Category: Commerce Notes PPT

Decision Making Process

Decision making is considered one of the most important tasks of management. The manager plays a crucial role in serving his/her decision, as the growth and failure of an organization are dependent on timely decisions taken. Each managerial decision like planning, organizing, staffing, and directing are all parts of decision making. 

A decision is a process that is consciously chosen from among a set of desired options to achieve the result.

Types of Decision Making

The managers or non-managers have to make decisions at some point to get their organizational goals done. These decisions are categorized further. The types of decision making in an organization are as follows:

1. Programmed And Non-Programmed Decisions:

Programmed decisions are routine and repetitive in nature. These decisions deal with common and frequently occurring problems in an organization such as buying behaviour of consumers, sanctioning of different types of leave to employees, purchasing decisions, salary increment, etc. 

Non-programmed decisions are not routine or common in nature. These are related to exceptional situations in which guidelines or routine management is not set. For example, problems arising from a decline in market share, increasing competition in the business environment. The majority of the decisions taken by managers do fall in this non programmed category.

2. Operational and Strategic Decisions:

Operational decisions are just the normal functioning of the organization. These decisions do not require much time and take a shorter time as compared to other decisions taken. Ample of responsibilities are delegated to subordinates. The main decision is to create harmony in an organization and to see whether the management is proper or not. 

Strategic decisions include all present issues and problems. The main idea is to achieve better working conditions, better equipment, and efficient use of existing equipment, etc. These all fall under this category. Usually, strategic decisions are taken by top-level management.

3. Organizational and Personal Decisions:

If the decision is taken collectively keeping in mind the organizational goal, it is known as the organization goal, and if the manager takes any decision in the personal capacity (affecting his/her life). It is known as personal decisions. These decisions may sometimes affect the functioning of the organization as well. For example, if the employee has decided to leave the organization, it may affect the organization. The authority of taking personal decisions cannot be delegated and is dependent on the individual itself.

4. Major and Minor Decisions:

These are classified as the type of decision-making in management where decision-related to purchase of new premises is a major decision. These are taken by top management whereas the purchase of stationery is a minor decision. Minor decisions can be taken by the superintendent.

5. Individual and Group Decisions:

When the decision is taken by an individual, it is categorized as an individual decision. Usually, routine decisions are taken by individuals within the policy framework of the organization.

Group decisions are taken by a group of individuals in the form of a standing committee. Generally, important types of decisions in management are shifted to this committee. The main aim of a group decision is to involve the maximum number of individuals in the process of decision making.

6. Tactical and Operational Decisions:

Decisions that are pertaining to various policy matters in the organization are known as policy decisions. These are taken by top management and do have a long-term impact on the organization. For example, decisions regarding the location of the plant or volume of production. These are tactical decisions

Operational decisions are all day-to-day decisions that need to be taken for the proper functioning and operation of the organization. These can be taken by middle or lower-level managers. For example, the Calculation of bonuses given to each individual is an operational decision and is performed by middle or lower-level managers. 

These were the types of managerial decisions that are performed by top, middle and lower-level management in the organization to get things done in alignment and to achieve the organizational goal effectively and efficiently. 

Buying Decision Behavior

There are other decisions pertaining which is to be looked at in an organization. One of them is buying decisions. Below will be discussed the types of buying decisions in an organization, also known as B2B buying. There are three types of decision making while going for B2B purchases. 

1. A New Task 

where a business buyer purchases for the first time and is introduced to the new product or service for the first time in his/her organization.

2. The Modified Rebuy

It is a business buying situation where the buyer wants to modify product or service specifications, price or terms, and conditions.

3. Straight Rebuy

In this situation, the buyer routinely reorders without any specifications or alterations needed.

These three situations highly determine B2B purchases. There are other factors as well which alters the type of buying decision behaviour. These are as follows:

1. Awareness about brand competing in product group

2. Decision criteria of customers

3. Evaluation and decision is done on the choice of consumer

Expenditure is the act of spending funds on various corporate expenses. However, in general, spending money to purchase something is called expenditure. For instance, you pay an amount to buy machinery or certain essentials, etc.

