Category: Commerce Notes PPT

Planning refers to the process of setting a specific goal to achieve something. It is the process of developing a particular approach to outline activities, prioritise them, and accomplish those goals. It refers to creating a well-approved schedule that brings people closer to the goals set. One cannot achieve their dreams or goals in life without effective planning. It shows that to keep things under control, planning is necessary. The successful execution of the plan needs the existence of particular conditions that are pre-defined along with an efficient strategy. 

What are the Basics of Effective Planning?

It is vital for the formulation of the plan that the essential statistical data must be available. The collected data should be acceptable, correct, and up-to-date. In the absence of the right statistical information, planning can never be effective. There are certainly necessary and effective planning requisites for successful hrp. It involves central planning authority, reliable statistical data, certain objective or definite goal, target fixation, and more. 

Prerequisites of Effective Planning in Management

Plans should be consistent and flexible to adapt to changes in the future. They should offer some motivation along with coordination. There are some of the points crucial for the effective implementation of plans such as: 

• Well-Defined Objectives: Objectives are similar to set particular goals. One cannot walk out of the path if they do not know where to start or end. The goals or objectives should be definable and accessible. If it’s possible, then one can attach timelines, numbers, and even resources to the objectives. It will enable control plus coordination and offers a sense of direction for the organisation. 

• Flexible Planning: The execution of effective planning requisites for successful hrp should be concerned with events. In case of modifying events, it becomes efficient to keep eventuality plans ready for sudden changes. These plans should be developed step-by-step.  

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• Management Information System: A collection of effective data and the selection of the correct substitute is essential for the development of effective plans. Several companies offer an edge to effective data and analysis to make data-driven decisions and grow. 

• Cautious Prefacing: Premising or prefacing is a vital step in the process of effective planning in management. Depending on the needs of an organisation, premises due consideration is provided to various factors in setting planning. 

• Topmost-level Initiative: It becomes essential to consider effective planning in management. The work of top-level management is to envision and chase the set goals. Effective planning requisites for successful hrp ensures that a firm runs with excellence and generates interest in planning throughout the process.

• Unaffected to Changes: When there is a need for a particular change but the execution of the previous one gives away to the new one then the plan suffers a push back. Moreover, change is not so trouble-free to work with or accept. That’s why; it is vital for effective planning in management to ensure even transitions.

• Incorporation of Short and Long-Term Plans: To achieve the objectives of any organization, both short as well as long-term plans need to get prepared. These plans should be integrated to achieve particular goals. It becomes efficient to achieve perfect coordination between two types of planning.

• Correct Estimation: The prediction of future forecasting is one of the crucial steps. The management should have a forecasting changes mechanism influenced by social, international, economic, and political factors. 

• Proper Assessment of Resources: While making a plan, it’s necessary to assess the available resources properly within the organization. It involves maintenance of inputs, continuous inventory of physical facilities, and more. 

• Economic Organization: There must be a suitable economic organization for the success of effective planning in management. It should promote progress instead of hindering it. Additionally, the socialistic economic organization is a basic condition for realistic planning. It is a fundamental condition in which the means of production are socialized for the success of effective planning. 

Arranging is the course of objective setting; fostering the way to deal with accomplish those objectives; laying out exercises; focusing on them; and making a timetable that carries us nearer to the objectives that we set.

It is difficult to accomplish such control without the right preparation. Accordingly, arranging becomes important to keep great control. Being objective driven is the key. It continues to endeavor to satisfy these objectives.

Peruse More Topics under Planning

Presentation, Meaning, Importance, Features and Limitations of Planning

Sorts of Plan

Essentials of Effective Planning:

1. Defined goals:

Destinations resemble objective setting. You can’t walk the way assuming you don’t have the foggiest idea where it drives you. Destinations ought to be reachable, level headed and perceptible. In the event that conceivable, append numbers, timetables, and even assets to these targets. This will guarantee an internal compass for the association and work with control and coordination.

2. The board Information System:

For the advancement of plans, an assortment of information, investigation, and choice of the right option is required. All things considered, the MIS Systems are the eventual fate of best organizations now. It is the organizations that give an edge to information and examination to settle on information driven choices that become showbiz royalty in their areas.

3. High Level Initiative:

To cause arranging viable they to begin at the top. These layers exist to guarantee that an organization runs similar to a well-orchestrated symphony. In the present circumstance, crafted by the high level administration is to picture and pursue those fantasies to then give it to their groups further The top administration ought to produce interest in arranging all through the association.

