CA Foundation

Nature, Process and Types of Communication – CA Foundation BCR Notes

Nature, Process and Types of Communication – CA Foundation BCR Notes

Browsing through Nature, Process and Types of Communication – CA Foundation BCR Notes Pdf help students to revise the complete subject quickly.

Nature, Process and Types of Communication – BCR Notes CA Foundation

Meaning of Communication:
The word communication has been derived from the Latin ‘Communicare, which means “to share”. Communication may, therefore, be defined as the process of sharing (exchanging) information, ideas, thoughts, feelings and emotions between two or more persons.

Nature, Process and Types of Communication – CA Foundation BCR Notes

Process of Communication:
The communication process consists of the following elements:
Nature, Process and Types of Communication – CA Foundation BCR Notes 1
→ Sender : Sender is the person who initiates the process of communication. The sender may be a speaker, a writer, an actor, a painter, etc.

→ Encoding: The process of converting the message into words, symbols, pictures, etc. is called encoding
Message: Message means whatever is to be communicated. It is the heart of communication process

→ Channel: The medium through which the message is sent is called channel. It may be a speech, a letter, an e-mail, SMS, gesture, sound, etc.

→ Receiver : The person to whom the message is sent is the receiver. The receiver may be a listener, a reader or a viewer.

→ Feed back : The reaction or response to the message is called feedback

→ Noise : Any disturbance, hurdle or barrier to communication is the notice

Types of Communication:
Communication is of several types and may be classified as follows:
Nature, Process and Types of Communication – CA Foundation BCR Notes 2
1. Verbal Communication:
In verbal communication words and language are used to convey the message. Verbal communication is of two types:
(a) Oral communication:
It means communication through spoken words. It may be face- to-face (lecture, seminar, conference, meeting, informal conversation, chit-chat, gossip, or telephone). Clear voice and tone are necessary for effective oral communication. Speaking at too fast/slow speed or two high/low volume impairs oral communication:

(b) Written communication:
Communication via SMS, e-mail, letter, brochure, hand book, report is written communication. Such communication is essential in case of formal business interactions (memo, proposal, press release, contract, etc.) and legal documentation. Grammar, vocabulary, writing style, etc. determine the effectiveness of written communication.

Verbal communication is the easiest and fastest form of communication. Even then it constitutes a very small part (about 7 per cent) of all human interactions.

2. Non-Verbal Communication: Communication without using words is called non-verbal communication. Non-verbal communication may take the following forms:
(a) Body Language:
Communication through facial expressions, gestures, stance, touch . and other physical signs is called body language. For example, leaning forward may indicate interest and acceptance whereas leaning backward may mean rejection and lack of interest. Body language (Example – smile, frown, clenching of hands etc. can transmit emotions which cannot be expressed through words. Body language constitutes a major part (about 55 per cent) of all communication.

(b) Paralanguage:
Pitch, tone, quality, etc. of voice is known as paralanguage. The way one speaks, rather than words, reveal the intent of the speaker. Paralanguage constitutes about 38 per cent of all communications.

(c) Aesthetics:
Music, dancing, painting sculpture and other forms of art serve as means of communication. These convey the feelings and thoughts of artists.

(d) Appearance:
Dress and grooming create the first impression. In offices, there is a dress code. Formal dress for men may consist of shirt, trouser, coat and leather shoes. For women, it may consist of saree, suit, shirt, trouser or skirt.

(e) Symbols:
Symbols may relate to religion, status, ego, etc. These convey the special meaning. For example, the number of stars on the shirt of a police officer reveal his/ her status.

3. Visual Communication: In visual communication, signs, drawing, graphic design, colour, illustration and other visual aids are used to convey the message. For example, colours are used to control traffic. Visuals such as graphs, pie chart, flow chart, etc. convey considerable information in a clear and concise manner. These are a powerful medium and are an essential part of official presentations.

4. Audio-Visual Communication: Use of voice and visuals together is called audio-visual communication. Radio is an audio medium while television and films are audio-visual media of communication. Combination of spoken words and pictures is a very powerful form of combination.

5. Formal Communication: Communication through the organisational hierarchy (chain of command) and in accordance with the policies, rules and conventions of the organization is called formal communication. It can be both oral and written.

Nature, Process and Types of Communication – CA Foundation BCR Notes

Formal communication can be in the following patterns:
(a) Vertical communication : Flow of information downwards and upwards in the organization is called vertical communication. Managers pass down orders and instructions to their subordinates for implementation. Subordinates transmit reports, suggestions, grievances and requests to their superiors.

(b) Horizontal communication : Communication between individuals/departments at the same level of authority is known as horizontal communication. For example, heads of production and marketing departments hold a meeting to discuss quality and price of a product.

(c) Diagonal Communication : This type of communication takes place between employees working in different departments and at different levels of authority. Such cross functional communication reduces the chances of distortion or misrepresentation. For example, the marketing manager may directly ask a factory manager about the cost and quality of output.

6. Informal Communication: When two or more employees in an organization exchange views without following the official rules and procedures it is called informal communication or grapevine.

Grapevine:
It is unofficial, friendly and casual. It is based on common interests and attitudes. It helps to satisfy social needs of employees and to build relationships. For example, during the lunch break, employees working in different departments of an organization may discuss new leave rules.

Networks of Communication:
The pattern used to share information is known as communication network. Members of an organisation use various types of communication flows as per their needs. In some organizations there are prescribed networks for communication. Main types of communication networks are given below:
1. Vertical Network: This network is used for communication between a superior and a subordinate. It is a two-way communication in which immediate-feedback can be available
Nature, Process and Types of Communication – CA Foundation BCR Notes 3

2. Circuit Network : When two employees at the same level of authority communicate with each other, it is a circuit network.
Nature, Process and Types of Communication – CA Foundation BCR Notes 4

3. Chain Network: In this network, communication flows through the chain of command. The message flows from the chief executive downward to different levels of employees. In the following, diagram A gives command to B, C, D, E, F and G working at different levels in the hierarchy. In chain network
Nature, Process and Types of Communication – CA Foundation BCR Notes 5
Communication gets delayed as it has to pass through several layers. Communication may be distorted due to filtering at various levels.