You may make the entire purchase in instalments or by paying at once, all those will be considered under expenses. Nevertheless, for Commerce students, the expenditure meaning in accounting is to be considered.

Here is a brief explanation of all the types of expenses with their examples for a holistic understanding.

What is Expenditure in Accounting Terms?

In terms of accounting, expenditure is a disbursement or a payment made towards a different entity. You have to understand that expenditure may be paid towards your liabilities. 

Therefore, expenditure in accounting does not necessarily mean payment for gaining something in exchange. However, there might be instances where you are purchasing an asset for your company or business. In such cases, you will be the owner of the purchase that you make.

Students have to develop a clear understanding with the help of expenditure examples of such terminologies and be able to differentiate between regular definition and specific definition with respect to Commerce. 

What is Revenue Expenditure?

It is one of the types of expenditure, wherein the Central Government spends money with an aim to create fixed assets. In simple words, it is an expenditure to keep the assets in functioning condition regularly.

Let us Understand the Concept with the Help of a Simple Example.

Suppose, you own a tyre company and to expand your business, you recently bought a piece of machinery that cuts out pieces of tyres in equal measurements. The machine cost you Rs. 1,36,000. On regular operation, you found the machine costs Rs.5,700 monthly expenditure towards its maintenance.

Here, the amount incurred in keeping the machine in working condition is Rs.5,700 and this amount is called the expenditure towards making revenue. 

In further simpler words, an expense that is likely to bring revenue is called revenue expenditure.

Consider this case, the machinery is supposed to increase productivity and thereby increase sales and generate revenue. To keep it functioning, an expense is incurred towards its regular repairing and save it from wear and tear.

What is a Capital Expenditure?

Capital expenditure is one of the two different types of expenditure. This kind of expense is incurred by a company to upgrade or expand its business operations. Often this expense is related to acquiring fixed assets that are likely to be productive in the long term.

The primary aim of capital expenditure is to enhance the overall efficiency or capability of a business.  Let us further understand this concept with a small example.

Again, you have a tyre manufacturing company, and you already have the equipment to produce different sizes of tyres. However, lately, you have purchased other equipment that will enhance the longevity of the previously present pieces of equipment. 

In such a case, the cost incurred in purchasing the new equipment to enhance the efficiency of old equipment is the capital expenditure. 

Students should also understand the types of capital expenditure, which are classified into two types –

Commerce students need to develop clarity on both these types of expenditure so as to classify them and determine a company’s expenses rightfully. 

How Does Revenue Expenditure Differ from Capital Expenditure?

Both capital expenditure and revenue expenditure are two different types of expenses incurred while running a business. Although the primary objective is the overall growth of a business, it is their specific purposes that separate them from each other. 

The former is incurred when purchasing a piece of equipment or machinery to upgrade the working condition of a company. Contrarily, the latter is incurred in an organisation when there is a need for funds to keep the equipment functioning effectively that are likely to be productive over the years.

To check your preparation level, you need to revise the lessons as well as take necessary challenges and short tests at times. Here is a short quiz that will help you test your knowledge learnt so far.

Taking this quiz will allow you to think deeply about each example and classify them into expenses under capital or revenue. 

Quiz:

Classify the following under the categories of capital and revenue expenditure.

Rent, office equipment, carriage on saleable goods, Furniture and fixtures, salaries, wages manufacturing expenses, vehicles, commission, buildings, legal expenses, land,  insurance, computer equipment, advertisement, machinery, free samples, postage, printing charges, software.

Answer:

Once you have understood the classification of expenditure, it will be easier for you to delve into advanced concepts as well. Listing these expenses on a balance sheet or drafting a report for a business will help you ease your job significantly in the long run if you take up accounts in your higher studies.

For more information on expenditure, its types and its role in a detailed manner, you can take help from our online learning programmes. Our study materials and notes of important topics drafted by subject experts to help you develop a clear understanding of the same. So, get your notes from us now and add an extra edge to the competition.

