Category: Commerce Notes PPT

Owing to the prevalence of digitalisation in the 21st century, many new concepts have flooded the business environment. Hundreds of websites publish an astonishing amount of information every day, which is shared and accessed from the internet. The Internet and its universality have made way for a unique concept called business aggregator.

By the term ‘aggregate’, we mean the act of amalgamating or combining something into one. Thus, an aggregator is someone who renders the service of collecting, compiling and providing similar as well as a relevant informant on a particular website. It can be an internet site or an app.

It is because of an aggregator that internet users can find the information they are looking for in a matter of seconds. Here, an aggregator works to find all the homogenous or similar content on a particular topic and then amalgamates it to provide a relevant result to the user.

Digital marketing is booming worldwide. Almost every company, brand, association, or initiative have their website to reach out to the customers and target audience. Advertising or promotion requirements are also carried on through the websites. So, if a customer is looking for any particular information, he might have to search for all the relevant pages to find an answer. Here an aggregator comes to the rescue. It narrows down the search process to help a user get access to what they are exactly looking for.

Now, depending on the requirements of a particular sector, the nature and task of compiling any information may vary. This is the reason why we have different types of aggregators functioning today.

Different Types of Aggregators

If you delve into the digital market, you will find the following kinds of aggregators assisting you in finding the relevant information:

1. Service Aggregators

Service aggregators are the ones which render homogenous or similar services. This also applies to the ones who operate through an application. Service aggregators reach out to businesses or entities on their website and enable customers to avail the facilities from their application/website.

Online cab applications can be considered as a case of such aggregators. These applications help connect the taxi drivers and riders.

2. News Aggregators

News aggregators can also be called feed aggregators in terms of computing. It could be a web application, software, or website which aggregates information from newspapers, blogs, news channels, e-papers, videos, sites, etc. It compiles all the relevant or similar information into one page so that the user can read it conveniently.

The absence of news aggregators could make the task of reading news quite troublesome. This is because an individual would then have to visit several websites to find the information he or she is looking for. This sort of aggregators usually makes use of the RSS (an acronym for RDF Site Summary) technology to combine and compile fresh information. Scribd, Huffington Post, Google News, etc. can be cited as examples of a news aggregator.

3. Social Media Aggregators

Social aggregators are those applications or websites which aggregate information from social media sites like Facebook, Instagram, Twitter, and so on. The collected data or information is then displayed live on their app or website. Social media aggregators offer a great way to create brand recognition, promote a new company or product, and make it a trend on the internet. Twine Social, Curator, etc. are well-known social aggregators.

4. Video Aggregators

YouTube can be identified as the most popular platform to access and watch videos. But the number of videos published on it every day is huge. This is where video aggregators play their role. They compile similar kinds of videos available on a platform to help users find what they are looking for. Daily Tube is another example of a video aggregator.

5. Online Shopping Aggregators

Many shopping websites and applications now operate on the internet, selling a wide range of products. The number of customers shopping online has also risen rapidly in recent times. Shopping aggregators come in to ensure an easy and convenient online shopping experience to the customers. It displays all the similar products in one place so that customers do not have to visit multiple websites.

What is an Audit Report? 

An audit report of a company is the auditors’ formal opinion about the reliability of the organization’s financial statements. The auditor can be either internal or an independent external one. He/she checks if the preparation of the company’s financial reports follows the Generally Acceptable Accounting Principles (GAAP) or other reporting frameworks e.g. IFRS, UK, etc. The audit report assesses the financial statements’ validity and credibility. Hence, it must be included in the company’s financial report. The importance of an audit report is that it ensures that there are no material errors in an organization’s financial statements. However, it must be always remembered that the report is merely an opinion and not an evaluation of any kind. This was the audit report definition in a nutshell. 

Contents of the Audit Report of a Company

Now since we know the importance of an audit report, let us move on to what an audit report of a company includes.

In the contents of the audit report, the auditor prepares the report on the financial statements and accounts of the company to the best of his knowledge and information. Later, he/she presents the annual report auditors report before the organization in the general meeting. 

 The Specimen of the Audit Report 

1. During auditing, the auditor might be unable to collect any information. In this case, he has to include the details and nature of the missing information and also the effect of its absence in the report. 

