Category: Commerce Notes PPT

In our routine life, we must have visited banks. These banks help us in many banking activities like maintaining our savings account, depositing cash, and withdrawing the same, thus we see these banks are always at our service. These are the commercial banks, which operate commercially for serving the common people.

Commercial banks have a lot of other functions to do than what is mentioned above. What are those functions? What will happen if the commercial banks cease to perform all the banking activities? Are there any other types of banks that might help the masses? All these questions will be addressed in our discussion that is based on the functions of Commercial Banks.

What are Commercial Banks?

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Before diving straight into the topic of functions of commercial banks, first, it is obligatory to know what are Commercial Banks.

A commercial bank is a typical financial institution that accepts as well as deposits from the general public and also, they give loans for the purposes of consumption activities and investment activities, to make their own profit.

Commercial banks are profit-based institutions that offer financial services like loans, as well as services like deposits, electronic transfers of funds, etc. to their customers. Commercial banks have a significant role in a country’s economy as these organizations fulfill the short and mid-term financial requirements of industries.

The functions of commercial banks are primarily based on a business model of accepting public deposits and utilizing that fund for various investment purposes. Such functions can be classified into two categories, primary and secondary functions.

These functions will be discussed in our upcoming section.

What are the Functions of Commercial Bank?

Commercial Banks have both primary and secondary functions that as explained in detail below.

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Primary Functions

• Accepting Deposits – Commercial banks accept deposits from their customers in the form of saving, fixed, and current deposits. 

• Savings Deposits – Savings deposits allow a customer to credit funds towards their accounts for up to a certain limit. These deposits are preferred by individuals with a fixed income, utilized to create savings over time.

• Fixed Deposits – Fixed deposits come with a predetermined lock-in period. Fixed deposits are also referred to as time deposits as the funds are deposited for a specific time frame.

• Current Deposits – Current deposits allow account holders to deposit and withdraw money whenever necessary. In some cases, current accounts also offer overdrafts until a pre-specified limit to individuals and businesses.

• Providing Loans – One of the main functions of commercial banks is providing credit to organizations and individuals, and profit from the earned interest. Usually, banks retain a small reserve for their expenses while offering the remaining amount to customers as various types of short and long-term credits.

• Credit Creation – A unique function of commercial banks is credit creation. Instead of offering liquid cash, banks create a line of credit and transfer the loan to a business or commercial body all at once.

Categories of Secured and Unsecured Loans provided by Commercial Banks

• Cash Credit – Commercial Banks and their Functions include extending advances to individuals and organizations against bonds, inventories, and other types of securities. This facility, commonly known as cash credit, provides a more substantial sum when compared to other forms of credit.

• Short-Term Credits – Short-term loans are usually pledged without any security, offering a smaller loan amount and repayment tenor. These are also referred to as personal loans.

Secondary Functions

The following can be considered as the secondary functions of commercial banks – 

• Providing locker Facilities – Commercial banks provide locker facilities to customers who want to store valuables safely. Locker facilities eliminate the impending risk of theft or loss, which prevail when kept at home.

• Dealing in Foreign Exchange – Commercial banks help provide foreign exchange to individuals and organizations that export or import goods from overseas. However, only certain banks which have the license to deal in foreign exchange are eligible for such transactions. 

• Exchange of Securities – Another function of commercial banks is to trade in bonds and securities. Customers can purchase or sell the units from the financial institution itself, which offers more convenience than alternate approaches.

• Discounting Bills of Exchange – The main function of a commercial bank in today’s date is to discount bills of businesses. Bill discounting is considered a profitable investment for banks. Bills create a steady flow of funds, while not becoming a risky venture during payment as it is considered as a negotiable instrument. These also do not involve the financial institution in any litigation. 

• Bank as an Agent – Commercial Bank and its Function also require them to provide finance-related services to customers, fulfilling the role of an agent. These services usually include – 

• Acting as an administrator, trustee, or executor of a customer-owned estate.

• Assisting customers with tax returns, tax refunds, and other similar tasks.

• Serving as a platform to pay premiums, repay loan installments, etc.

• Offering a platform for electronic transaction of funds, processing of cheques, drafts, bills, etc.