Unemployment constitutes one of the most plaguing concerns of a country’s economy. According to the Centre for Monitoring Indian Economy (CMIE), India is seeing one of the lowest Unemployment rates of almost 7% as of October 2020, since the lockdown from March 2020.

In this section, you will get a brief overview of topics related to Employment and Unemployment, their calculation, what is urban Unemployment, types of rural Unemployment, and how they are different from each other.

Employment in the Organised Sector 

The organised sector is defined as one that is registered with the relevant body or government and adheres to its rules and regulations. The organised sector in India consists of employees of the national and state governments, banks, railways, insurance, industry, and so on. This industry follows a set of legal guidelines. Systematic processes and procedures exist in the organised sector. Personnel in this industry have more Employment rights and earn more money than those in unstructured industries.

Good pay, defined working hours, paid holidays, and medical allowance and insurance are all provided by the organised sector.

Employment in the Unorganised Sector 

Domestic production and small-scale industries make up the unorganised sector of the economy. Jobs are generally low-paying and irregular, with little benefits such as paid vacations, holidays, or sick leave. It is difficult to find work. People are asked to leave their jobs if there is no work. A considerable number of people work in this sector on their own, doing minor things like selling on the street, making repairs, and so on.

What is Unemployment?

In economics, Unemployment refers to the state of those people who belong to the working-age group and are looking for jobs but are unable to find one. It also includes working individuals with no suitable job.

There are three types of activity statuses of a person, based on which the National Sample Survey Organization (NSSO) determines Employment and Unemployment. These are:

• Working or contributing to economic activity, that is, employed.

• Looking for and willing to work, that is, involuntarily unemployed.

• Neither working nor seeking a job, that is, voluntarily unemployed.

The first two types of individuals make up for the total labour force, and the Unemployment rate is the percentage of this population that is presently lacking a job.

Calculation of Unemployment Rate

The most common way of gauging Unemployment is by calculating the Unemployment rate. It is calculated by taking a percentage of the number of unemployed individuals divided by the total employed population or individuals constituting the labour force. Mathematically, it can be represented as:

Unemployment rate =[ frac{text{(Number of Unemployed Individuals}}{text{Total labour force)}} times 100]

Types of Unemployment

The Indian subcontinent faces Unemployment, both involuntary and voluntary, which can be examined under two broad categories, in relation to one another.

Rural Unemployment 

A majority of the Indian population resides in rural areas and thrive on agriculture as a primary means of livelihood. But this agrarian industry does not make up for adequate Employment for the entire population living in these areas. This leads to rural Unemployment which can be categorised into three major types, as have been discussed below.

In India, the downturn is systemic. To put it another way, economic output is insufficient to provide enough jobs. This has been going on for a while.

Open Unemployment

One of the most basic Unemployment situations is when an unemployed individual, seeking and available for work, is unable to get a job with a regular payment. This is termed open Unemployment. A major reason for this type of Unemployment is a rapidly expanding labour force in an economy with a slower growth rate. When it comes to open redundancy, identifying those who are unemployed is a simple task. Agriculture is a short-term occupation in India, and there is usually a high need for labour during sowing, weddings, and harvesting, but demand for labour drops significantly during the slack season.

The duration of periodic Unemployment in India varies by state, based on farming practices, soil type, and the potential of multiple cropping. Farmers in rainy agriculture are unemployed for four to six months per year. They are unable to find an alternative job at this time due to their illiteracy, poverty, and bad health.

Disguised Unemployment

This type of Unemployment is particularly rampant in the agricultural industry, contributing as the most common form of rural Unemployment in India. It presents a circumstance in which more individuals are engaged in a work than what is required due to lack of alternative job opportunities. This indicates that the removal of some of the workforce would not make a major difference in the production of a farm; that is, this surplus manpower has negligible to zero marginal productivity. The disguisedly impoverished are individuals who work for themselves and are overly numerous in relation to the resources with which they work, such that if a number of them were to be reassigned to other sectors of the country, the total output of the sector from which they were reassigned would not be affected, even if no significant reorganization took place. Another important cause of uncertainty is the high rate of Unemployment among educated rural youth. The growth of education has resulted in a large number of unemployed young people looking for work. However, they are unable to find work in the labour market. Unemployment of this nature has devastating implications. It causes some people to be frustrated and others to be dissatisfied.