2. It is the solemn duty of the auditor to state if proper accounts, as mandated by law, have been kept by the company.

3. The auditor has to include all the reports audited by a person other than the company’s auditor in his final report.

4. The auditor has to ensure that every director is eligible to be appointed as a director.

5. The annual report auditors report must contain the auditors’ comments on financial transactions. The auditor must also include his observation on matters which might adversely affect the functioning of the company.

6. The auditor opines if the financial statements follow the existing auditing and accounting standards.

7. The auditor ensures that the profit loss account and the company’s balance sheet mentioned in the report are according to the account books and returns.

8. Every deficiency, qualification, and reservation related to the account books must be included in the report.

Components of the Auditor’s Report

Every audit report of a company follows a standard format, as mandated by the Generally Accepted Auditing Standards (GAAS). An audit report generally consists of three paragraphs.

1. The first paragraph mentions the duties and responsibilities of the directors and auditors.

2. The second paragraph mentions the scope. It states that the report was prepared following a set of standard practices.

3. Finally, the third paragraph contains the opinion of the auditor. 

At times, a fourth paragraph is also present. Here, the result of another audit on another function of the entity is mentioned. However, the investor mainly focuses on the third paragraph, where the auditor’s opinion is stated. 

Audit Report Under Companies Act 2013

The Companies Act, 2013 requires that companies appoint an auditor. Besides, it also states the procedure of the appointment of an auditor. The Act lays down the various duties and responsibilities of the auditors. An audit report has a lot of value; hence proper steps must be taken in order to ensure that the audit is done without any error.

The Duties and Responsibilities of Auditors

1. Auditors can access the account books and vouchers of the auditee company anytime. It does not matter whether the said documents are at the registered office or anywhere else.

2. Auditors have the right to access the records of the subsidiary company. These records are essential for consolidation purposes.

3. Auditors have the right to be informed of a general meeting. He may attend it in person or through his authorized representative, who is also qualified to be an auditor.

4.  An auditor has the right to receive information about such matters, which are necessary for performing his duties. 

The business world and its study are constantly changing, now it has gone to a phase where the term ‘entrepreneurship’ is given much of a weightage. This is not an age-old term while the concept is not new. This term coins the business individuals in a more focused way. The benefits of entrepreneurship are now given limelight and thus nations across the world are trying to produce entrepreneurs who will make a difference in the future.

In this context, we are going to know the benefits of entrepreneurship, why the world has seen and is keen to observe such a chance of vast improvement in this subject we are yet to know.

Who are Entrepreneurs?

Entrepreneurs are self-motivated individuals who strive to do something new and unique on their own. By identifying opportunities, arranging the necessary resources, and taking in all the risks in the business, entrepreneurs fulfill customer needs and create employment opportunities for themselves and the people around them.

Entrepreneurship is the process of establishing those ideas in the form of business by introducing new goods, services, and technologies to the market. Entrepreneurship is not just another form of business; it is considered a driving force of our society and the nation’s economy. Entrepreneurship not just benefits the entrepreneur himself; it also contributes to the overall development of the organization and the economy.  Entrepreneurship is an emerging form of business and involves a lot of risk-taking.

Benefits of being Entrepreneurs

The benefits of entrepreneurship are never-ending. Some of the reasons for people to choose entrepreneurship and its benefits are discussed below:

They are their own bosses, unlike offices and organizations which require work to be done from a specific time and place. Entrepreneurs have the free will to work in a flexible schedule from any location as preferred. They tailor their work depending upon their lifestyle and other commitments.

Entrepreneurship requires a lot of managerial skills such as decision making and being able to do so confidently boost their self-esteem. Entrepreneurs are those who inspire people to do business on their own and confidently pursue their passion in a certain way. They are people with good leadership qualities and a vision. The ability to be able to create a product and fulfill a certain customer need with the use of individual ideas, talent, and resources creates a huge sense of satisfaction and is very fulfilling.

One of the biggest benefits of being an entrepreneur is you get to wear various hats and get to learn many things. These learnings are not just limited to your own industry but about marketing, managing money, handling people, dealing with risks, getting the work done in the most effective way, etc. It enables one to explore and figure out how to do things even if they don’t know much about it.