Importance of Commercial Banks

Thus, we now know how important are commercial banks in performing the balanced function in an economy. In a parallel universe, if commercial banks cease to perform these banking functions, then the economy will collapse out of thirst for money liquidity. Along with the growth, economic and social stability will be shattered completely. 

Types of Commercial Banks

It is necessary to understand the different types of financial institutions to explain the functions of commercial banks effectively. Commercial banks are commonly categorized into three types. They are as follows:

• Public sector banks

• Private sector banks

• Foreign banks

Public Sector Banks

Public sector banks refer to a type of financial institution that is state-owned by the corresponding Government. A significant part of the share of such organizations is held by the Government. In India, the Reserve Bank of India, which acts as the central bank, creates operating guidelines for the public sector banks. 

Private Sector Banks

Private sector banks are financial institutions registered as companies with limited liabilities. The major part of the share capital of such companies is owned by individuals or private businesses. 

Foreign Banks 

Foreign banks are financial institutions that are operating overseas within a foreign nation. Post the financial reform of India (in 1991), there was a marked increase in the number of foreign banks on Indian soil. They are essential for the economic development of a nation.

Apart from these commercial banks that lend and deposit money, there is Central Bank which is known as the ‘head honcho’ in terms of banks. The Central Bank supervises the commercial banks, sets their interest rates, and controls the money flow in the economy. This bank, unlike the commercial banks, does not engage with the general public in terms of providing banking services. Thus, Central Bank will never be as helpful as commercial banks to the general mass. 

Did You Know?

In this section, we will know about some interesting commercial banking facts. 

• Allahabad bank is the oldest joint stock bank existing in India.

• Bank of India was the first bank to open branches in foreign nations. 

• Canara Bank is the first bank to be receiving the ISO 9002 Certificate.

• Bharatiya Mahila Bank is the first all-women bank formed in India.  

• Reserve Bank of India served as the central bank of two countries at a time. It was the central bank for Pakistan after the partition of India until June 1948.

From the above-mentioned details, you will get a clear idea about commercial bank definition as well as its functions. For more information on the discussed topic students can refer to ’s website today. They can also avail study solutions on the introduction of commercial banks from us and avail a detailed idea.

To work in the business world, the owners are required to choose the form of business structure that they need to function in. There are Sole Proprietorships, Corporates, MNCs and other organisations. Among these, Companies play an impressive role in the growth of the economy of India.

 

Also, Companies are divided into two – Private and Public Owned. The Public Owned Companies are also called the ‘Government Companies’. In this context we will understand what a Government Company is? Who owns a Government Company? And so forth to talk about these Government Companies.

 

What is a Government Company? 

There are companies where the Central or the State Government, or any of the two, or both of them combined holds 51% of the stake or capital of that particular company, then the specified company is deemed to be a ‘Government Company’. ‘Public Enterprises’ or ‘State Enterprises’ are the other names for this Government Company. They are to be registered legally under the Companies Act. 

 

Under section 2(45) of the Companies Act 2013, a Government Company is defined as “any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government Company”. 

 

This means that one of the basic features of the company is to have 51% of governmental stake.

 

Subsidiary Company

Another extended part of the Government Company is this – Subsidiary Company. A ‘Subsidiary Company’ or simply a ‘Subsidiary’ is a subsidiary or the side or extended part of a Government Company. In the case of a subsidiary company, the board is controlled by the Government Company itself. 

 

The Government Company exercises more than half of the control of voting rights on the subsidiary. Joint Ventures created by governments and even the public sector undertakings are also considered as the Government Companies. The BOD or Board of Directors are controlled by the government. 

 

In case of Government Companies, the auditor is appointed by the CAG (Comptroller and Auditor General of India). Also, a Government Company’s books are presented to both the houses of parliament, and unlike other companies, a Government Company cannot contribute directly to the political parties.

 

Features of Government Company

Specified features are anticipated to be present in any kind of organisation. Similarly, in Government Companies too, some distinct features bloom. Those features are discussed in the following paragraph. 

Features of a Government Company are:

1. Government Companies are legally registered under the Companies Act 2013, under section 2(45). The Government Companies observe the rules engraved in this section.