Seasonal Unemployment

This type of Unemployment is seen with people working in industries with seasonal production. Industries like agriculture only need additional laborers for particular times of the year, for instance, harvest season. In such cases, these specific workers remain unemployed during the rest of the year, giving rise to Unemployment in rural areas.

Urban Unemployment

With rapid immigration and a population boom, India has seen remarkable growth in urban Unemployment in recent years. These can be further categorised into three types. 

Industrial Unemployment

This is the most commonly observed type of urban Employment due to an increasing rate of migration of workers from rural to urban areas. Every year, thousands of illiterate individuals travel to more developed areas in search of jobs of menial labour in production units and factories. Due to high demand, most of them suffer from industrial Unemployment meaning their inability to secure such jobs.

Structural Unemployment

Referred to as educated Unemployment, this is probably the most disappointing type of Unemployment. Structural Unemployment arises when an educated individual fails to find a job matching their qualifications. This occurs due to a lack of adequate job opportunities in concerned fields compared to the number of learned individuals.

Technological Unemployment

Rapid advancement in technology is leading to Unemployment of individuals who fail to match or adapt to required skills and, thus, become obsolete for the industry. This is mostly seen in employees belonging to the retiring age group.

What Causes Unemployment?

Following is a list of some of the most common causes of Unemployment in India.

• A rapidly growing rate of the population overruns available Employment opportunities.

• A negligible growth rate of the economy failing to keep up with a growing labor force.

• Lack of proper infrastructure and required investment in sectors lagging.

• The advent of smart technology and AI reduces human resources previously employed for those tasks.

• Lack of necessary field-specific skills, as a result of school and college education not relevant to concerned industries.

• Physical unskilled labor is undervalued by today’s educational system. Physical labor is disliked by educated people. As a result, after completing formal schooling, the rural teenager seeks sedentary Employment in a government agency or a private company. They are both unable and reluctant to work in agriculture. As a result, rural Unemployment is exacerbated by the current educational system.

• Indeed, there is no genuine attempt in India to plan for personnel. Employment has not been given the attention it deserves in our development strategy. It is not related to the development process because it is assumed that economic progress will lead to the establishment of job possibilities. However, this has not resulted in the integration of jobs and growth. Poverty, in general, and rural poverty, in particular, are caused by all of these reasons.

• In India, the caste system is a major contributor to underdevelopment. It is a system of occupational distribution that limits rural residents’ occupational mobility. In rural India, occupations are inherited due to the caste system. When the number of members of a caste grows faster than the demand for services, the remaining populace becomes unemployed.

• India’s agriculture is chaotic and diverse. Because even though the Indian farmer must willfully invest more to receive less, it follows an inverted economics model. Regional insecurity is a result of this.

• The Indian farmer’s traditional farming approach is outdated and unscientific. Agricultural productivity is hampered by a lack of improved farming technologies and a shortage of skilled labour. Fertilizer aversion, a lack of proper irrigation facilities, and insufficient funding to purchase sophisticated agricultural instruments, seeds, and vermicompost all have an impact on agricultural output. As a result, rural agriculture reduces its potential for Employment.

• Agriculture does not keep the farmland busy all year. The rural population is frequently fully engaged throughout the sowing and harvesting seasons, and economically inactive during the post-harvest and before the following sowing season. Farmers in South India are only busy for five months of last year,  and the other seven months are spent doing nothing financially productive. Peasants all over India are in a similar situation. As a result, rural communities experience high levels of seasonal Unemployment.

Employment and unemployment are a not only crucial topic for CBSE Class 12 Commerce but is also a necessary concept for students to understand the working of a real economy. comes with additional detailed explanations and examples to help you prepare Class 12 Economics projects on employment and unemployment. For step-by-step answers to questions like what is rural unemployment and what is industrial unemployment, visit our website or install the app today!