A decent director consistently empowers his/her colleague to oversee themselves. On the off chance that a group is self-run, there’s nothing similar to it. This can be accomplished by the executives by goals, the development of arranging boards of trustees and the planning of spending plans.

4. Arranging ought to be Flexible:

Its execution ought to be situated to occasions. If there should arise an occurrence of changing occasions substitute or alternate courses of action ought to be saved prepared for changes. They ought to be created bit by bit.

5. Impervious to Changes:

There is continually going to be push back when there is a requirement for change yet the elimination of old gives approach to the new. Just when there is a change would we be able to anticipate dramatic development. What’s more change is never simple to acknowledge or work with. Which is the reason the management genuinely should guarantee smooth advances.

6. Cautious Premising:

In arranging starting is a significant stage. It is a pre-imperative for deciding future settings. In setting arranging premises due thought is to be given for different variables dependent on the necessities of the association.

7. Incorporation of Long-Term and Short-Term Plans:

Both short and long haul plans are to be ready and incorporated to accomplish the goals of the association. They ought to be ready and coordinated to accomplish the targets of the association. Ideal coordination between the two kinds of arranging is to be accomplished.

8. Money saving advantage Analysis:

The organizers are to attempt a money saving advantage examination to guarantee that the advantages of arranging are more than the expense engaged with it.

9. Legitimate Forecasting:

One of the significant stages in arranging is the guaging of things to come. The board should have an instrument of anticipating changes in the climate which are affected by monetary, social, political and worldwide elements.

10. Dynamic Managers:

Unbending nature leaves no space for changes and development. Which is the reason managers should develop and fix while working and be adaptable to the climate.

It is not always possible for a single individual to manage all the workload and execute the work. It is the same for the managers also. They delegate responsibilities and authorities among the workers so that the organizational objectives are met and at the same time a smooth performance is delivered. In this article, the principles and barriers of the delegation will be discussed along with helping you find the answer to why should managers delegate.

Why Should Managers Delegate?

A business performance involves not one or two functions rather a lot of activities. If the manager decides to take the responsibility of all of them, there are chances that he/she will be drained out physically, mentally, and emotionally and the work will be adversely affected.

Here lies the importance of delegation and the answer to why do managers delegate. As the number of subordinates increases, they can perform the task as allocated to them on behalf of the manager. In fact, the function of the manager is more managing people and ensuring work is being done than doing work himself. Therefore, to meet the prior set goals, managers need to delegate the duties among the subordinates.

There is another subtle answer to the question of why should managers delegate. It benefits the managers also in terms of receiving specialized knowledge from the subordinates regarding the particular task. This way, delegation appears to be an administrative technique essential for the organization.

What are the Principles and Barriers of Delegation?

Though there are multiple reasons as to why do managers delegate, one cannot avoid the principles of delegation or the barriers that come with it. Let us first discuss the principles that one must follow for successful delegation.

1. Clarity of Delegation

After all, why should a manager delegate authority if there is no clarity? Also, if the delegatee does not understand his task clearly, he cannot deliver it also. Thus, ambiguity must be completely eliminated and subordinates, irrespective of their vertical or horizontal position in the organization should receive clear instruction. 

2. No Responsibility Delegation

Even though you have the answers to why should a manager delegate authority, remember, a manager can never delegate his responsibilities or else the single chain of command gets disrupted and lack of clarity looms large regarding which task is whose responsibility.

3. Result – Oriented Delegation

Even more important than why should a manager delegate is what should be the result of the delegation. The goals, plans and functions are set well beforehand in the organization and managers should delegate authority adequately so that the desired result can be attained.

4. Exception Principle

When a manager delegates authority, decision-making also becomes the delegates’ responsibility. But in exceptional cases, the delegatee might turn to the seniors for assistance in decision-making. The manager is never devoid of the authority of the whole task and thus delegation should be done accordingly.

5. Unity to Command

To understand why a manager should delegate authority, the principle of unity of command should be strictly followed. According to this command, the chance of conflict is lesser when there is a single supervisor involved as the flow of command, direction or information is less complicated.

The barriers of the delegation are only a few. These are:

These are the basic principles and barriers of the delegation that you should know about before knowing why should a manager delegate in an organization. While the main focus remains on achieving the organizational goals, delegation is also important for the personal and professional development of both the manager and his subordinate.

