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UPKAR PRAKASHAN, AGRA–2
FOR ALL COMPETITIVE EXAMS.(CA, ICWA, CS, BBA, MBA, M. Com. etc.)
ByVivek K. Gupta
&Manoj Kaushik
Revised byDr. O.P. Sharma
OBJECTIVECOMMERCE
Revised and Enlarged Edition
© Publishers
Publishers
UPKAR PRAKASHAN(An ISO 9001 : 2000 Company)
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● The publishers have taken all possible precautions in publishing this book, yet ifany mistake has crept in, the publishers shall not be responsible for the same.
● This book or any part thereof may not be reproduced in any form byPhotographic, Mechanical, or any other method, for any use, without writtenpermission from the Publishers.
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ISBN : 978-81-7482-149-2
Price : 199.00(Rs. One Hundred Ninety Nine Only)
Code No. 985
Printed at : UPKAR PRAKASHAN (Printing Unit) Bye-pass, AGRA
Preface to the Revised Edition
It is a pleasant moment indeed to place the Fourth revised and refined edition of"OBJECTIVE COMMERCE" before examinees appearing in Commerce basedCompetitive examinations.
In this revised edition most of the chapters have been rewritten and some majorand substantial changes have also been made. The main redeeming and distinctfeatures of this revised edition are as under :
* All contents and question-answers have been framed in a systematic manner.
* At the end of each chapter summarised hints and analysis of importantconcepts of commerce are provided so that candidates can assess theunderstanding of the subject matter.
* Keeping in view the specific requirements of the candidates, a fresh and novelapproach to the study of commerce is adopted.
We are deeply indebted to the students, readers and subject experts for theirconstant encouragement and cooperation throughout the process of bringing out thisrevised edition successfully.
Any constructive suggestion and guidance for further improvement of the book willbe gratefully acknowledged.
—Authors
CONTENTS
SECTION-I✰ Important Equations and Formulae............................................................ 3–20
SECTION-II✰ Accounting Fundamentals ........................................................................ 23–47
✰ Partnership Accounts ............................................................................... 48–62
SECTION-III✰ Company Accounts (Introduction, Shares & Debentures) ........................ 65–85
✰ Schedule VI of the Companies Act, 1956 (Balance Sheet format) ............ 86–93
✰ Company Accounts—(Final Accounts) ..................................................... 94–98
SECTION-IV✰ Financial Management .............................................................................. 101–148
✰ Financial Analysis and Ratios Analysis ..................................................... 149–161
✰ Cash Flow and Funds Flow Statement ...................................................... 162–172
✰ Cost-Volume-Profit or BEP Analysis ......................................................... 173–176
SECTION-V✰ New Corporate Laws ................................................................................ 179–191
✰ Business or Mercantile Laws .................................................................... 192–198
SECTION-VI✰ Auditing ..................................................................................................... 201–215
✰ Cost Accounting ........................................................................................ 216–224
( viii )
SECTION-VII✰ Indian Partnership Act, 1932 .................................................................... 227–229
✰ The Payment of Gratuity Act, 1972 ........................................................... 230–232
✰ Consumer Protection Act, 1986 ................................................................ 233–235
✰ The Industrial Disputes Act, 1947 ............................................................. 236–237
✰ The Income Tax Act, 1961 ........................................................................ 238–240
✰ The Payment of Bonus Act, 1965 ............................................................. 241–245
✰ Insurance Act, 1938 (including IRDA, 1999) ............................................ 246–256
SECTION-VIII✰ The Securities and Exchange Board of India (SEBI) Act, 1992 ................ 259–262
✰ The Foreign Exchange Management Act (FEMA), 1999........................... 263–265
✰ The Competition Act, 2002 (Including CCI) ............................................... 266–268
✰ The National Food Security Act (NFSA), 2013 .......................................... 269–271
Section I
✰ Important Equations and Formulae
Obstacles are those frightful things you see when you take your eyes offyour goal . —Henry Ford
