Category: Commerce Notes PPT

Demand Curve

The demand curve is a graphical depiction of the relationship between the price of a service or good, and the quantity required for a given time. The amount will appear on the left vertical axis in a typical representation, the quantity demanded on the horizontal axis. The demand law is elucidated by the shift of the demand curve from left to right, with the rise of the price of a commodity, there is a decrease in quantity demand, all other being equal. In general, the term ‘demand’ indicates the need, the desire, the want or the necessity for a commodity. In an economic sense, demand refers to the desire for an item. This desire is a unification of the willingness and ability to pay for it. 

Change in Demand vs Change in Quantity Demanded 

It is essential not to confuse the change in demand and change in quantity demanded as the same. Quantity demanded defines the total amount of services or goods demanded at any provided period in time, depending on the amount being charged for them in the marketplace. On the other hand, change in demand focuses on all determinants of demand other than price changes.

• Change in demand curve refers to an increase or decrease in demand for a product due to different demand determinants while maintaining the price at constant. 

• Change in quantity demanded refers to contraction or expansion of demand.

Therefore, the demand curve movement changes in quantity demanded while the changes in demand measure shift in the demand curve.

Shift in Demand Curve

The shift in the demand curve is when a final demand other than cost changes. It happens when the need for services and goods changes even though the price doesn’t change. The shift in the demand curve is a unique event when the opposite transpires. Price stays equal, but one among the five determinants changes. The determinants are the buyers’ income, consumer trends and tastes, The future price, supply, and needs expectations, related price of goods, and the number of potential buyers. This determinant refers to aggregate demand only.

Supply Curve 

A graphic representation of the relationship within the quantity of product and product price that a seller is compliant and able to supply is called a Supply Curve. Product price is estimated on the graph’s vertical axis, and the quantity of the product is provided on the horizontal axis. The supply curve is represented as a slope extending upward from left to right since its price and supplied quantity are directly linked. This relationship is reliant on certain ceteris paribus (other things equal) conditions staying constant. Such situations involve:

• The state of technology.

• The number of sellers in the market.

• The level of production costs.

• The seller’s price expectations.

• Related products’ prices. 

Equilibrium Price 

Equilibrium price can be defined as the price point where the quantity demanded and quantity supplied match each other, for a given commodity at a particular time. At equilibrium, both producers and consumers are satisfied, thereby conserving the product’s price or stable service. A four-step process enables us to predict how an event will help to observe the change in equilibrium price and quantity using the supply and demand framework.

• Outline the market model (a demand curve and a supply curve) depicting the situation before the economic event took place.

• Determine whether the economic event being investigated influences supply or demand.

• Figure out the movement or shift of the curve to the right or left and draw the new supply or demand curve, based on the impact of demand or supply

• Identify the new equilibrium quantity and price and analyse the original equilibrium price and quantity to the new one.

Assets and liabilities are two major aspects of a business and a measure of its long-term viability. To explain in short, the assets and liabilities simply indicate that assets add money in and liabilities take money out.

Assets are such items that economically benefit a company. Examples of assets are buildings, equipment, inventory, and cash. They support the successful running of a business in the present and also in the future. Liabilities are always obligations of a company, which may be either the amount it owes or services yet to be performed.

All the receivables are considered assets while all the payables are considered liabilities. In a balance sheet, the investments through which revenue or profit is generated are listed under assets and the expenses or losses incurred are listed under liabilities.

 

Classification of Assets and Liabilities

While preparing a company’s financial statement, the classification of assets and liabilities held in the balance sheet is classified into two heads i.e., assets and liabilities. The items that the company owns and when it can give future economic benefit are termed as Assets. But, when a company owes other parties, they are termed as Liabilities.

 

Assets are Classified Based on:

1. Convertibility: This classification is based on its convertibility to cash. They are current and fixed assets.

2. Physical Existence: These are the assets that physically exist with the company. They are tangible and intangible assets.

3. Usage: This classification is based on their usage or purpose in the business. They are operating and non-operating assets.