Profitability ratios are financial metrics to gauge and assess the capacity of an organization to produce a profit in relation to its revenue, balance sheet assets, or stakeholder’s equity, operation costs during a definite period. This metric used by investors and market gurus can be compared with efficiency ratios, which judge the optimal utility of internal resources to generate profit. 

What Does it Mean by a Higher Profitability Ratio?

A higher profitability ratio implies the organization is operating well, generating enough profit, cash flow and revenue, long-term investors like to invest in such well-managed companies. This metric gives a reasonable comparison of performance with peers or the preceding period.

Two Types of Profitability Ratios

All profitability ratios can be categorized into segments;

1. Margin Ratios 

This metric represents the firm’s capacity to transform sales into profit at various points in time. Examples of margin ratios are gross profit margin, net profit margin, cash flow margin, operating profit margin, EBIT (Earnings before interest and taxes), EBITDA (Earnings before interest and taxes, depreciation, amortization), operating expense ratio and overhead ratio.

2. Return Ratios

This parameter states the organization’s ability to produce a return to the shareholders. Return on assets, return on equity, return on debt, return on revenue, cash return on assets, return on invested capital are examples of margin ratios.  

What is the profitability ratio? Answer to it is a metric to analyze the productivity of the business by weighing against sales, assets, and equity.  

Importance of Profitability Ratio

Profitability profit analysis states the final performance of the company, how profitable the venture is. Profitability analysis also represents how the stakeholder’s equity has been utilized by the organization.

There are different profitability ratio formulas used by entities to analyze the financial performance and stability of the business. 

• Gross Profit Margin is the most used profitability ratio formulas stating the difference between revenue and cost of production, also known as cost of goods sold (COGS). Some sectors experience seasonality in their business operations. For instance, patisserie firms experience considerably higher revenue and profit earning during the Christmas holiday season. It would be more effective and informative to compare the fourth-quarter profit margin with the fourth quarter of last year than to the first quarter of the previous period.

• EBITDA (Earnings before interest, taxes depreciation, and amortization) states the profitability of a firm before deducting non-operation items such as interest and taxes and non-cash items like depreciation and amortization. The usefulness of this metric is to compare performance with peers since it excludes expenses that could be variable.

• Operating Profit Margin is one of the profitability ratios examples that represent profit as a percentage of sales before deducting interest and income tax. Companies with higher operating profit margins have an adequate reserve to pay interest and other fixed costs and have a better probability of surviving an economic meltdown. Due to higher profitability, they can offer products at a lower price than competitors.

• Net Profit Margin Means this metric represents the bottom line, the net profit after deducting interest and taxes. This profitability measure considers every aspect of accounts, but the disadvantage is it takes into account one-time gains and expenses, producing a lot of noise.

Useful Metrics in the Equity Market

Informative investors and corporate equity buyers also use these types of profitability ratios.

This profitability ratio represents the return on the invested equity and how it has been utilized to breed revenue of the company. Return on equity profitability ratio formula is profit after tax divided by net worth, where it stands for equity share capital and reserve and surplus.

This ratio is important from the standpoint of ordinary shareholders as it is calculated by net profit divided by the total number of shares outstanding.

This ratio exhibits the total amount of dividends distributed among stakeholders, which is derived by dividing the number of dividends distributed by the number of shares outstanding. 

This metric is useful to determine if the stock value is overvalued or undervalued. This ratio also gives insight into expected earning and incentives to stakeholders. The formula of this ratio is the market price of a share divided by EPS (earning per share).

Hopefully, the article has covered all the significant information regarding profitability ratio in detail. 

In simplest terms, ratio analysis is a procedure that individuals use to determine an organisation’s financial condition and well-being. Through this process, accountants learn about a company’s ability to make profits, and its efficiency in business operations. In addition, investors can also gather data on liquidity of a company’s assets to meet its working capital requirements. 

 

Besides, one can form an idea about a corporation’s performance in a competitive sector using this method. Therefore, ratio analysis presents a detailed insight into a company’s ability to compete with similar organisations in an industry or a sector.

 

However, there are several ratio analysis advantages and disadvantages that students must keep in mind. Learning the definition of ratio analysis and its limitations therefore would help them understand the concept better.

 

What Does Ratio Analysis Mean? 