The Employment Generation 

Elevated enterprises account for a considerable amount of new jobs created, as measured by Employment expansion rates, and are important contributors to the country’s economic growth. Small and medium-sized businesses (SMEs) create more net jobs than larger corporations. SMEs are key Employment producers, according to much research. According to these findings, job creation and job contraction occur hand in hand in all countries. It is common to see some companies shed employees while others gain, and some of them exhibit a considerable increase in the labour force, even in the same industry or market. 

The World Bank Group’s commitment to entrepreneurship development as a major aspect of its tool for enhancing economic growth, Employment, and poverty alleviation in various countries is established in the World Bank Group’s evaluation on small company activities (World Bank Review, 2001). The importance of SMEs in long-term global and regional economic recovery is increasingly becoming more widely recognised.

 

However, due to a lack of data, very little research has been done in this area. Small and medium-sized enterprises (SMEs) play a vital role in a country’s industrial growth since they create more gainful Employment, utilise fewer resources, generate more money, and reduce poverty. It’s plausible to assume that if SMEs had been given more weight in industrial development, prior patterns of disastrous economic development may have been averted. However, the significant role in a country’s economic progress is seldom fully appreciated. As a result of the relevance and contribution of SMEs to economic activity, there is a substantial opportunity to boost their growth by increasing their operational efficiency.

A written or spoken agreement, especially which is concerned with employment and sales, is intended to be enforceable by law; this is the definition of Contract.

This contract needs to come in effect and is possible by living, and sound human beings, the signing of the contract and the lawful effect of the contract are all done under the purview of sound individuals, therefore we should know all the facets in performing the contract, who performs, and what is the legal enforcement done in the formation of the contract, this is to be learned.

Introduction: Who Performs the Contract?

At least two parties are present in a contract – a promisor and a promisee. A promisee is that party to whom a promise is made and a promisor is another party who performs the promise.

A Contract can be performed by

1. Promisor himself

2. Agent

3. Representative

4. Third Person

5. Joint promisor

Promisor Performs the Promise

In the contract, it is to be shown that the parties intend that the promise should be performed by the promisor himself. Such a promise is to be performed by the promisor. This means that the contracts which involve the exercise of personal skill like singing or dancing or are founded on personal confidence between the parties like promising/contracting to marry is to be performed by the promisor himself.

A contract indicating that the parties intended the promisor to fulfil the promise by himself, then the promisor is mandated to perform the promise. These usually include promises which involve personal skills, experience, or expertise and these contracts are usually based on the trust between the promisor and the promisee.

Example: Mary singing at Liza’s wedding reception is a good example of a personal skill being required to perform the promise.

Section 41

Section 41 of the Indian Contract Act 1872 throws light on the “Effect of accepting performance from third person” This states that When a promisee accepts performance of the promise made from a third person, the promisee cannot afterwards divert the performance of promise against the promisor. A promisee accepting performance of the promise from a third person, will not afterwards enforce it against the promisor who is present in the contract. Section 41 focuses on the promise being transferred to the promise from any third person present in the contract. The law mandates the promise to act accordingly and fulfil the promise accepted by him.

Section 40

Section 40 of the Indian Contract Act 1872 illustrates the ‘Person by whom promises are to be performed. When it appears from the nature of the case that this was the intention of the parties to any contract that any promise contained in the contract should be performed by the promisor by himself, then such promise must be performed by the promisor necessarily. Yet in other cases, the promisor or his representative may employ a competent person to perform the promise.

Example: Sana promises to pay Michael a sum of money. Sana may perform this promise, either by personally paying the money to Michael or by causing it to be paid to Michael by another person or representative; and if Sana dies before the time appointed for payment, his representatives must perform the promise, or employ some proper person to do so.