2.  Like all other companies, Government Companies too have a separate legal entity, that is to be sued and can sue in legal matters. They can also hold properties in their name.

3. The annual reports, at the end of the financial year, are to be presented in the houses of Parliament.

4. The capital of the company is to be held wholly or partially by the state government and the central government together or individually.

5. They are managed by the directors who are appointed by the government itself.

6. Accounting and Audit Practises are done by Chartered Accountants appointed by the government. 

7. The employees are not civil servants. They regulate their own personal policy following the Articles of Associations.

 

Government Companies in India

India is enrolled as a developing country, with a mixed economic system in regard to trade. This means that the big enterprises in India are both owned by the Private Company as well as still by the Government Companies. While the Government remains predominantly engaged in the crucial sectors, like the petrol or mines, the private companies remain engaged in developmental sectors as well.

 

There is a huge list of Government Companies in India. Few of them are listed below:

 

List of Government Companies in India

Understanding the Background for Government Companies

Humans use resources to sustain their life on Earth. Resources are any materials obtained from nature which can be used by humans as food, shelter or other services. Mankind started processing the raw materials from the very beginning of the Neolithic period for its own use. In later times with the growth of population production systems became more localised. In modern days we see industries performing the job of processing raw materials in a single place. These started with the effort of individuals to sell the goods and gain profit. With a government system in place it took charge of some of the work of production of goods and services for the general population. it established companies to manage the production units in a systematic way. These companies are known as Government Companies. 

The Government Company responsible for a certain work is regulated by government authorities. These are usually no profit companies established by the investment of public money. Any gain obtained from the operation of such companies goes to the public fund of the government. The government tries to operate these companies consistently with the market which results in a healthy economy of the country. It is also very essential for the employment generation and inspiration for the masses to start their own businesses. Proprietorship is another type of company established by individuals without any help or group. the individual remains legally responsible for all the activities of such companies.

In recent times there has been criticism of incompetence of the authorities  running the Government Companies. Some critics have also stated to completely exclude Government Companies and privatise them all which is difficult to do.

In conclusion , Government Companies are essential for a welfare state. and it helps in regulating the prices of commodities in the open market.

A very important role is played by the Import and Customs authorities in all countries of the world when it comes to the entry of goods into the country. The era of globalization ushered in more and more interactions between different countries of the world, leading to an increase in the masses of imports and exports. In order to effectively manage all this, having a trained body of officials and rules is very important. 

Import procedures and documentation are required for any good that crosses the international borders and enters the country. This can range from mere gifts to big shipments. 

Steps for the Process of Import Procedure

The following steps can adequately explain the process of import procedure and documentation:

1. First and foremost, before anything can enter the country, a comprehensive list of what item is being imported and for what purpose needs to be updated and registered. Data like this can be obtained from trade associations and trade organisations. 

2. The EXIM Policy is then consulted by the Importer to make sure that all rules and regulations are followed and standards are met. 

3. Then the request of the instalment of foreign cash takes place which includes the trading of Indian Currency into foreign notes. In this matter, The Exchange Control Department of the Reserve Bank of India (RBI) manages foreign trade exchange in India. 

4. The importer then puts in an import request with the exporter for the supply of merchandise. 

5. Once the payments are settled between the importer and the seller, a letter of credit is issued to the importer. 

6. The importer arranges for the payment of the advance money on arrival of the goods at the port. This saves the importer from the high penalties. 

7. The overseas supplier after in-loading the merchandise on the ship dispatches the “Shipment Advice” to the importer to give information with respect to the shipment of goods.

8. Dock charges are also paid out by the importer once the goods are received and all inspections are completed.

In India, the procedure of imports usually follows this outline, unless the goods are otherwise specified as hazardous or are specially requested by the government of the country. A number of documents are required to make sure that this process takes place seamlessly, which is important for the importer to have quick access to.

These Documentations Include

• All invoices, packing lists, certificates specifying the origins of the product and its description, GATT declaration, IET documents and any other document that the government specifies. 

• Catalogue, Technical Write ups – required for import of machinery and equipment.