By its definition, ratio analysis is a process to scrutinise and compare financial data of a company using its financial statements. This method actively uses the data from financial statements to calculate the financial health and performance of a company. Therefore, this process eliminates the need of analysing and comparing line items from each financial statement. 

 

This prevailing method primarily helps the management of a company as well as its investors to gather information on its growth percentage. Besides, this method also clarifies the operational drawbacks of an organisation. As a result, the management can take suggestions from the ratio analysis to take the right course of financial action. Thereby, a company benefits largely from this widely prominent method. 

For example, let’s consider that a company XYZ has had an annual income of Rs. 1,00,000. On the other hand, the cost of XYZ is around Rs.60,000. Therefore, the margin of profit for XYZ is Rs.40,000. As a result, the ratio analysis suggests that the gross profit is 40% of the revenue of XYZ.

 

Consequently, the margin of profit of XYZ is denoted by a percentage instead of line comparison of financial statements. However, there are several types of ratio analysis that companies use to gather data on their financial operations. Having knowledge about these types will certainly help a student understand the advantages and limitations of ratio analysis. 

 

What are the Types of Ratio Analysis? 

Companies use a wide array of ratio analysis types to understand the financial condition and position within a sector. As a result, they can gather effective information on the level of cash flow circulating within the organisation. Therefore, these types of ratio analysis helps an investor know about an institution’s solvency, profitability, and asset liquidity. 

 

Moreover, the fundamental types of ratio analysis include the following – 

• Activity Ratio Analysis – Activity ratio analysis implies the assessment of a company’s efficiency and scale of operations. This method helps accountants understand the pace at which companies convert their inventories into sales. Besides, this method also helps them to understand how the cash from sales helps them to manage their fixed capital and working capital. Activity ratio analysis also includes inventory turnover ratio, working capital turnover ratio, and payables turnover ratio among others. 

• Profitability Ratio Analysis – This category of ratio analysis helps a business measure its profits. As a result, accountants can use the profitability ratio analysis to determine the company’s ability to bag profits. Besides, this works as a marker for the industry to understand which companies have exhibited the most profits. Therefore, it duly conveys the financial health of an organisation. This kind of analysis takes into account the net profit margin, gross profit margin, and return on capital employed. 

• Liquidity Ratio Analysis – This method duly analyses an organisation’s liquidity of its assets. Therefore, individuals can gather an idea about the rate at which the company can convert its assets into cash. This procedure is mainly used to determine a company’s ability to fulfil its financial obligations without experiencing any disruption. 

• Solvency Ratio Analysis – Solvency ratio analysis takes into account the long-term financial sustainability of a business. Therefore, it is used to analyse the ability of an organisation for paying off its long-term financial obligations. These obligations thus include loans taken from financial institutions to fund its capital requirement, and the bonds it has issued in the secondary market. 

These are the main types of ratio analysis that companies use to understand their financial position, performance, and health. Now it’s time to move on to the advantages and disadvantages of the ratio analysis process.

 

What are the Steps of Ratio Analysis?

The major steps involved in ratio analysis are collecting relevant accounting data from financial statements, constructing ratios of related accounting figures, comparing the constructed ratios with standard ratios (corresponding ratios of the past, average ratios of the firm and ratios of the competitors) and finally the interpretation of ratios in order to arrive at certain valid conclusions.

 

What are the Objectives of Performing Ratio Analysis?

Ratio analysis is a very important tool for financial analysis and management in order to interpret the financial statements and data of a company. The major objectives of ratio analysis are to measure the profitability of a company improve on the areas which are weak or at loss, evaluate the degree of efficiency of a company, to ensure liquidity, that is, the required level of short-term solvency, to diagnose the overall financial strength that determines the long-term solvency of a company and to compare a company with its existing competitors in the market.

 

What are the Advantages of Ratio Analysis? 

The most prevailing advantages of ratio analysis are as follows – 

• Ratio analysis effectively directs a company’s operational decisions on the basis of its percentage value. As a result, companies can either encourage or discourage a managerial policy depending on the value that ratio analysis has denoted. On top of that, ratio analysis simplifies the figures in a financial statement into simplified ratios and percentages. This in turn enables organisations to take swift decisions to improve their financial status. 

• Ratio analysis actively opens decision making avenues by considering the drawbacks and strengths of operations. Since ratio analysis also indicates the growth factor of an organisation, it brings several operational areas under the lens of management. As a result, the decision making entities within a company can determine the drawbacks of that company accurately. 