 

The Classification of Liabilities is as Follows:

1. Current Liabilities: These are short-term liabilities and are payable within a year.

2. Non-current Liabilities: These are long-term liabilities and can be paid after a year or even more. 

3. Contingent Liabilities: These liabilities may or may not arise until such an event requires.

Each of these liabilities is explained below in detail. 

 

Define Assets and Liabilities

Assets and liabilities definitions are assets are the items that a company owns and liabilities are items that a company owes. In other words, assets provide benefits in the future and liabilities provide obligations in the future. 

 

Accounting Assets and Liabilities

An asset is a source of economic value that a business or an individual owns expecting its future benefits. Assets are listed on the left side of a company’s balance sheet and shown to increase the company’s value. 

Liabilities are the company’s obligations that are yet to be completed or due for payment and are listed on the right side of the balance sheet. The image below shows what the balance sheet tells about a company.

 

Assets or Liabilities

The fundamental difference between assets and liabilities is that anything the company owns to give economic gains in the future is termed as assets while something that the company owes or is obliged to pay in the future are liabilities.

It is very important in accounting to ascertain whether a certain entry in the book of accounts is an asset or liability. It is based on the correct understanding of this aspect only that one can prepare a proper balance sheet with the company.

 

Conclusions

This chapter provides you with complete knowledge about the classification of assets and liabilities that are studied by commerce students and it is one of the most important topics that students should study to prepare for the final examination. After studying, these notes students should be able to questions like

• What are asset and liability

• Classification of assets and liability

• Difference between assets and liabilities

 

These are the few topics which the students should be able to answer and also students can gain deep knowledge about these topics with experts where they can get access to free live classes and content that provide a better understanding about various topics like classification of assets and liabilities. Assets and liabilities are the topics that are studied till the higher grades, therefore, students should always know the basics which will help them to score better in higher grades also. Making revision notes will help you to understand the chapter well and you will be able to retain it for a longer duration. 

Also practicing the sample papers of assets and liabilities prepared by helps a lot as it provides good knowledge about the types of questions that are asked in the examination and this helps students to prepare accordingly and get confidence to appear in the examination. 

Language in the most simple terms is a means of communication. It is a medium to send or share information and ideas with other people. This language can be verbal that includes both written and spoken(oral) which are commonly used by the majority of people around us. Or it could also be a non-verbal language like paralinguistics, haptics(the language of touch) and sign language. The study of language is an important part of a child’s development as it is through this means a student will present their ideas and learning. 

Over the years, English has become an important part of Indian education as a creative language and literature. Especially for English medium students, it is an essential part of learning that can make or break your progress. In this regard, provides a free online learning platform for students that ensures excellence from the expert teachers in each subject by providing free study material for all classes in CBSE, ICSE and State board.

To solve comprehension passages is an important part of understanding any language. It is the art of reading, understanding, and remembering what you read in any given piece of writing. Once you have understood the passage, you will be able to reproduce the same passage in your own words. Reading comprehension builds the foundation for high-level thinking in different subject areas. Comprehension writing is the other part of this practice.

Passage Reading Meaning 

To comprehend means to understand. In any academic curriculum, reading English comprehension passages is an important topic. As a part of reading comprehension passages, you need to very carefully go through a given passage, understand its meaning, and notice the meaning of various contexts in which the sentences appear. You will then have to answer different questions that are based on the passage you read. If you are wondering how to understand comprehension passages, then here are some points.

• Comprehension tests your vocabulary, so building a good vocabulary is important to understand passages.

• You also need to have a good sense of the language in which the comprehension is written.

• You need to develop the ability to identify the meanings of phrases or words by reading the passage multiple times.

Reading comprehension passages assesses your intelligence in grasping the gist of the written text and inferring your conclusions based on the context. Most of the questions in comprehension are directly related to the passage. A few of them will need you to find the contextual meaning of different words, and some of them will test your ability to find suitable antonyms of given words. 

How to Answer Questions of Comprehension?