• Chemical Composition, Test bond required by the respective customs – all are needed in case of Chemical Import.

• Phytosanitary Certificate with Fumigation, Certificate of Origin – required for un-processed food, plant products, wood imprints, fruits and seeds import.

• Test Report and Composition – for processed food product import.

• Azo Dye Inspection Certificate – in Import of Fabric.

• PLAT T essential for valuation – In case of import of Plastic Granules.

• Registered EPCG License, Panelised Undertaking by Importer, Bond com BG Bank Covering Letter, Signature Attestation from Bank, Copy of Board of Regulation, Particles of Memorandum, and Detail of Previous License – Import under EPCG license.

• Form necessary from Supplier for customs duty advantage – Import of Ceramic Tiles.

• Test Certificate – Import of Wine and Whiskey. 

Explain Import Procedure

Import procedure means all the steps involved in purchase of goods from any foreign country. The procedural steps involved in import trade differ from country to country in respect of their import policy, statutory requirements. In majority of the countries import trade is being controlled by the government. The objective of empowering the government in the import trade is to keep a strict restriction policy in regards of foreign exchange, protection of Indigenous industries etc. For importing goods, a specified and regulated procedure is to be followed. The procedure is summed into quick steps as below: 

1. Trade Enquiry

2. Procurement of Import License and Quota

3. Obtaining Foreign Exchange

4. Placing the Order

5. Dispatching a letter of Credit

6. Obtaining Necessary Documents

7. Customs Formalities and Clearing of Goods

8. Making the Payment

9. Closing the transactions

In our daily life, we do calculate and keep track of the record of our monthly income against all the expenses. Similarly, business individuals follow this task of calculating and keeping track of their income and expenditure. This income and expenditure account is prepared for tracking the income and expenses of the business to know the surplus earned and deficit incurred in a period. Without this account, it would be havoc knowing where the money flowed at the end of the business cycle.

In this context, we are going to take up the discussion of what exactly an income and expenditure account is, what item comes in this account, and other such important aspects that will be dealt with here.

What is an Income and Expenditure Account?

An Income and Expenditure Account is the detailed summary of every income and expense incurred by an organization in a specific financial year. Prepared on an accrual basis, this account records every income and expense in a particular year, irrespective of whether they are clear or not. Outlined by non-trading entities, this account distinguishes capital from revenue and takes only the latter into account.

Typically, these are nominal accounts, which outline an organization’s final accounts and are similar to that of profit and loss accounting by a business entity. These accounts primarily serve to find the surplus or deficit balance of an organization, taking both current income and expenses into account.

Surplus and Deficit Balance of an Income and Expenditure Account

When the revenue generated by a non-trading or non-profitable organization exceeds the total expenditure incurred in a financial year, the Income & Expenditure account shows a surplus balance. It is usually termed as excess income over expenditure. Contrastingly, if the revenue generated by an organization falls short of its annual expenditure, the format of the Income and Expenditure account shows a deficit balance. Be its surplus or deficit, only its closing balance is taken into consideration.

Format of an Income and Expenditure Account

Like any accounting method, an Income and Expenditure account has its specific format accompanied by its formula. This format has the following features:

• The name of this institution is mentioned at the top, followed by its heading of Income and Expenditure account.

• The financial year for which this account has been created must be mentioned too.

• Typically, these have 4 columns with 2 on the left for expenditure, while those on its right for income.

• The first column contains expenditure details while the following column notes these expense amounts.

• The third column lists every income along with its following column mentioning income amounts

• These second and fourth columns mention total expenditure and income in a financial year.

This format is vital since it effectively ensures that the Income and Expenditure formula is utilized in the simplest ways to calculate results. Total expenditure is subtracted from total income to find out surplus or deficit. In the event of a negative answer, it indicates a deficit while it is vice versa if there is a profit. The following table illustrates an Income and Expenditure account format.

Following is a Model of Income and Expenditure Account

Income and Expenditure Account for the Year Ended……….

Basic Features of an Income and Expenditure Account

Vital features of an Income and Expenditure Account are as follows:

1. Similar to profit and loss accounts maintained by business entities, an Income & Expenditure account helps non-trading organizations to keep a note of their generated revenue.

