[Commerce Class Notes] on Price Discrimination Pdf for Exam

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Overview – Perfect Price Discrimination 

Price Discrimination definition is something which every student must be aware of in order to gain effective knowledge in the study of economics. It is a microeconomic pricing strategy in which similar or largely identical commodities are transacted at different prices by the same vendor in different markets. It relies on the customer’s willingness to pay and the elasticity of demand. Other factors of Price Discrimination include market share, monopolistic market, uniqueness of the product, sole pricing power, etc. The prices are higher than the equilibrium price under Price Discrimination. Other terms used in place of Price Discrimination include equity pricing, dual pricing, tiered pricing and preferential pricing.

Perfect Price Discrimination 

The highest level of Price Discrimination is termed as perfect Price Discrimination. It is also called first-degree Price Discrimination. In this case, the firm tries to gain as much market surplus it can achieve. First-degree Price Discrimination observes Pareto efficient level of output where marginal cost is equal to the marginal willingness to pay. As seen in the above figure, the producer surplus is equal to the total surplus which is (A+B). Therefore, you can observe that there is no deadweight loss even though there is no consumer surplus either. In the end, the quantity and price become equal and it turns into perfect competition. So, in practical scenarios, it is agreed that perfect Price Discrimination cannot exist. In real life, the closest one can get to perfect Price Discrimination through second-degree Price Discrimination or two-part tariff. 

The Edge

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Student’s Room Environment

It is quite understandable that our surroundings are a reflection of our inner qualities and vice versa. Taking note of this, students must always keep the environment healthy for studying.  It will enhance a student’s focus and develop consistency in the studying hours. Lighting of the room also plays a role sometimes when it comes to developing a healthy mood. Students are suggested to have not too bright and not too dim lighting.  It Has soft lighting which doesn’t keep you distracted and also ensures a comfortable reading experience for the students.  .  The study table should not be piled up with the old books that student’s o not need at all. It must be organized since organized surroundings lead to an organized mindset and well arranged time management. 

After reading the entire article a student must have garnered quality information that improves their quality of preparation and guides them towards better grades in the exams ahead.

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[Commerce Class Notes] on Private, Public and Global Enterprises Pdf for Exam

With the upscale of the economy all over the world, the sphere of business and trade have changed in a vast manner. In today’s time there are enterprises who run the economy of any nation. 

These enterprises are then subdivided into other names as well. The basic fundamental is that the realm of modernization has also captivated these enterprises with every passing year – the modernization gave rise to competition and change. This has mostly affected the types of enterprises working here. With this interface we will know about the enterprises in our preceding section.

 Private, Public and Global Enterprises

The enterprises here are divided into three basic groups – Private, Public, Global. With the advent of modification in these enterprises their definition and scope has also expanded. 

Private Enterprises

A Private Enterprise is an entity which operates under the ownership and management of individuals who are free to decide and to develop a given business idea. They are beyond the captivity of government intervention, and this makes it different from a governmental institution.

Among other entities in a free market, private enterprises are the keystone, since they allow individuals working here to possess ideas, concepts and assets that work together to produce the final results which are both positive and initiates wealth creation. 

  • Under a market economy, of a nation, private enterprise should be enforced to promote the nation’s development and growth. 

  • The individuals are empowered here and are motivated to pursue their self-interest through creating business enterprises in this hemisphere. 

  • With the approach of wealth creation this further gives them the power to have full ownership. 

  • They are entirely managed by the private individuals, and thus exclude governments from having a vote in their company’s decisions and managing the courses of action.

  • The enterprises that are owned by one or more individuals by sharing the stake of ownership in the company. 

  • The private enterprises are free to pursue any legally permitted business activity and to develop any projects which will help them to achieve the enterprise’s goals.

Public Enterprises

Public enterprises are those business organizations which are wholly or partially owned by the state and are controlled through a public authority. These public enterprises are placed under the public ownership, for social reasons, the product provided in this market is by a state monopoly. Gas, electricity, broadcasting, telecommunications, and other forms of transport are examples of this kind of public enterprises.