IMPORTANT EQUATIONS AND FORMULAE
OWNER’S EQUITY
Owner’s Equity
= Assets – Liabilities
Assets = Liabilities + Capital
Liabilities = Assets – Owner’s Equity orCapital or Net worth
Owner’s Equity= Paid up Capital + Reserve &
Surplus or Retained EarningsRetained Earnings
= Capital Reserve + RevenueReserve + Other Reserve orUndistributed Profits
Assets = Owner’s Equity + ExternalLiabilities
Assets = Income + Gains + Liabilities– Expenses – Losses
or
Expenses + Losses + Assets
= Incomes + Gains + Liabilities
Balance Sheet Equation in Short FormA = L + C Here,
C = A – L A—Assets
L = A – C C—Capital
A – C – L = Zero L—Liabilities
FUNDS FLOW ANALYSIS
Total Sources = Total Usesor
Increase in Equity + Decrease in Assets
= Increase in Assets +Decrease in Equity
Statement of Sources and Application ofFunds
Sources of Funds Application of Funds
1. Operating Profit orTrading Profit
1. Operating Loss orTrading Loss
2. Issue of Share Cap-ital.
2. Redemption of Pref-erence Share Capi-tal.
3. Issue of Debentures 3. Redemption of De-bentures.
4. Raising of Long-term Loans.
4. Repayment of Long-term Loans.
5. Sale of Non-currentAssets
5. Purchase of Non-current Assets.
6. Sale of FixedAssets.
6. Purchase of FixedAssets.
7. Non-trading Re-ceipts or Non-trading Incomes
7. Non-trading pay-ment (i.e., dividendpaid)
8. Decrease in Work-ing Capital.
8. Increase in WorkingCapital.
Identification of Sources and Uses ofFunds
Sources of Funds :
● Increase in liabilities or capital or creditbalances; and
● Decrease in assets or debit balances.
Uses of Funds :
● Increase in assets or debit balances and● Decrease in liabilities or capital or credit
balances.● Sources of Funds – Application of Funds
= Increase in Working Capital● Application of Funds – Sources of Funds
= Decrease in Working Capital
4A | O. Com.
Schedule of Changes in Working Capital
Items Current LastChanges in Working
Capital
Year Year Increase Decrease
CurrentAssets :
Cash — —
Bank — —
Stock — —
B/R — —
Debtors — —
Total A
CurrentLiabilities :
B/P — —
Creditors — —
Provision forTax
— —
Total B
Increase/Decrease in working capital
Working Capital = Current Assets –
Current Liabilities
— Increase in Current Asset increasesWorking Capital.
— Decrease in Current Asset reducesWorking Capital.
— Increase in Current Liability reducesWorking Capital.
— Decrease in Current Liability increasesWorking Capital.
CASH FLOW ANALYSIS
Cash Flows
= Changes in cash and cash equivalents
Cash
= Cash in hand + cash at bank + demand
deposits
Cash Equivalents
= Highly liquid short term investments i.e.
Treasury Bills, Deposit Certificates,
Commercial Papers, Money Market
Deposits, Marketable Securities etc.
Cash Flow Statement
Sources of Cash(Inflows)
Uses of Cash(Outflows)
1. Cash from BusinessOperation.
1. Loss from BusinessOperation.
2. Sale of FixedAssets.
2. Purchase of FixedAssets.
3. Raising Loans. 3. Redemption of P.Shares.
4. Issue of Shares/Debentures.
4. Redemption ofDebentures.
5. Other Cash Re-ceipts.
5. Repayment of Loans.
6. Payment of taxesand dividends.
Note : This statement considers only items relatingto cash.
Calculation of Cash from Business Oper-ation
(i) Income-Expenditure Method—Cash from Operation= Cash Sales – Cash Purchases
– Operating expenses paid in Cash.(ii) Net Profit Method—
Rs.Net Profit as per P & L A/c ………Add :(a) Non-Cash Expenses ………(b) Decrease in Current Assets ………
(Except Cash & Bank,Debtors, B/R and LoansGranted)
(c) Increase in CurrentLiabilities (Except BankOverdraft) ………
Total ……… Lessl ……… Cash from Operation ………
Examples of Non-Cash Transactions(i) Depreciation on Fixed Assets.(ii) Profit or Loss on Sales of Fixed Assets.
Objective Commerce For CA, ICWA, CS,MBA, M.Com. Etc
Publisher : Upkar Prakashan ISBN : 9788174821492 Author : Vivek K. GuptaAnd Manoj Kaushik
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