2. These accounts typically outline one year and are taken into account when the fiscal year concludes.

3. This accounting method is primarily based on a double-entry system of accounting that records both outgoing expenses and incoming revenues.

4. These accounts are used to deduce the surplus or deficit incurred by an organization at the end of a certain period.

5. The surplus or deficit recorded in an Income and Expenditure account is moved to a Capital fund account when this account is closed.

6. An Income & Expenditure account only takes into consideration revenues and expenses. Such an account does not record any capital-based income or expenditure of an organization.

7. While these accounts are generally prepared by internal accountants of a non-trading organization, these are audited independently by external auditors.

8. Such an account does not begin with its opening balance. Usually, they follow back every income with expenditure through a concerned financial year.

9. As a nominal account, the Income and Expenditure account format debits all expenses and losses, while crediting every income. Prepared on an accrual basis, this includes every paid and received amount along with those that await clearance.

How to prepare an Income and Expenditure Account?

Understanding the format for an Income & Expenditure account along with its formula is not adequate to prepare them. These steps below detail an outline on how to create such an account:

1. Collection of receipts and payment accounts of a non-trading enterprise whose Income and Expenditure account is to be created.

2. Opening and closing balances about this receipt and payment account should be ignored. Additionally, every payment of previous years’ expenses, as well as that of the future, should also be ignored. Capital payments of this current year are also omitted.

3. Every receipt about the previous year’s revenue along with that of the upcoming years should be omitted from the listing. Additionally, capital revenue for this current year is also ignored.

4. The current year’s revenues should be listed, including both expenditures and incomes. Depreciation of fixed assets related to revenue should also be taken into consideration. Additionally, profit or loss on sales of assets is also taken into account as long as they are not a part of this organization’s capital revenue.

5. Both the total expenditure and total income should be calculated. Net differences between these 2 suggest if a non-trading enterprise has a surplus or deficit balance.

With numerous vital concepts, formats, and formulae being a part of the curriculum, students should go through related topics too. Along with study material on these topics, also offers live classes which can be especially helpful in clearing difficult concepts. So, why wait? Go for it today to take a step towards academic excellence.

The Industrial Policy in 1948 can be held to be a precursor to industrial development in India. Some of the primary objectives of the Industrial Policy are –

• Maintenance of sustained growth in the productivity 

• Increasing employment opportunities 

• Human resource’s optimal utilization 

• Spearheading international competitiveness 

Before the formulation of the Industrial Policy, industrial development in India before independence was in shambles. Under colonial rule, a proper industrial base in India could not be formed. Even the cotton textile industry, the first industry in India, was in ruins under British control.

Industrial development in India started with the implementation of Industrial Policy in 1948, and took off with the Policy in 1991, with the liberalization of the economy.

Read on to know important features of Industrial Policies in India. 

Industrial Policy Reform

1. Industrial Policy 1948

This was the first Policy that was implemented after gaining independence. It ushered in a mixed economic model in the country. Existing industries in India were categorized into the following sectors –

• Strategic industries such as rail transport, atomic energy along with arms and ammunition 

• Basic industries such as iron and steel, mineral oil, coal, etc.

• Controlled private sectors such as cement, paper, textile, etc.

• The private and cooperative sector 

For the implementation of Policy resolutions, the Industries (Development and Regulation) Act, 1951 was passed. 

2. Industrial Policy 1956

The Policy of 1956 led to an enormous expansion of the public sector to restrict private monopolies. Three schedules were laid out for the classification of industries –

• Schedule A – Included 17 industries that were entirely under the control of the State. 

• Schedule B – Included 12 industries that had both public and private ownership.  

• Schedule C – Included all other industries which did not fall within the ambit of the previous two categories.

  

3. Industrial Policy 1977

The Policy statement of 1977 had been highly criticized for having undertaken no clear measures for socio-economic development. The Policy’s main emphasis had been, however, the propagation of cottage and small industries. 

4. Industrial Policy 1980

This Policy focused on the promotion of economic federation and restoration of the Monopolies and Restrictive Trade Practices (MRTP) Act. 