  • Public enterprises are normally intended to be operated in the public interest. Also, this gives rise to a number of organizational and commercial issues. 

  • The public corporation form, is used extensively in Great Britain and other parts of the world, the organization is created by a special act of Parliament which defines its powers, management structure, and relationship with government bodies. 

  • The corporation has a legal entity, and its capital requirements are funded from the state treasury. 

  • Its employees are not civil servants, and the top management of the enterprise is often appointed by the ministry in charge. 

Global Enterprises

Global enterprises are those business structures which have its functions conducted and coordinated between two or more countries. Their industrial and marketing operations network is extended in several other countries. These enterprises have a bigger vision than other enterprises and they capture all the market of the host country forming monopoly power.

  • Global enterprises are those companies that operate around the globe. 

  • They are categories which are based on their huge size, a large number of products, advancements in technology, they strategize, markets, and networks operations all over the world. 

  • With the network of branches in several countries, the global enterprises expand their industrial and marketing operations over all.  

  • Their vision to work across many global frontiers is to earn in international currencies from many countries. 

  • These organizations have books of accounts for various countries, which at the end of financial year of respective countries are consolidated together, according to its requirement.

[Commerce Class Notes] on Proper Email Correspondence Pdf for Exam

As we live in an electronic generation, everyone can talk and text globally using the internet. Many options are available online to speak and text informally. However, to reach others formally and professionally, everyone uses Email Correspondence, which is the best option, especially for businesses and the corporate sector. So, it is essential to get aware of the best email communication practices in detail.

Overview

Email Communication is a way of sending a written message formally and professionally in a short span. It is the best practice to communicate with others in several situations to multiple people in a proper way. It has certain essential qualities and ethics to follow for every scenario.

Scenario

Let us consider a scenario to know how to use an email in business communication—the emerging business in online shopping. So we will take this as an example. Suppose you want an item in a particular site with different size and other specifications which are not available on the website. So you tried to call them, but no response. Then you will choose the option of mailing. You will send a mail to request the product with your required specifications. Then you will receive a thank you mail. Then they will confirm the product to you in another email from both sides. One mail for placing orders from the customer. Another mail for confirming, tracking the order, etc. Till the product reaches the customer and payment reaches the sender, the mail will continue.

Essential Qualities for a Good Email Practice in Business Correspondence

Nowadays, most businesses run through email communication. Specific tips will help us send perfect and proper mail for business correspondence.

  • Before entering into the content, it is always advisable to introduce yourself briefly to avoid confusion for the recipient.

  • Email Communication is always good to discuss only public matters. It is harmful to discuss personal issues related to business as well as their own life.

  • Messaging politely is a good email practice for business correspondence.

  • It is not a good practice of using shortcuts and additional blurry content for emails in business correspondence.

  • The content of a good email should be clear and concise. The sender should text with confidence.

  • In mail communication, the content should always match with the subject mentioned.

  • The sender should be cautious while clicking to reply all because it is unnecessary to send all the recipients if they don’t require it.

  • Signature plays a vital role in sending a good mail for business correspondence. 

  • The sender needs to send the mail formally so that it creates an impression on him indirectly.

  • Maintaining attachments in less number is the best email communication practice.

  • Also, both the sender and receiver should react and send emails on time. Delaying is not a good practice.

  • Using special characters and exclamation marks doesn’t appear as a professional mail. So it is better to reduce them as much as possible.

These are some of the rules which help you out in practising good mail for business practices.

Email Ethics Definition

Email Ethics refers to a set of rules and principles which we need to follow while sending and receiving emails either for business purposes or for personal use. 

Mail Ethics 

Firstly, ethics is a principle which one should follow to maintain a healthy environment. It might be in any scenario. So, mail ethics also creates a healthy relationship between the sender and the receiver. The mail communication occurs between several people like- between two organizations, between a company and client, or from employer to employees, to provide offer letters, to invite the legendaries, to give instructions, etc.

Every individual needs to stick with mail ethics as it plays a predominant role in the present situations. It also impacts human relations as well as the growth of the company. The content of the email has to be evaluated and justified before sending it. It should not hurt anyone and may not be harmful to any organization. Before going to start using mail communication, everyone should be aware of the do’s and don’ts to have a good practice of emails in business correspondence.