• Ratio analysis additionally provides an insight into an organisation’s performance within its industry. Besides, this process also helps a company determine its position in the associated sector. Therefore, companies implement the ratio analysis method to find ways to outdo their competitors in the market. 

As the advantages of ratio analysis have been discussed, let’s shift our focus to the ratio analysis limitations.

 

What are the Disadvantages of Ratio Analysis? 

The limitations of ratio analysis include the following pointers – 

• The primary limitation of ratio analysis is that it is a process and not a solution in itself. This process lacks a value of its own unless decision makers use this to take effective directions. 

• The methods of ratio analysis differ for various companies. Therefore, due to the lack of uniformity in the process, the data gathered are often incompatible. For example, certain firms may or may not consider current liabilities in the process of calculating their current ratio. 

• One of the major disadvantages of ratio analysis is that it considers only the monetary inclinations of a business. Therefore, it blatantly ignores the qualitative aspects of a firm such as productivity and working conditions of the employees. 

The above mentioned points are the fundamental disadvantages of the ratio analysis method. Students are now aware of both the advantages and disadvantages of ratio analysis methods. Therefore, they can determine whether a company should use this method or eliminate it from their financial accounting procedure.

 

However, if you want a detailed insight into ratio analysis, make sure to visit the official website of .

Responsibility accounting refers to a system that undertakes the identification of responsibility centers, subsequently determines its objectives. It also helps in the development of processes related to performance measurement as well as the preparation and analysis of performance reports of the identified responsibility centers. 

What is Responsibility Accounting, and How Does it Work?

Responsibility accounting is a type of management accounting in which a company’s management, budgeting, and internal accounting are all held accountable. The fundamental goal of this accounting is to assist all of a company’s planning, costing, and responsibility centers.

Accounting often entails the creation of monthly and annual budgets for each responsibility center. It also keeps track of a company’s costs and revenues, with reports compiled monthly or annually and sent to the appropriate manager for review. The focus of responsibility accounting is mostly on responsibilities centers.

For example, if Mr X, a unit manager, plans his department’s budget, he is accountable for keeping it under control. Mr X will have all of the necessary information about his department’s costs. Mr X will look for the problem and take the necessary actions and processes to correct it if the expenditure exceeds the allocated amount. Mr X will be held personally accountable for the performance of his unit.

Objectives of Responsibility Accounting 

See below for the major objectives or principles of responsibility accounting –

• Each responsibility center is given a target, which is communicated to the relevant management level. 

• At the end of the time period, there is a comparison between the target and the actual performance.

• The variations that are detected in the budgeted plan are examined for fixing responsibility to the center. 

• Due measures are taken by the top management which is communicated to the responsible personnel.

• The responsibility for costs does not include the policy costs and various other apportioned costs.

Features of Responsibility Accounting

Read on to know more about the host of responsibility accounting features, you

Responsibility accounting system can be implemented only on the basis of due information of input and output. The monetary term of inputs is costs, and outputs are correspondingly called revenues. Hence, cost and revenue information is crucial for responsibility accounting.

Apart from the data of cost and revenue, planned and actual financial data is also required. It is only with effective budgeting that the accounting plan implementation can be communicated to the concerned levels of management. 

Clear lines of authority and effective organization structure is absolutely necessary for the success of a responsible accounting system. The accounting system is appropriately designed to be consistent with the existing organizational structure. 

Only after responsibility centers are identified, the responsibility accounting system can be implemented. The centers go on to represent the decision points within the organization. 

As the responsibility account primarily relates to control, any deviation or disruption in the plan has to be noted and reported at the earliest. On the report of such an issue, corrective measures have to be taken. Such information is the basis on which ‘responsibility’ or performance reports are prepared. 

Different Types of Responsibility Centers

A responsibility center is a functional business entity that is given definite objectives and goals, dedicated personnel, procedures and policies as well as the duty for generating a financial report.

Managers are vested with specific responsibility in terms of expenses incurred or revenue generation or the investment of funds. Let us take a look at the four types of responsibility centers. 

1. Profit center 

It contributes to both revenue and expenses, resulting in profit and loss, respectively. For example – The product line is a profit center, and the responsible person is the product manager.

2. Cost center 

The center only contributes to specific costs that have been incurred. For example – The housekeeping department will only incur costs.