Despite taking on all the risk, entrepreneurs more often than not stand a high chance of profitability as such upon fulfilling customers’ needs. Entrepreneurs reap good profits and create wealth for themselves and also related businesses. Establishing a new business involves arranging resources from the existing market. This allows other existing entrepreneurs to earn profits.

One of the driving factors of entrepreneurship is the increased needs of customers for variety and luxury in goods and services. This motivates the entrepreneurs to introduce unique need-based products. It could be electronics, clothing, automobiles, or other products. Increasing the use of such new products in return improves the standard of living of the consumer.

When like-minded entrepreneurs get together to coordinate physical, human, and financial resources and direct them towards the achievement of objectives through managerial skills, businesses are developed. Although entrepreneurship is a business run by one person or the innovator, it involves a lot of factors and the use of resources which results in the creation of organizations.  Further, these organizations are built from the scratch with a number of skilled people working together.  This creates a lot of job opportunities.

Entrepreneurship enables new markets to develop in the form of goods, services, and technology. It paves ways of generating wealth; these higher earnings contribute to increased national income and tax revenues. It promotes innovation, self-reliance and generates employment opportunities.

The new products and services innovated by the entrepreneurs encourage consumers to adapt to new trends and technology. It breaks away from the dependency upon traditional ways of using products/services. They help the consumers in having an open mind which results in better morale, the standard of living, and quality of life. It increases the foreign exchange revenue with large-scale exports of the produced goods and services.

Being the first one to introduce something new into the market in the form of good service or technology allows the entrepreneurs to create demand and trust in the market. This results in becoming the one being looked up to in the industry as an innovator. Be it any industry, as long as the entrepreneur wishes, he can continue to innovate and introduce new products in the market just by continuously looking for opportunities and capitalizing on them.

What are the Key Characteristics of Entrepreneurs?

Entrepreneurs are different than usual people. Their mindset is somewhat different which makes them capable of the tag ‘Entrepreneur’

Below are some key characteristics of entrepreneurs which enable them to reap all the benefits of being in the industry they are in:

Did You know?

• There are 582 million entrepreneurs in the world.

• The main reason why businesses fail is because of no access to proper markets

• Studies have shown that middle-aged men become the most successful entrepreneurs. 

• 90% of the new American billionaires are entrepreneurs who developed themselves.

All the laws which pertain to how, what and why of how businesses are legally allowed to and supposed to function are encompassed by what is business law. Business law meaning includes contract laws, manufacturing and sales laws, and also hiring practices and ethics. In simple words, it refers to and pertains to the legal laws of business and commerce in the public as well as the private sector. Note that it is also known as commercial law and corporate law, due to its nature of regulating these worlds of business.

Significance of Business Law

Business law is an important aspect of law in general because, without the same, the corporate sector, manufacturing sector, and retail sector would be in tyranny. The aim of putting business and law together is to maintain safe and functional working spaces for all individuals involved in the business, whether they’re running it or working for the people running it.

Types of Business Law

There are several types of business law that are recognised and followed by countries the world over. Some of these include the types of business law sections that follow.

1. Contract Law

A contract is any document that creates a sort of legal obligation between the parties that sign it. Contracts refer to those employee contracts, sale of goods contracts, lease contracts, etc.

2. Employment Law

Employment law is where it is imperative for business and law to meet. These laws enforce the rules and regulations that govern employee-employer relationships. These cover when, how and for how much and how long employees should work.

3. Labour Law

Labour law also indicates the appropriate relationship between employee and employer, and also pay grades and the like. However, an additional element to labour laws is the relationship of the union with the employer and employee.

4. Intellectual Property Law

Intellectual property refers to the intangible products of the working of the human mind or intellect, which are under the sole ownership of a single entity, such as an individual or company. The validation of this ownership is provided by intellectual property law, which incorporates trademarks, patents, trade secrets, and copyrights.

5. Securities Law

Securities refer to assets like shares in the stock market and other sources of capital growth and accumulation. Securities law prohibits businesspersons from conducting fraudulent activities taking place in the securities market. This is the business law section that penalizes securities fraud, such as insider trading. It is, thus, also called Capital Markets Law.