Hence, using emails in business communication is appreciable these days. It helps the customers as well as sellers to react at the moment with full clarity and confidence. Also, using mail communication, both sender and receiver have written proof. It helps to avoid malpractices like cheating etc.

[Commerce Class Notes] on Reconstitution of a Partnership Firm Pdf for Exam

A partnership firm is one of the oldest existing forms of business ventures. There are several notable examples of successful partnership firms around the world. Noteworthy among them are eBay, Twitter and Apple, which are household names. Partners in business are often individuals who share common interests and hobbies, and who bring specific skill-sets to their ventures. Since their bonding extends beyond just making profits, the results they achieve are often extraordinary.

When is a Partnership Firm Reconstituted?

There are 4 specific instances which may necessitate this restructuring:

  • When there is any alteration in the profit-sharing ratio between partners.

  • When there is imminent admission of a new partner into a firm.

  • When a partner resigns or retires, and

  • On occasions when a partner dies or is rendered insolvent.

We will look at each instance closely. Before that, here’s a task for you. Log on to the Internet and find out the story behind Apple and its co-founders: the ‘Two Steves.’ They were Steve Jobs and Steve Wozniak. Jobs was a terrific sales-person and an excellent brand ambassador. Wozniak was the ‘geek’ and the trouble-shooter.

Forms of Reconstitution of a Partnership Firm

The four types are explained.

 

Changes in Profit-Sharing Ratios Between Partners

One of the guiding principles of partnership firms is profit-sharing. If two persons form a partnership firm, they are entitled to split the gains made. They must also manage the losses incurred, if any. If there are pressing issues regarding profit-sharing between partners, a reconstitution of partnership firm is needed. 

The old ratio in which all profits made were divided will stand null and void. A new legally valid partnership deed will be drawn up. All the new details of profit sharing will be mentioned therein. Only these new terms will be applicable in future. There can be several reasons why profit-sharing ratios may need a relook. One partner may not be happy with the status quo. Someone else may not be pleased with how his or her partners are being compensated. At times, a partner may decide to take on reduced responsibilities. In that case, his share of a firm’s profits is likely to take a hit.

 

Admission of a New Partner

Whenever a new partner joins a firm, the legalities must be reconstituted. Admittance of a new partner should be unanimous. However, the Partnership Act of 1932, which governs the reconstitution of partnership firms in India, has certain provisions which will take effect if there is no unanimity between extant partners.

The new partner may bring in fresh ideas, new sources of capital, a renewed drive to the business or enhanced managerial ability. Note that it is not mandated under the law that every time a new partner joins a firm, an older one has to leave. This new partner will take a part in the profits generated. He will also have a say in day-to-day activities of the partnership firm. All assets and liabilities, and even intangible articles like goodwill, will be re-tailored to suit the new partner/s. 

DIY tasks for advanced students: Find out details on India’s Partnership Act of 1932. It is obviously an old set of laws. Why has it not seen amendments? Or are there amendments waiting in the wings? You will also find later additions including the Limited Liability Partnership Act of 2008, which laid out the foundations for LLPs and LLCs in India.

 

Retirement of a Partner

Often, a partner may choose to retire on account of age or ill-health. Retirement is voluntary and no law dictates when a partner in a firm can, or cannot, retire or exit a partnership. Reconstitution of partnership firms is needed in such instances as profit-sharing, capital inputs and shouldering of liabilities are bound to change. Upon retirement, that partner will be paid his share of profits valued till the period he or she has served.

Note that there is a provision for prolonged payments to a retired partner if he continues to shoulder certain responsibilities even after a new deed is constituted and agreed upon. Before you move on to the last part, you must know that reconstitution of partnership deed is a serious legal process. A majority of active partners need to witness it, and it must be admissible in a court of law. An example of a fresh partnership deed post reconstitution follows.

 

Death/Insolvency of a Partner

Reconstitution of partnership firms is necessitated when a partner passes away or becomes insolvent. In case of insolvency, the laws state that he or she cannot continue being a partner in a firm. All dues are to be repaid to the bankrupt partner. The partnership agreement which existed before ceases to exist.