3. Revenue center 

The revenue center only leads to the generation of sales. For example – Sales department of an organization.

4. Investment center 

The center is responsible for profits and returns on investment. The latter includes the fund which is invested in the organization’s operations. For example – A subsidiary entity of a company is an investment center. The responsible person in that instance would be the president of the subsidiary.

Responsibility Accounting Example

The following scenario acts as an example of responsible accounting –

The responsibility accounting system of the company, Lush Footwear, allows the departmental heads to allocate the expenses and control such costs based on immediate needs. The executive management of Lush Footwear is tracking managers’ performance, and at the same time, there are considerably fewer top-level executives who would direct the operations. 

To carry out the demarcated functions properly, the executives of Lush Footwear prints the responsibility accounting performance reports for the analysis of the holistic performance of all the departments. If it is seen that the statistics seem to meet the established objectives, further responsibility accounting budgets are allocated by the top management. 

Steps in the Responsibility Accounting Process

The steps for proper implementation are as follows:

• Define responsibility centers correctly.

• Setting goals and assigning responsibilities to the various responsibility centers.

• On a regular basis, keep an eye on their actual performance.

• Compare actual performance to the target on a regular basis.

• Determine the cause (or causes) of a discrepancy between actual and target performance.

• Management makes steps to address the discrepancy. The management also informs the responsibility center about the situation.

Test your Knowledge – 

Now that you have some idea about the topic of responsibility accounting, how about testing your newly gained knowledge! Find out if you are able to answer the following quiz.

i. Responsibility accounting undertakes the collection as well as reporting of costing information on –

(a) Cost center basis 

(b)Department basis 

(c) Product basis 

(d) Function basis 

ii. Responsibility accounting covers the following –

(a) All employees

(b) Chief Executive Officer and Chief Financial Officer 

(c) Middle Managers 

(d) Managers 

You can find the solutions to the quiz at the end of the article.

Advantages of Responsibility Accounting

• Responsibility accounting establishes a robust mechanism for cost control 

• To achieve the objectives of cost control, the organizational structure is re-assessed by the management to consider attribution of responsibility as well as engaging in power delegation 

• Budgeting is put in place which helps in the comparison of actual achievement on the ground

• The awareness among designated personnel is enhanced, which is likely to lead to greater productivity. They will also be held accountable for their actions, and any deviation will necessarily call for an explanation 

• Reporting structure and timings are facilitated because such items are excluded which is beyond the purview of individual responsibility of the designated personnel.

• It encourages managers to recognise the company’s structure, determine who is responsible for what, and resolve issues.

• Because managers must explain the deviations for which they are accountable, it enhances their attention and awareness.

• It makes it easier to compare the accomplishments of pre-planned goals with real outcomes.

• Individual employees will feel more efficient as their efforts and accomplishments are evaluated.

• It assists management in planning and structuring a company’s future expenditures and revenues.

• As a cost-control technique, it instills in employees a sense of ‘cost-consciousness.’

• Individual and organizational goals are set and conveyed in the most effective way possible.

Disadvantages of Responsibility Accounting 

• There could be instances of individual interest and organizational interest to be at loggerheads. Such conflict is likely to create problems for policy implementation

• An organizational chart may not be possible to be established in such a manner where the grant of authority and the responsibility lines are clearly demarcated 

• The policy implementation process is likely to experience the reactions from the designated person as well, which may eventually cause passive resistance. Such actions may negatively impact the organizational objectives

• The tool can only be effective if an outstanding reporting system is put in place 

• In the absence of a sound structure of the organization, the responsibility centers cannot be clearly identified.

• Fresh analysis of the conventional methods of the classification of expenses may be cumbersome.

• The downsides of responsibility accounting are as follows:

•  It can be difficult to meet the requirements of an efficient responsibility accounting system at times. It completely destabilized the system.

• Because it needs the presence of highly trained management, the system increases the company’s costs.

• This accounting system only accounts for controllable costs and ignores uncontrollable expenses.

• If a corporation fails to adequately communicate a person’s goals and responsibilities, the system may fail to produce correct outcomes.

Objectives of Social Responsibility Accounting 

It will be useful for you to know that, connected to the inherent principles of responsibility accounting, an important concept of social responsibility accounting has emerged. Before we determine what the objectives of social responsibility accounting are, let us know a little bit about the concept.