While answering comprehension passages, the most important part is to read the passage carefully. To answer a comprehension question properly one needs to do the following.

• Decipher what you just read.

• Try to make a stable connection between what you read and what knowledge you already have.

• Think in-depth about what the comprehension passage says.

Some of the important strategies for solving comprehension passages are:

• Upgrade your Vocabulary – For attending competitive exams, it is very important to develop your vocabulary. A comprehension question will appear difficult if you do not understand the meaning of a few of the words used in it. The many ways by which one can improve English vocabulary are:

• Reading newspaper articles.

• Reading various vocabulary books and newspapers.

• Writing down new words that you come across in your daily life, for example, while watching a movie or while reading a book. You could then find the meaning of those words in a dictionary.

• Utilise your Strengths – While answering a comprehension question, try to utilise your strong points. For example, some students like to read the passage completely to get an idea of the whole thing while others may find it confusing so they can approach the topic with a “down to top” approach. In this approach, students first read the given questions and then read the paragraph to get the required answers. Any of these methods can be used based on your preference and acumen.

• Try to get the gist of the Passage – Many students start getting into the details of a passage like trying to understand all the words and sentences in it. Yet, understanding the passage in its entirety is not always required. It is too time-consuming if you start getting into each example, illustration, etc. The best way is to understand the summary of the passage or its main intent. If you comprehend the overall flow and structure, you will be good at answering the questions in the given time frame.

• Managing Time – Time is the most common concern that students have during comprehension writing. Exams test not only your basic knowledge but also your ability to manage time well. A good way to manage time while reading comprehension passages is not to spend time on tricky parts of the passage. If you find that a certain section of the passage is complex and you are having difficulty understanding it, then it is better to skip that part. Once you are done reading the passage and the questions, you can decide if you need to go back to the complicated piece of the passage or not.

• Do Not Rely on Outside Knowledge – Do not try to answer a comprehension based on your assumptions or knowledge of the subject outside the given passage. You must use whatever information is provided in the passage to answer the questions. If you include your version of any topic, they can be marked as wrong by the evaluator.

Answering a comprehension passage can be summed up as shown in the image below.

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Importance of Solving Comprehension for the Students of all Classes 

1. Comprehension helps students to prepare for the unpredicted and the syllabus questions to face them and answer the same with ease and expertise.

2. Comprehension helps students to improve their vocabulary and grammatical errors by practising the unprecedented passages again and again. 

3. Comprehension contains high weightage in the language exam of every class. Therefore, preparing and practising unseen passages only boosts the morale of students and their expertise towards a topic that holds importance for every student in every class.

4. Solving Comprehension consistently elevates the presentation skills and learning skills of students like reading and writing etc.

Some Important Links by to Articles that help Students to understand Unseen Passage and Comprehension 

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1. Students can find Important Questions on Comprehension, Revision notes and keynotes for comprehension, Reference solutions, Sample question papers and Previous year’s Question papers of English with unseen passages solved by the expert and experienced trainers at for the students of CBSE, ICSE and State Board.

2. Students can also find articles strictly dedicated to English language and literature including Comprehension like CBSE Sample Questions Papers for Class 10. 

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A company’s revenue is what it earns from selling commodities, and services to consumers, which are its normal business pursuits. It is also called turnover or sales. Royalties, fees, or interests may also be a source of revenue.

By setting a cost price less than or equivalent to the market cost price, an enterprise believes it can sell as many quantities of its product as it needs. The rationale for lowering the cost price of a product is lost in such a scenario. As a result, the enterprise should set a cost price that matches the market price of the commodity to the greatest extent possible.

 

The Types of Revenues

• Total revenue: The total revenue is the total amount a vendor can collect from the sale of commodities or services to the customer. The price of the commodities can be expressed as P × Q, which means the cost price of the commodities multiplied by the amount sold. Therefore, total revenue (TR) is defined as the market cost price of the commodity (p) multiplied by the enterprise’s output (q).