Section 42

Section 42 of The Indian Contract Act 1872 talks about “Devolution of Joint Liabilities”. When two or more persons made a joint promise, then (unless a contrary intention appears by the contract) all those contracting persons, during their joint lives, and, after the death of either of them, his representative jointly also with the survivor or survivors, and after the death of the last survivor, all the representatives jointly, will have to fulfil the promise.  This section takes the parties jointly liable to conduct and perform a promise so contracted in. The parties in the joint liability will be required to complete this promise even if their death occurs, in that case, their legal representatives need to fulfil the same.

Performance of Contract consists of these various sections which moreover makes the contract legally enforceable. Performing of the contract can be on any – the promisor himself, the agent or the representatives appointed.

Learning the Concept of Who Performs the Contract?

Do you need to know Who Performs the Contract? When you are studying the Indian Contract Act, you will come across terms, like promisor and promisee, which are necessary to learn. If you learn all these terms, it will be much easier for you to understand the entire Indian Contract Act, 1872. Moreover, you should know everything about the elements of a valid contract and how contracts are formed. provides you with a user-friendly platform to learn concepts, like Who Performs the Contract? – You can use our website or mobile app to study the entire Indian Contract Act and improve your understanding of contracts.

Learning Who Performs the Contract? You might have to sign a contract, say while buying a car. So, if you already know the elements of that contract, you will be able to tell whether it is valid or not. Below are some tips on how to start learning the concepts of contracts:

• Go through the entire Indian Contract Act,1872, thoroughly to understand the laws and rules related to the contracts. 

• Make notes of the important sections in the Indian Contract Act and keep revising them so that you do not forget anything during your tests.

• Use ’s online learning platform to know more about Who Performs the Contract? Our study materials are curated by highly-trained professionals who have years of experience in this field. 

• You can go through different examples to understand sections 40, 41, and 42 of the Indian Contract Act. These examples will make the concepts easier to learn and memorize. 

• Keep testing your knowledge by solving important exercise questions based on Who Performs the Contract? Before the exam, go through the revision notes of the Indian Contract Act to brush up on your knowledge and revise the entire concept. 

• Lastly, gain a better understanding of Who Performs the Contract? to score well in your final exam.

The motivation behind planning Trading, Profit and Loss Account and Balance Sheet to discover the benefit or misfortune made by business and to know the monetary adequacy of the worry all in all. To accomplish the destinations of the firm, it is fundamental to keep a few books and records. The quantity of books and records are kept up with by an – undertaking for the proof of the recording deals. Cash Receipts, Invoice, Cash Memo, Check and different vouchers are the instances of narrative proof upheld for arrangement of pay explanations. As per twofold passage process for bookkeeping every exchange is recorded in the books of records to discover the benefits acquired during a specific period. “Exchange” of a business alludes to an occasion the acknowledgment of which leads to a section in account records. While examining the audit of bookkeeping cycle, the entire course of bookkeeping comprises of the accompanying significant stages : 

1. Recording the exchanges are done through Journals or Subsidiary Books.

2. Classifying the exchanges is accomplished by Ledger. 

3. Summarizing the exchanges are done through Trial balance. 

4. The last stage is worrying about planning Income Statements (Trading, Profit and Loss Account and Balance Sheet).

Who Is The Consignee?

The consignee is the element who is monetarily responsible also known as the purchaser for the receipt of a shipment in the agreement of carriage. By and large, the representative is equivalent to what a beneficiary is.If a source who dispatches a thing to a collector by means of the conveyance administration, then, at that point, the shipper is the consignor, and the beneficiary is the consignee, and the deliverer is the carrier of the good.The agent is the beneficiary of the merchandise which is being shipped.  The proctor is a client or a client.  The principle proprietor of the item is the recipient, and henceforth it is vital to remember that the shipments are bound for an outsider coordinations organization which won’t be recorded however the 3PL as the consignee. The recipient may be the merchant of record in the global shipments. The terms representative and distributor are utilized by an organization which sends its items on a transfer basis.  The proprietor of the freight commits the item to a cargo transporter for moving something very similar to the proctor. The responsibility for cargo doesn’t change legitimately until the beneficiary of the merchandise signs.

The consignee is the entity who is financially responsible (the buyer) for the receipt of a shipment in the contract of carriage. Generally, the consignee is the same as what a receiver is.