Social responsibility accounting, even though used generally in the context of corporate social responsibility, involves the communication of the environmental and social effects of a firm’s economic steps. It is usually done with respect to a specific interest group or towards the society at large. The focus on multinational corporations and the tools mostly include – public hearing, public audit, social audit, use of complaint box and citizen charter and public expenditure tracking survey.

Let us now look at the underlying objectives of social responsibility accounting.

• The communication will disclose and measure the ‘costs’ and ‘benefits’ caused to society due to the firm’s production-related activities

• The organization may use it as an assessment for the impact of its performance on communities, people and the environment 

• It leads to the creation of a favorable image of the organization and helps to attract investors. In continuation of this aspect, it will also facilitate the inflow of capital from multiple sources to the organization

• It lends an overall conducive effect on society with the firm committing to improving its business processes

If you are keen to learn more about responsibility accounting, do not forget to install ’s app on your device, and check the online materials available on the platform. 

Did you know?

Among all the different kinds of responsibility centers such as cost centers, profit centers, revenue centers and investment centers – profit centers enjoy maximum autonomy. If business unit managers are not given sufficient autonomy, they will not be able to undertake critical operating decisions connected with profit generation. 

There are a multitude of decisions that may have to be taken within a short period of time. Such decisions may range from pricing, product mix, purchase, and inventory, among others.

Introduction to Role of Indian Chambers

In a nation’s development, the role of this commerce and industry is very crucial towards the development of the economy. Due to the development of Commerce and Industry, the internal trade eventually heightens its pace of development. AS we know, this commerce and industry have a vast expansion in its own and thus they also have a chamber associated with their function.

In this section, we will know about that distinct chamber or the department which regulates the growth of commerce and industry in our nation India. 

Federation of Indian Chambers of Commerce and Industry

The Federation was established in the year of 1927, FICCI is the largest and the oldest apex business organisation in India. Its history is closely connected with India’s struggle for independence, its industrialization pace after the independence, and its emergence as one of the most rapidly growing global economies of the world.

This is a non-government, non-profit organisation, FICCI is the pillar of India’s business and industry. From influencing business policy to encouraging the debate on the industries, engaging with policy makers and with the civil society, FICCI views and concerns of industry are vivid. It serves its members from the Indian private and public corporate sectors and the MNCs as well, drawing its strength from the regional chambers of commerce and industry across states.

FICCI provides the platform for networking and building of consensus within and across sectors and is the first port for Indian industry, policy makers and the international business.

Function of Chamber of Commerce 

The Chamber of Commerce are required to perform different functions, the functions based are as follows:

1. The chamber performs analyses, also provides information and renders the consulting services to the public bodies. 

2. They also provide support in the development of the projects regarding the country’s economy;

3. They organize and upkeep the non-governmental trade register of its members.

4. They organize meetings and also establish the business contacts between the economic agents.

5. The Chamber organizes and supports the participation of the local economic agents at trade fairs and exhibitions abroad as well.

6. Organizes specialized exhibitions and trade fairs within the country.

7. Also, on request of home and foreign economic agents, they provide specific mentioned services.

8. Performs expertise services of the contracts regarding the projects between local economic agents, and agents from abroad upon their request only.

List of Chambers of Commerce in India

The List of Chambers of Commerce in India are as Follows:

1. The Southern Gujarat Chamber of Commerce and Industry.

This is the apex organization for Trade and Business and this serves at its nodal point.

2. Indo-French Chamber of Commerce and Industry.

This was created in 1977, which is the leading bi-lateral business chamber. 

3. Indo-German Chamber of Commerce.

This Chamber facilitates the Trade relations of India and Germany by providing assistance in the areas of import and export.

4.Indo-American Chamber of Commerce

his is the chamber bilateral to the promotion of Industrial, Economic, Business and Commercial Activities which is situated in Mumbai, India.

5.Indian Chemical Merchants and Manufacturers Association.

This is located in Kolkata, India which also promotes foreign investment and trade promotions.

  

Commerce and Industry India

The Department of Commerce and Industries is responsible for overall development of various industrial and commercial activities in the state. The Department plays a developmental and facilitation role to attract the industrial investments in the state. It focuses on creating an industry friendly environment and formulate suitable policies in the State aimed at propelling fast pace modernization and also to strengthen the industrial units. 

The Department provides an interactive platform for the synergistic coordination between the investors and the State Government. The Department is also supported by its subsidiaries in the form of Agency, Board and Corporative.