5. Industrial Policy 1991

The Industrial Policy of 1991 opened up India’s economy to the world, in the backdrop of a severe economic crisis. It was this policy that led to an acceleration of economic growth in our country –

• The public sector, with the exceptions of railways and atomic energy, was opened up for the private sector.

• Industrial licensing was abolished barring hazardous chemicals industries, defense, aerospace, industrial explosives, cigarettes, and tobacco.

• Substantial government stakes were sold off from public sector enterprises.

• Foreign Direct investment as allowed.

• Amendment of the Monopolies and Restrictive Trade Practices (MRTP) Act.

There have been certain drawbacks in the Industrial Policies as well. Some of such criticisms include – stagnation of the manufacturing sector, labor displacement, selective investment flow, and general lack of incentives for enhancing efficiency, among others. As the economy of India stands today, there is a greater need for initiatives like Startup India and Make in India.  

This topic has immense scope for study and discussion. Download ’s app today to know more about industrial development in India!

The buying and selling of the goods and services in order to earn profit is termed as trade. The civilization exists because of this trading system, it started from a much earlier period, when the barter system was prevalent. Now, in the modern time the importance of trade has increased even more with the proportionate intensity of the consumption needed. 

On the basis of geographical distinction, trade can be of two types – Internal trade and External Trade. The trade which is transacted within the boundaries of the country is called internal trade, while trade between two or more countries is termed as external trade.

 

What is Internal Trade?

In our discussion we have covered the internal part of trading.

The other name for internal trade is domestic trade. This is the buying and selling of goods and services within the confined boundaries of the nation. Import and export do contribute to the nation’s GDP but the nation majorly contributed from the internal trade itself.   

The products being purchased from the neighboring local shop or from a central market or from departmental shops or from malls or even from door-to-door selling all come under internal trade. Custom duty or Import duty neither of these is levied on the internal trade of goods as they are for domestic consumption. Also, the purchase is to be done through the legal tender of the country. Internal Trade can be classified in – Wholesale Trade and Retail Trade.  

The products which are to be traded to a large population of buyers require channels of distribution here. Example: if a biscuit is produced in a factory in any segment of the country, here the retailers and the wholesalers come in rescue and make the biscuit reach to the customers. 

Purchase and sale of goods and services are done in large quantities by the wholesalers and the retailers buy in smaller portions from them, eventually the customers then purchase from the retailer in their required quantity. Both these retailers and the traders are very important in the internal trade market. They act as the intermediaries who perform the basic function of distribution. They act as the savior in reaching the goods to the ultimate consumers. Internal trade functions to equitably distribute the goods throughout the nation with good speed and reasonable cost.

 

Types of Internal Trade

The types of trade can be discussed in the following manner

 

Wholesale Trade

As talked about previously, wholesale trade is the buying of goods and services in larger quantities to further resale it to the other intermediate use. Wholesaling is conducted by those individuals who attempt to re-sale it to other merchants or other retailers. They sell to industrial, institutional or even the commercial users, but they do not sell in smaller quantities to any individual or institutions. Wholesalers act as a link in between the manufacturer and the retailer. 

• They enable the scope of selling the goods to the larger population, thereby helping the manufacturer to great sales. 

• The wholesalers sell the goods in their own name thereby taking the risk, they purchase in bulk and sell in smaller lots comparatively to the retailers. 

• They sell to persons, or other institutions, and other commercial users, but they do not sell to the consumers. 

• Their activities include grading the products, packing into smaller lots, storing them, transportation and promotion of the goods, collecting the market related information.

 

Retail Trade

This is a type of business enterprise that is engaged in the sale of goods and services to the ultimate customers. After buying large quantities from the wholesaler the retailer sells it to the customers in much smaller lots. The retailer represents the final stage of distribution which started from the hands of the manufacturer. 

Retailers can be described as that branch of business which distributes the products to the end users that are consumers for their personnel or non-business consumption. Retailers can sell the goods in different ways personally, via the telephone or even through vending machines. 

Example: selling ball pens can be done in stores, medicine can be sold at medicine shops, while the joke books can be sold at the stations or trains or roadway buses. The sale of cosmetic products from door-to-door at the customer’s residence. Selling vegetables by the roadside in the market. 

