To put it in simple words, a financial statement can be defined as a systematic and properly organized way of representing certain financial data that is collected. These are the statements that help in representing the performance of the company from a financial perspective in the best way. Also, it helps in determining the fiscal positions of the business too. When we talk about financial statements, we tend to refer to these basic features.

What is a Balance Sheet?

In the field of financial accounting, the balance sheet definition can be given as a summary of different financial balances that an organization or a person can have. This could be a sole proprietorship, a corporation, a business partnership, a private company, a non-profit organization, or a government operation. Students can find out more about the Balance sheet meaning from the chapter.

What is Trial Balance?

Most students often want to find out the Trial Balance meaning and we are here to provide that information. The trial balance definition can be given as a worksheet in bookkeeping which can be used to determine the entire balance of all the different ledgers. These are compiled properly into the credit and the debit accounts in total. Any company would be preparing a trial balance at a certain period of time in order to keep track of the balance.

After learning about the balance sheet statement, students need to know the cash flow statement meaning and the definition of the income statement. Here we are providing both.

What is a Profit and Loss Statement or Income Statement?

Another one of the main questions that students often have is regarding the income statement definition. Well, the income statement or profit and loss statement can be defined as one of the examples of a major financial statement that tends to represent the revenues and the expenses that are done by the company in a particular period of time. The profit and loss statement is also responsible for determining how these revenues are then transformed into certain net profit or net income.

What is a Cash Flow Statement?

Here is another common question that students have to answer in the examinations regarding the financial statements. Most students want to know the cash flow statement definition. Well, in terms of financial accounts, we can define the cash flow statement as the statement which shows different changes that occur in the balance sheets and the accounts. Also, it depicts the effect of income in the cash as well as the cash equivalents. A cash flow statement can also be helpful in breaking down the analysis when it comes to operating, financing, and investing in certain activities.

Having knowledge of financial statement definition is extremely important for students these days. With the help of the notes which depict the income statement meaning and the profit and loss account meaning, students can aim for good marks in the examination. These notes are carefully created by experts and hence have all the information that one might need to gain in-depth knowledge on the subject.

After knowing the profit and loss definition along with the other financial statement, it is time for students to know some other terms such as financial reporting. When it comes to financial reporting meaning, it can be defined as the way that helps the company in making certain reports of the financial conditions in the best way.

What is an Expenditure Statement Definition?

The Expenditure Statement is basically a statement that can help in determining the expenditure which is done by a business, company, person, or corporation.

In a bigger market area like our country, there can operate many different types of Market. India is a country of varied types of people, with different tastes and styles, and hence entering in Indian market results in a varied outgrowth. Thus, different forms of the market find the best place to thrive in our country.

There are many markets where exists a large number of buyers and a lesser number of sellers. Incredibly! there is also a large number of sellers while a single buyer! We will study these amazing markets in this content. Without further ado let us delve into the forms of market.

Introduction of the Market Structure

The market is introduced as a structure that is for the societal benefit of the society. The market structure consists of various forms of market, the forms are characterized according to the nature and the degree of competition that exists in the market for the goods and services. The structure of the market both for the goods market and the service or the factor market is to be judged by the nature of competition that is prevailing in a particular type of market.

The Market form is a state that is resultant for the quality or the effectiveness of market competition that is prevailing in the market.  There are seven main market forms:

• Perfect Competition

• Monopolistic Competition

• Monopoly

• Monopsony

• Natural monopoly

• Oligopoly

• Oligopsony.

What is the meaning of Market?

A market can be defined as a place where two parties can gather, which will facilitate the exchange of goods and services. The parties that are involved are usually the buyers and sellers. A market is a physical form like a retail outlet, where the sellers and buyers can meet face-to-face, or in a virtual form like an online market, where there is an absence of direct physical contact between the buyers and sellers.

‘Market’ is a term used in many instances like the securities market or the normal physical market where the people come together for the procedure of buying and selling.

Forms of Market in Economics

The variety of market structures characterizes an economy. These market structures essentially refer to the degree of competition in a market.

The other determinants of market structures include the nature of the goods and product, the number of sellers, the number of consumers, the nature of the product or the services, economies of scale, etc. Let us discuss the basic types of market structures in any economy.

1. Perfect Competition

In a perfect competition type of market structure, there is a large number of buyers and sellers, where each of them is competing against each other. There is no big or influential seller in the market. Hence the sellers in this market are known as price takers.

2. Monopolistic Competition

This competition is a realistic scenario. In monopolistic competition, there are a large number of buyers as well as sellers. But the difference is that they all do not sell homogeneous products. The products are similar but all sellers sell differentiated products. The sellers here can charge a marginally higher price as they enjoy a dominant position in this form of market structure.

3. Oligopoly

In an oligopoly structure, few firms are existing in the market. In this type of market structure, the buyers are far greater than the sellers. The firms in the case of Oligopoly, either compete with another or collaborate. They use their market influence to set the prices and then maximize their profits. So, here the consumers become the price takers. In an oligopoly, there are various barriers to entry into the market, and new firms find it difficult to establish their foothold in this type of market structure.

4. Monopoly

In a monopoly type of market structure, there is a single seller, here this single seller means the single firm will control the entire market structure. It can set any determined price of its wishes since it has all the market power under its dominance. The consumers do not have any alternative to paying the price set by the seller.

Monopolies are the most undesirable form of market structure. Here the consumer loses all their power and thus the market forces become irrelevant. However, a pure monopoly is rather rare in reality.