6. Tax Law

In terms of business law, taxation refers to taxes charged upon companies in the commercial sector. It is the obligation of all companies (except a few tax-exempt small-time companies) to pay their taxes on time, failure to follow through which will be a violation of corporate tax laws.

Business Laws in India

Let us now take a look at some of the important business laws in India. In the Indian context, there are several business law sections of major importance to the country’s commercial sector. Here are some Indian business law notes that you will find helpful.

Indian Contract Act of 1872

The Indian Contract Act governs the working of contract laws in our country. Some of its requirements for contract laws are:

Sale of Goods Act 1930

The transfer of ownership of a tangible, immovable commodity between a buyer and a seller for a decided amount of money warrants a sale of goods contract, whose specifics are governed by the Sale of Goods Act of 1930.

Indian Partnership Act 1932

A partnership in business refers to when two or more business entities come together to create a new venture together. The investment and profits are split evenly between the involved parties. The Indian Partnership Act provides the laws under which partnerships in India can function.

Limited Liability Partnership Act 2008

This Act is differentiated from the IAP of 1932. A Limited Liability Partnership is a separate legal entity, which continues with its business as is, even if a partnership dissolves, only suffering the liability as mentioned in the contract.

Companies Act 2013

This is the ultimate business law, which oversees and provides the rules pertaining to each aspect of creation as well as dissolution of companies established in India.

Carriage refers to the cost of transporting goods into a business from a supplier and the cost of transporting goods from a business to its customers. The amount of transportation expense settled by the purchaser of the goods is called Carriage Inwards. The cost incurred by the seller of goods to deliver the goods sold to customers is called Carriage Outwards. The amount of Carriage Outward is posted in the Profit and Loss Account as an indirect expense and the amount of Carriage Inward in Trading Account as a direct expense. Since both the amounts are registered as expenses, they are recorded as debit balances.

What is Carriage Inwards?

If you are looking to understand “what is carriage inwards?”, then it is quite simple. It is the handling and shipping charges or the transport cost which a company or an individual incurs when there is a purchase of the goods or raw materials. It refers to the expense that is incurred to bring the purchased goods into the premises of the business or to the required location. Carriage inward is a nominal account, and it is also known as transportation-in or freight-in. It is evaluated as a direct expense and Carriage inward in trading account reflects on the debit side of it. This is the fundamental answer to “what is carriage inwards?”

What is Carriage Outwards?

Now we know about carriage inwards, the next question comes is, what is carriage outwards? The exact opposite of carriage inwards is termed carriage outwards that is it refers to the handling and shipping costs that a company incurs while transporting the goods to a client. In the income statement, the cost of carriage outwards usually occurs within the cost of goods sold. Carriage outward is an example of overhead, and it is treated as an indirect expense. Carriage outwards can also be called freight-out or transportation-out. 

What is the Accounting Impact and Profitability Impact of Both Carriage Inwards and Carriage Outwards?

The carriage inward in trading accounts is accounted for in the books of accounts of the buyer, while the carriage outwards is accounted for in the books of the accounts of the seller. The carriage inward in the trading account is debited, while the carriage outwards is debited to the profit and loss account. 

The gross profitability of the buyer is impacted by the occurrence of carriage inwards, while the net profitability of the seller is impacted by the occurrence of carriage outwards. 

With the above-mentioned definitions, we can now understand the difference between carriage inwards and carriage outwards.

Solved Examples

Q1. Mention the major difference between carriage inwards and carriage outwards. 

There are numerous differences between carriage inwards and carriage outwards. Both of the terms are opposite of each other, and their functions differ at several levels such as: 

• The carriage inward refers to the transport or freight cost which the buyer incurs on the purchase of goods or raw materials, while the carriage outward refers to the cost of transport or freight which the seller incurs while delivering or shipping the goods sold by it. 

• When we talk about what is carriage outwards?, it is the carriage outward is incurred on the inventory of the seller while the carriage inward is acquired on purchase of capital goods, raw materials etc. 

• The seller incurs the carriage outwards at the time of sale or delivery of goods, while a buyer incurs the carriage inwards during the time of purchase. 