The products or the goods are sold to the customers and hence they fulfil the task of retailing here. Thus, irrespective of how or where the products are being sold as long it reaches the end consumers it is termed as retail trading. 

The retailer performs various functions to complete the task of retailing:

• After producing a variety of products from the wholesaler he needs to arrange the goods.

• He is required to store the goods in full proof conditions, and a proper storage area is to be maintained by him.

• He bears the risk of the business. 

• Grades the product.

• Collects market information.

• Facilitates credit facility to the buyers.

Thus, we see there is the mentioned variety of internal trading which helps in the development of the nation and increases the GDP.

 

Some Important Facts to Remember

• IATA is the International Air Transport Association. It is a trade association of world airlines. 

• IATA is responsible for publishing a list of codes that relates to different carriers and the codes are used for export paperwork. 

• SCAC is Standard Carrier Alpha Code. 

• The foreign buyer is known as FPPI which stands for Foreign Principal Party in Interest.

• Purchasing goods from a foreign country is known as Import. 

• Entrepot are the goods that are imported for the purpose of exporting. 

• The principal appoints the agents. 

• The wholesalers check the fluctuations of prices in the market and by holding the goods back during the fall of prices and releasing them during the rise of prices in the market. 

• Brokers are the agents who are responsible for bringing the buyer and the seller together. 

• Departmental stores are a universal supplier of a broader variety of products. 

• General stores are small scale fixed retailing stores. 

• Supermarkets have varieties of groceries, food items and several products under one roof. 

• Supermarkets have large scale buying and selling so the operating costs are less. 

• Supermarkets have sales that accept only cash hence there are no debts. 

• Since supermarkets follow a self service culture, the customers don’t get attention which is a major drawback of supermarkets. 

• There are various types of small retailers. 

• General stores sell a range of products to meet the day-to-day needs of customers. 

• Specialty shops specialize in selling specific kinds of products. 

• Street shops sell products that are inexpensive compared to general stores. Their supplies extend from local markets to wholesalers. 

• Second hand shops sell products that are already used at much cheaper rates. 

• Wholesalers buy products from manufacturers and sell the products in bulk to the retailers at cheaper rates. They require investment and not advertising or promotion. They are available in any city and state.

• Retailers sell the products to the customers who are the final consumer. They don’t have the option of reselling. 

• Retailers sell products in small quantities that causes more profit since the retailers buy the products from wholesalers at cheaper rates.

 

Quick Ways to Understand this Chapter

1. Make Notes 

Note-making is a wonderful habit. Students are advised to make notes while attending the classes or later while studying by themselves which will make sure that the students understand the chapter in a better way and memorize it. 

2. Read the Chapter 

After attending the classes, students should read the chapter by themselves to memorize the chapter. Internal trade is an easy chapter but also a vast one that might take time to remember the points so a thorough read is a must. 

3. Solving Questions From Textbook

Students should make sure to answer the questions from the textbook in order to test their knowledge and get an idea regarding the possible questions. After answering the questions, they should refer to the answers in order to get a clearer picture of the answers that will be helpful for the exams. The solutions to the questions in the textbook are available on ’s official website and students can download them in PDF formats for checking the answers. 

4. Solving Sample Papers

Students should solve the sample question papers to get a better understanding of the chapter and get a proper idea of the possible questions for the exams. Questions like, types of internal trade, functions of retailers are to be understood and remembered adequately so that students can answer them in a correct manner. 

5. Understanding the Revision Notes

Students should refer to the revision notes which will consist of important points related to Internal trade that will help them to brush up their knowledge before the exams. The revision notes available on for Internal trade are curated by the experts at that will certainly help the students during the exam season.

6.  Practice Mock Test

Students should appear for mock tests to check their knowledge. Mock tests are designed to test the student’s idea and check if they can answer the questions correctly and with ease. It will make sure to check if the students have any doubts and fill their gaps of knowledge. 

7. Stay in Touch with the Chapter

In order to be fluent with the chapter of Internal Trade, a student should stay in touch with the subject matter. Students can also opt for quizzes and puzzles in order to polish their knowledge from time to time.