Thus,

            TR = p × q

Where

TR-Total Revenue,

P-Price,

Q-Quantity.

• Average revenue: The average revenue represents the revenue initiated per unit of output sold. The average revenue contributes greatly to the profit of any enterprise. In calculating profit per unit, the average (total) cost is subtracted from the average revenue. It is usually more profitable for an enterprise to manufacture the greatest amount of output.

AR = TR/q = p × q/q = p

Where

AR-Average Revenue,

TR-Total Revenue,

P-Price

Q-Quantity.

• Marginal revenue: It is defined as the revenue earned from the sale of a new product or unit. In other words, it is the revenue that a company generates when it sells an extra unit. Management uses it to analyze customer demands, plan the production schedules, and set the prices of products.

In accordance with the law of diminishing returns, the margin of revenue remains constant to a certain output level, and slows down as output increases.

MR = Change in total revenue/Change in quantity

Where

MR-Marginal Revenue,

TR-Total Revenue,

Q-Quantity.

Several financial statements tend to follow certain accounting concepts and principles. However, there are some cases where relevant and important information is not present in some of the statements and that is due to some of these accounting principles and concepts. One of the cases might be due to the contingent assets. Here in the notes about contingent assets, we are going to figure out some of the details that students need to know about in the chapter.

 

What are Contingent Assets? 

A contingent asset can be considered as a potential asset for the company or any sort of economic benefit that the company can have. The main thing about the contingent asset is while it might not exist in the present times, there is a chance of it appearing in the future. There are certain cases where the occurrence of some particular events or the non-occurrence of such events led to the formation of a contingent asset. The company doesn’t have control over such events and hence the economic interest which arises from such contingent gains is something that is important. A great contingent asset example is that a company when locked in certain legal disputes gets a fairly good chance of winning or getting some entitlements to make claims. 

In these notes for contingent assets and liabilities, we are going to discuss both of these topics so that students can have an idea about the chapter and can score good marks in the examinations.

 

When is a Contingent Asset Not Recognized as an Asset? 

After learning the contingent assets meaning, it is now important for the students to know when the contingent asset is not recognized as an asset. Well, there might be certain conditions in accounting concepts that might lead to the absence of the contingent assets in the balance sheet. In case of uncertain events where the company is not in control of the events, there might be times when some of the contingent assets are not included. 

Also, according to the conservatism principle, some uncertain events of the future really must be recognized. However, any future incomes which are uncertain cannot be recognized in the present. So, the contingent asset will be included in the latter group for sure. This is what students get to know from the notes of provisions, contingent liabilities and contingent assets.

 

Disclosure of Contingent Assets 

When it comes to the contingent assets definition, students can refer to the notes. However, some other details are not mentioned clearly. With our notes, students can have all the details that they want to have in the first place. There are mentions of contingent asset recognition and so much more. With help of our notes, students can know the meaning of contingent assets in the best way. 

After understanding the meaning of contingent assets, we are going to learn about the IAS 37 Provisions Contingent Liabilities And Contingent Assets. IAS stands for International Accounting Standard and according to that, there is a specific outline of the treatment provided to contingent liabilities and contingent assets too. In a similar way Accounting Standard 29 was made by ICAI to deal with such treatment details. 

According to Accounting Standard 29, the contingent asset will not be disclosed while making the financial statements and that is due to the existence of the concept of prudence in accounting. However, when it comes to the approving authorities, they are allowed to make such mentions of the contingent liabilities and the contingent assets. However, the contingent asset disclosure can be made in the reports in the cases mentioned below. 

• If the economic benefits are probable and are pretty much likely to happen in a sure and certain manner 

• In case the amount or value of the asset or the benefit can easily be estimated in a reliable way

It is imperative that the contingent assets are completely monitored in a close manner. Once, this has been made certain that there will be a rise of economic benefits, these contingent assets can easily be included in all the different financial statements which are made. Then that particular asset will not be considered as a contingent asset example.