If a sender who dispatches an item to a receiver via the delivery service, then the sender is the consignor, and the recipient is the consignee, and the deliverer is the carrier of the goods.

The consignee is the recipient of the goods which are being shipped.  The consignee is a customer or a client.  

The main owner of the product is the consignee, and hence it is important to keep in mind that the shipments are destined for a 3rd party logistics company which will not be listed as the 3PL as the consignee. 

The consignee is the importer of the record in the international shipments.

The terms consignee and consignor are used by a company which ships its products on a consignment basis.  The owner of the cargo consigns the product to a freight carrier for transporting the same to the consignee. The ownership of the freight does not change legally until the recipient of the goods signs the BOL.

Journal Entries in the Books of Consignee

They extensively ordered into 

(I) General Journals and

(2) Special Journals. Exceptional Journals are auxiliary books which are as per the following :

1. Deals Book

2. Buy Book 

3. Buy Returns Book 

4. Deals Returns Book 

5. Bills Receivable Book 

6. Charges Payable Book 

7. Cash Book. 

These auxiliary books which are utilized for recording of every exchange. The accompanying focuses to be considered prior to making diary section : 

1. Capital Account: The underlying convergence of capital as money given by the owner is known as “Capital.” It might be additionally changed over into plant and apparatus, building and so on Thus it ought to be charged to Cash Nc or Plant and Machinery Property Nc and credited to Proprietor’s Nc. 

2. Drawing Account: When owners remove cash or merchandise from business for individual use, it ought to be charged to Drawing Nc and credited Cash Nc or Purchase Nc.

3. Goods Account: If any exchanges identify with buy or offer of products, rather than making diary passages in a single Goods Account, separate records might be kept up with as Sales Nc, Purchase Nc, Sales Returns Nc, and Purchase Returns Nc.

The set of journal entries which are recorded in the books of the Consignee are as follows:

1. When the Goods is Received:

No entry required

2. When the Carriage Expenses are Incurred by the Consignee:

Consignor Account Dr

To Bank Account

(Expenses being paid on consignment)

3. Advance that is Remitted to Consignor by way of   Cash/Cheque or Bills Payable:

Consignor Account Dr

To Cash/Bank/Bills Payable A/c

(Advance paid to Consignor for the goods)

4. When Consignee Sold the Goods:

For cash sales:

Bank Account Dr

To Consignor Account

(cash sales of consignment occurred)

5. For Credit Sale:

Consignment Debtors Account Dr

To Consignor Account

(Occurrence of credit sales of consignment)

6. When the Commission Becomes Due:

Consignor Accounts Dr

To Commission Account

(Being commission earned at the time of sale of consignment)

7. When the Consignee Collected the Debt from Consignment Debtors:

Bank Account Dr 

To Consignment Debtors A/c

(Being the Collection of consignment debts happen)

8. For Bad Debts, If Any:

If Del Credere Commission is not paid:

Consignor Account Dr

To Consignment Debtors A/c

(bad debt that is incurred on sales)

9. If Del Credere Commission is Paid:

Bad Debts Account Dr

To Consignment Debtors A/c

(Being bad debts incurred on the consignment sales)

10. Bad Debts are Transferred to his Profit & Loss Account:

Del Credere Commission Account Dr

To Bad Debts Account

(Being the bad debts transferred to Del Credere Commission Account)

11. Closing of the Del Credere Commission and Commission Account:

Commission Account Dr

Del Credere Commission Account Dr

To Profit and Loss Account

(Being Commission account and balance of Del Credere account is closed by transferring the Profit and Loss Account)

12. Settlement of the Account with Consignor:

Consignor Account Dr

To Cash/Bank/Bill Payable A/c

(Being the amount, which is due to Consignor is settled)

Consignee Rights

The rights of the consignee under an air waybill are regulated by the Convention of Warsaw. With the unification of Certain Rules for the International Carriage by Air, 1929 and the Montreal Convention for the alignment of certain rules for the International Carriage by Air 1999 and other the relevant state laws (which may be the one law which has been chosen as the proper law by the parties, or for any combination of laws represented by the seller, buyer, consignor, and even the carrier.) This is very important according to the export documents.