In case of death, all outstanding dues will be paid to any legal heir of that partner. Note that the heir has to stake a claim. Find out more on partnership laws, firms and related topics in ’s study materials. You can also install the app for easy access to the same.

The Need of Reconstitution in a Partnership Firm

For starting any Business the investor can unite with another individual and invest their money in equal shares for greater returns. This type of venture is known as a Partnership and can be traced back even in the 14th century. This is quite popular today also. We can see many big corporations and conglomerates like Apple, Uber, The Red Bull company that started as partnerships and are very successful these years. To understand how these great companies became so successful we need to understand their origin and the different types of legal procedures they are bound to follow.

When two or more persons come together they have to make an agreement or contract before starting functioning as a business entity. This agreement contains all the general laws and regulations of the establishment of a company along with the specific rules defined by the partners to run and manage the business. It explains all the commonalities and procedures that need to be followed during the financial investment during the operation and also the sharing of the profit generated therein. 

The main concern in this topic is how any partnership company deals with any changes that may occur due to change in the arrangement they follow. It can happen for many reasons such as if there is a change in the ratio according to which each partner draws its profit. Or if they want to include another person as the partner or exclude any partner due to retirement or any other reasons. 

[Commerce Class Notes] on Retirement of Bills of Exchange Pdf for Exam

Bill of exchange is generally honoured only on the maturity date. While, in some cases, the bills can be honoured before time of its maturity. This honouring of the bill is known as the Retirement of bills of exchange. Also, a bill may be cancelled before time and a new bill can be written in its place. This action is known as Renewal of the bills of exchange. 

We will further discuss this topic of ‘Retirement of Bills of Exchange’. This concept is taken to be a priority in today’s business world. 

Retirement of Bills of Exchange

The drawee can have surplus funds hence, he may decide to pay the amount of the bill before the date of its maturity. For this he asks the drawer or the holder of the bill whether he is ready or willing to accept the payment before the due date of the bill or before its maturity. The drawer or the holder of the bill may agree to this prepayment condition. This process is called the retirement of bills of exchange.   

Also, for this purpose, to encourage the drawee to pay the bill before the maturity date, the drawer gives the drawee a discount. Thus, this discount is known as the rebate on the bills. Thus, we calculate the rebate on the bills at a certain rate of interest for the time between the date of payment and the date of its maturity.

The rebate on the bills is actually an expense of the drawer or the holder of the bill. It is an income of the drawee or the payer. 

Meaning of Bill of Exchange 

The following features of a bill of exchange will make the meaning more clear, they are as follows:

  • A bill of exchange is required to be in writing. 

  • It is an order to make the required payment. 

  • The order to make the same payment is unconditional. 

  • The maker of the bill of exchange are required to sign it 

  • The payment should be of a definite amount. 

  • The date on which payment is to be made must also be definite. 

  • The bill of exchange is to be payable to a certain person. 

  • The amount which is mentioned in the bill of exchange is payable either on demand or after the expiry of a fixed period of time. 

  • The bill must be stamped as per the requirement of the law. 

Parties to a Bill of Exchange 

In a bill of exchange, there are three parties:

  • Drawer is the one who makes the bill of exchange. A seller or the creditor who should receive the money from the debtor can draw a bill of exchange upon the buyer or the debtor. The drawer then after writing the bill of exchange is required to sign it as maker of the bill of exchange. 

  • Drawee is the one on whom the bill of exchange is drawn. Drawee is the purchaser or the debtor of the goods on whom the bill of exchange is drawn

  • Payee is the person to whom the payment is contracted to be made. 

In a case, the drawer of the bill will himself be the payee if he keeps the bill with him till the date of its payment or maturity. 

[Commerce Class Notes] on Royalty Accounts Pdf for Exam

Royalty can be defined as a proper and periodic payment that is made by one person to another in order to use the right to some resources. There are two different sides to royalty. The person who is responsible for providing the right for using the resource is known as the lessor. The person who is responsible for the use of the resource by making the payment is known as the lessee. In these notes about royalty accounts, students will be able to learn what these are and what the significance of royalty is.