 

Contingent Liabilities 

There are certain cases or transactions when the final outcomes will not be known at that exact same time. Some examples of the incidents would include insurance claims, litigations, and pending disputes. So, the liabilities rising during those situations will be known as contingent liabilities.

The supply of a firm is determined by its costs. Now, supply and demands both indicate the price. Therefore, to determine the process of price and the forces for supply, one must unearth the nature of costs. The cost concept is an important chapter in economics, thus, both traditional and modern theories play a significant role in this study.

Cost concept is important, especially when it comes to financial decision making for your business. The study of the cost concept in accounting provides the base for understanding pricing. On the professional level, it helps managers in taking correct decisions like the concept of fixed cost, the concept of variable cost, price quotation, and others.  

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Accounting and Economic Costs

Accounting costs are expenses that are caused by form production. Therefore, all the payments that are made by a company to its suppliers and other clients come under the accounting costs. Accounting costs are also known as explicit costs. These include rent, utility bills, interest payments, etc. These costs are actually direct costs that are associated with the business. Accounting costs are accounted for each expense made and then recorded in ledgers or accounting software.

Economic costs are usually used for comparing two separate courses of action. It helps in the evaluation process of a particular action for a business. The costs are calculated based on the accounting costs and also subtracting implicit costs. Now, the calculation of implicit costs is analyzed based on the current resources and their cost estimation. Also, the impact on the business from these resources is taken into account. 

Outlay and Opportunity Costs

Outlay cost is incurred when a strategy is executed or is needed to acquire an asset. This is an important part of the cost concept. Outlay costs can also be paid to the vendors for the requirement of goods like services and inventory. These are actually concrete expenses incurred for achieving specific goals. Outlay costs are easily recognizable and measurable due to the payment done to outside vendors. However, in the case of opportunity costs, they are not actually incurred and directed to the outside parties by a company.

Coming to the opportunity costs, it represents the potential benefits missed out by an individual, investor, or even a company when choosing a better option over another. The idea of opportunity costs is a pivotal factor in the cost concept and classification. As per the studies of economics, opportunity costs can be easily overlooked if you are not careful. For this reason, you need to learn more about the cost concept in accounting. Most of the financial reports do not show opportunity costs, thus, business owners use this concept to make proper decisions. 

Direct and Indirect Costs

When it comes to the cost concept in accounting, learning these two variables can be of great help. Direct costs are simple expenses of a company that can be connected to specific cost objects. These can include anything from the costs of projects, departments, labour, equipment, raw materials, and so on. Most of the direct materials and labour constitute direct costs. In the study of cost concept and classification, direct cost varies. For example, smartphone hardware is a direct cost because the production is dependent on other units as well. 

Looking into the indirect costs, they often extend beyond the expenses that are incurred when creating a product including the costs required for maintenance and running business operations. After computing the direct costs, most of the overhead costs are leftover. Some of the clear examples are materials and supplies required by a company for everyday operations. These items may contribute as a whole from a business perspective but are not assigned when it comes to the creation of a service. To stay away from complications, it is good to make yourself more knowledgeable about the various aspects of cost concept and classification.

Fixed and Variable Costs

There are different measures of costs in a cost theory. These are the concept of fixed cost and the concept of variable cost. When it comes to the cost concept in accounting, determining these two variables is crucial. Remember, fixed costs do not vary based on production. For example, the rent paid for a facility. 

On the contrary, variable costs keep changing based on the quantity of production. The wages that are paid to the workers in a company are a form of variable costs. This is because the number of workers may need to increase if there is a hike in the production line. Producing more goods means the requirement for more costs. However, the costs vary based on the amount of work done by each worker.

• Fixed costs demand the fixed expenditure of funds without considering the level of output like interest on loans, rents, depreciation, and others.

• Variable costs are based on the function of output in the production line, including wages and costs of raw materials. 

Therefore, the total sum of fixed and variable costs determines a company’s overall costs. 

The economic cost concept will only help you gain a better insight into the company’s financial future and plan the business operations accordingly.