• Carriage inwards is a direct expense while the carriage outwards is vice-versa. That is, it is an indirect expense. 

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The difference between carriage inwards and carriage outwards is demonstrated in the above image. One can easily spot that both are opposite of each other and goes vice-versa. The carriage inwards is the inventory or the cost of sales, while the carriage onwards is the selling cost. Both the terms have several differences. The carriage inwards can be taken as the transportation cost which occurs while transferring the goods from the location of the supplier to the location of the buyer, whereas the carriage outwards is the opposite of this. The carriage outwards is borne during the sale of goods, while the other one occurs during the purchase of goods. 

Do You Know?

Carriage means shipping or transport expenses. It is the cost of transporting or shipping goods from a supplier to a business and the transportation cost of goods to the customers from a business. Another term used in accounting is the “Railage inwards”. The term is British, and it is defined as the transportation cost by a train (rail). In simpler terms, it refers to the expense of transporting goods to your desired business location through a train. 

Introduction To Effective Communication

In business terms, business correspondence and reporting refer to the exchange of information between different departments, authorities, and hierarchies in written format to ensure effective communication within an organization. One has to report all the necessary information to ensure effective communication within the business. There are several characteristics or features of communication that should be followed to achieve an effective communication system. You may ask what is effective communication or how can you achieve effective communication. To answer this, you will have to keep in mind a few points, a good communicator, essentials of effective communication, and attributes of communication.

Essentials For Effective Communication

This is a list that one should follow to achieve effective communication.

1. An Excellent Communicator: The communicator is entrusted with the job of transferring the message with clearly written instructions without any complications.

2. Formal Writing: The written document must follow the formal writing pattern. It is imperative as it is written for an official purpose.

3. Qualities of a Good Communicator: A communicator must have the following qualities.

• Have fluent English writing skills.

• The writing must be clear and to the point.

• A communicator should include all the essential pointers in a letter.

• The letter should be brief and easy to understand.

If one possesses all these qualities then, one is a good communicator. Though there are various other points that are essential for effective communication, yet these three points are of utmost importance to begin effective communication.

What Is Effective Communication?

To answer this question of what is effective communication, it is crucial to understand the terms ‘effective’ and ‘communication’. The term ‘effective’ means it gives the desired or the intended result for a particular task. The word ‘communication’ refers to transferring information from one person to another by verbal or written mode. So, effective communication altogether relates to the action of transmitting information within a stipulated time from one person to the other.

The question of what is effective communication is also answered with a pictorial representation below.

[Image to be added Soon]

To achieve successful and effective communication, it is essential to understand the characteristics of effective communication. These are listed as follows.

• It should have a clear message and not be twisty or challenging to understand.

• The message should be correct both grammatically and ethically.

• The message should not be incomplete.

• Effective communication should always be precise and to the point. It should not comprise a lot of other information. The message should be short and clear.

• The message should be reliable and devoid of any false claims. 

Among the various important aspects of effective communication, these are a few basic ones.

Attributes Of Communication

These attributes of communication pave the way for the characteristics of successful communication.

• Listening: If a person is a good listener, then, definitely he will be able to communicate his thoughts in writing successfully.

• Positive Attitude: A positive attitude plays an essential role in successful and effective communication, as it impresses the reader and makes the letter compelling.

• Fairness: Last but not the least point, is fairness. One should never lie about the information under any circumstances. One should disclose all the details related to the business and present a true and fair picture in front of the concerned person.

Solved Examples 

Q. How is communication-related to effective communication?

Ans. Communication is related to every human activity, starting from expressing one’s ideas to conveying one’s emotions, it is all done through effective communication.

Q. Are women more talkative than men?

Ans. Though it is a common belief that women are more talkative than men, the evidence, however, is inconclusive. A recent study shows that women say about 13000 more words per day than men, while another research found no substantial difference in the numbers. 

Did You Know?

• Communication plays an essential role in one’s personal, social, and corporate life.

• Effective communication helps to develop better relationships, cultures, communication skills, etc. among people.

• The first-ever communication that took place between humans was physical gestures, cave paintings, and other forms of art.

• Communication is the key to success. In the absence of effective communication, one might fail to achieve the desired result due to a lack of clarity.