Royalty in Terms of Accounting

When it comes to deciding royalty meaning in accounting, it can be said that royalty is basically what the lessee is supposed to pay to the lessor in order to use the rights or resources which are provided by them. These resources might include some rights, franchises, copyrights, or some of the other assets of a similar kind. Royalty meaning in accounts is a really important topic for students to understand so that they can get the basics correct in order to score good marks in the examination.

Most students have the question that a royalty account is which type of account. Well, it is technically a nominal account. The system of having to share certain revenues that occurs between the lessor and the lessee can be formally defined as royalty. Hence, this can answer the question that students have about royalty is which type of account.

Some Basic Terminologies Related to Royalty Accounts

After understanding the meaning of a royalty account it is important to understand some basic terminologies related to them. Here are some terminologies of royalty accounting treatment.

What is a Lease?

A lease is basically an agreement that is made between two people. Here one person will acquire the particular rights to use certain assets for a particular time period from someone else. This person is basically the asset’s owner and will require some sort of payment. The owner is called the Lessor and the person who takes the right to the asset is called the lessee. In the royalty account notes, there is often a mention of the lease which is made between two people. The amount which is to be paid to the lessor on behalf of the lessee is known as Royalties.

Different Treatments of The Royalties in Accounting

Now we are proceeding towards the discussion of the treatment of royalty in final accounts. When it comes to that, there are certain aspects that students need to know about. We can say that in the case of the lessee, royalty in final accounts is basically just an expenditure made normally. The royalties which are paid on a proper basis of the output will be provided to the Manufacturing or Trading Account. However, when it comes to paying the royalties on a sales basis, the amount would be debited to the Profit & Loss Account. In the notes, students will also get to know about different types of royalty accounts, so you need to read all of this very carefully.

Fixed Rent or Dead Rent

This can be defined as a minimum amount that the lessee has to pay to the lessor inevitably whether or not they have been able to make proper use of the asset. It is also known as the Minimum Rent or Rock Rent. Dead rent is almost fixed every single year and there can be a few different changes when it comes to the agreement made between the lessor and the lessee. There can be two different scenarios when it comes to the Minimum Rent.

In case the value of Actual Royalty that is set for a year comes out less than what the minimum rent is supposed to be, then the lessor will be paid the minimum rent from the lessee

In case the value of Actual Royalty that is set for a year comes out more than what the minimum rent is supposed to be, then the lessor will be paid the actual royalty from the lessee.

What is Short working in a Royalty Account?

Well, Short working in Royalty accounts can be defined as the particular amount by which the Dead Rent or the Minimum Rent becomes more than the Actual Royalty which is to be paid. It can be calculated by finding out the difference between the actual Royalty and the Minimum Rent.

What Are the Other Important Terms in Royalty Accounting?

  1. Excess Workings: It is the amount by which the actual royalty is more than the minimum rent.

  2. Fixed Right: This means that the lessee can recover short workings from the lessor only within a stipulated time period from the date of lease of the asset. If a lessee fails to recover short workings, within the stipulated time period, the recoupment lapses or ends.

  3. Fluctuating Right: Under fluctuating right, the lessee can recover Short Workings for a certain period of time during the subsequent period or periods. For example, Short Workings of the previous year can be recovered in the following year.

Performance Royalty: The owner of copyrighted music will get an amount whenever the music or song is played by a radio station, used in a film, or used by any other third party. 

Book Royalty: These are paid by publishers to authors. Generally, the author will receive a fixed amount decided via an agreement, for every book that is sold.

Patent Royalty: If a creator or innovator has patented their products they are compensated for their intellectual property. When a third party wants to use the same product, they have to have a license agreement that will require them to pay royalties to the patent owner. 

Franchise Royalty: The business owner who is a franchisee, has to pay a royalty to the franchisor for the rights that he will get to open a branch under the company name. 

Mining Royalty: Mineral royalties are paid by mineral extractors to property owners. If a party wants to extract minerals from a certain land, they will pay the property owner an amount based on units such as barrels of oil or tons of coal.