The rule that actually applies isn’t just the guideline by which, from a specific point on schedule, the right of activity shifts from the shipper to the agent, yet in addition the arrangement identifying with their archives confirms the option to bring an activity. For the sender, the copy transfer note he acquires when he hands the merchandise over for carriage goes about as such an archive, and for the agent, it is the first transfer note, which he claims when he has acknowledged the products.

Be that as it may, there are circumstances where the agent can authorize his cases by lawful activity even without creating the copy transfer note, for example assuming the proctor concurs, or on the other hand on the off chance that there is proof that the agent wouldn’t acknowledge the merchandise.

The partnership capital account can be defined as an equity account that is recorded in the accounting entry. The following are the types of transactions:

• The initial and the subsequent contributions by the partners to the partnership firm, in the form of either cash or the market value of another kind of assets 

• The profit and the losses are earned by the business and are allocated to the partners based on the provisions of the partnership agreement.  

• Distributions done to the partners. 

The ending balance in the account is then undistributed balance to the partners as of the present date.

Type of Partnership Account

A partnership might maintain a single partnership capital account for all the working partners, with a supporting schedule that breaks down the capital account for each partner. Given that, it is easier over the long term to instead maintain the separate capital accounts within the accounting system for each and every partner. By doing this it will be a lot easier to determine the amount that is to be distributed to each partner in the time of liquidation of the business or the if a partner leaves, it then reduces the amount of discussion over the payments and the liabilities amongst the partners.

The liquidating payment is that a partner may eventually receive the termination of the business which does not necessarily equal the balance in the partnership capital account that is prior to the liquidation of the business. When the assets are being sold and the liabilities are settled, it is likely that the market values are going to vary from the amounts recorded in the partnership. This difference will be represented in the liquidation payment also.

Adjustment of Partner’s Capital

The partners may agree that their capitals in a reconstituted firm will be in the proportion of the new profit-sharing ratio. 

Here, it welcomes two situations.

The new partner is required to bring the proportionate capital for his share of the profit. Also, the new partner’s capital is then calculated on the basis of the capital of the reconstituted firm or on the basis of the combined capitals of the old partners in the share of profit.

The old partners may decide to make their capital in the proportion to their new profit-sharing ratio. The old partner’s capital is then calculated on the basis of the capital that is brought by the new partner for his share of profit. This deficiency or the excess in the old partner’s capital account is to be adjusted through the current accounts or through cash which may be brought in or withdrawn by the partners.

While, on the death of a partner, the partnership ceases to exist. But this firm will not cease to exist as the remaining partners may decide to continue their partnership business. In the case of the death of a partner, the treatment of various items is similar to that at the time of retirement of the partner. After making all the necessary adjustments in the Partners Capital Account, the amount that is due to him is to be paid to his Legal Representative.

Adjustment of Partner’s Capital and Death of a Partner

When there is a death of a partner, we need to credit the following mentioned amounts in the Deceased Partner’s Capital Account:

• Reserves or the Undistributed profits

• Goodwill 

• Profit on revaluation of the assets and the liabilities. 

• Any loan that is given by the partner

• The Joint Life Policy 

• Share in the subsequent Profits

• Interest on Capital

Also, we need to debit the following amounts:

• Drawings by the deceased partner

• Interest in his drawings

• Loss of revaluation of the assets and liabilities.

• Share in subsequent Losses of the entity.

Procedures to Calculate the Profit of a Deceased Partner

Time Basis

In this method, the assumption is that the profits are earned evenly throughout the year. We estimate the profit on the basis of the profit that is incurred in the last year.

Turnover or Sales Basis

In this method, we need to consider the profit also the total sales of the last year. Here, we estimate the profit up to the date of death of the partner on the basis of the sales that are of the last year.

After all these adjustments, the amount which is standing in the Deceased Partner’s Capital A/C is payable to the legal representative.