Nature, Process and Types of Communication – CA Foundation BCR Notes

4. Wheel: In this network, a single authority gives orders and instructions to all the employees around him. They also report directly to him. This network may be efficient for a small organization provided the central authority is competent. But in a large organization all decisions cannot be taken by one person.
Nature, Process and Types of Communication – CA Foundation BCR Notes 6

5. Star Network : In this network members of an organization communicate through multiple channels. They exchange information with each other freely without any obstacle. Star network encourages group communication and teamwork in the organization.
Nature, Process and Types of Communication – CA Foundation BCR Notes 7

The Limited Liability Partnership Act, 2008 – MCQ on Business Law with Answers

The Limited Liability Partnership Act, 2008 – MCQ on Business Law with Answers

Students should practice The Limited Liability Partnership Act, 2008 – CA Foundation Business Law MCQ Questions with Answers based on the latest syllabus.

The Limited Liability Partnership Act, 2008 – Business Law MCQ Questions with Answers

1. The LLP Act, 2008 came into force from:
(a) 31st March, 2008
(b) 31st March, 2009
(c) 1st April, 2008
(d) 1st April, 2009
Answer:
(b) 31st March, 2009

2. Maximum number of partners in a LLP can be:
(a) 100
(b) 200
(c) 50
(d) Unlimited
Answer:
(d) Unlimited

The Limited Liability Partnership Act, 2008 – MCQ on Business Law with Answers

3. In case of a LLP, the partners are agents of _________.
(a) LLP
(b) Other Partners
(c) Both (a) and (b)
(d) None of the above
Answer:
(a) LLP

4. For reservation of name, e-Form _________ is required.
(a) E-Form 1
(b) E-Form A
(c) E-Form B
(d) E-Form 2
Answer:
(a) E-Form 1

5. Minimum designated partners required in a LLP are:
(a) 1
(b) 2
(c) 3
(d) 0
Answer:
(b) 2

6. Common seal is mandatory for _________.
(a) Company
(b) LLP
(c) Both the above
(d) None of the above
Answer:
(d) None of the above

7. In case of legal non-compliance and penalties under the LLP Act, _________ are responsible.
(a) Partners
(b) Designated Partners
(c) LLP
(d) All the above
Answer:
(b) Designated Partners

The Limited Liability Partnership Act, 2008 – MCQ on Business Law with Answers

State Whether The Following are True or False:

  1. It is mandatory for a LLP to have a common seal.
  2. A LLP is not a body corporate.
  3. Executing an LLP Agreement is discretionary.
  4. In a LLP, all partners have an unlimited liability.
  5. Limited Liability Partnership is governed by Partnership Act, 1932.
  6. Every partner in a LLP is the agent for the purpose of the business of LLP but not of the other partners.
  7. LLP can be incorporated for charitable purpose as well as for business.
  8. Foreign Nationals can become a partner in a LLP.

Answer:

  1. False
  2. False
  3. False
  4. False
  5. False
  6. True
  7. False
  8. True

Sale on Approval Basis – CA Foundation Accounts Study Material

Sale on Approval Basis – CA Foundation Accounts Study Material is designed strictly as per the latest syllabus and exam pattern.

Sale on Approval Basis – CA Foundation Accounts Study Material

Question 1.
Meaning of sale on approval basis.
Answer:
As per the definition given under the Sale of Goods Act, 1930, in respect of such goods, the sale will take place or the property in the goods pass to the buyer:

  • When he signifies his approval or acceptance to the seller
  • When he does some act adopting the transaction
  • If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, on the expiry of the specified time (if a time has been fixed) or on the expiry of a reasonable time (if no time has been fixed).

Sale on Approval Basis – CA Foundation Accounts Study Material

Question 2.
A merchant sends out his goods casually to his dealers on approval basis. All such transactions are, however recorded as actual sales and are passed through sales book. On 31.12.2005, it was found that 100 articles at a sale price of ₹ 200 each sent on approval basis were recorded as actual sales at that price. The sale price was made at cost plus 25%. You are required to: (a) give adjustment entries (b) show how they will appear in final a/ c.
Solution:
The sales includes goods which remained unsold on 31.12.2005.
Value = 100 x 200 = 20,000.
The reversal entry will be:
Sales a/ c Dr. 20,000
To Debtors a/c 20,000
In the final accounts sales and debtors will be after reducing this ₹ 20000/-. The cost of this goods ₹ 16000 (2000 ÷ 25 x 100) will be accounted as closing stock.
Trading A/c (Extract)
Sale on Approval Basis – CA Foundation Accounts Study Material 1
Balance Sheet (Extract)
Sale on Approval Basis – CA Foundation Accounts Study Material 2

Question 3.
Ramesh sends goods on approval basis as follows:
Sale on Approval Basis – CA Foundation Accounts Study Material 3
Show how the transactions will be dealt with when memorandum books are kept on double entry system.
Solution:
Memorandum Records
Goods on sale or return register
Sale on Approval Basis – CA Foundation Accounts Study Material 4
Entries:
(i) When goods are sent on approval
Individual customer a/c Dr.  11,240
To Sales on approval a/c 11,240

(ii) When goods are returned
Sales on approval a/c Dr. 4,440
To Individual customer a/c 4,440

(iii) When the goods are accepted/time expired
Sales on approval a/c Dr. 6800
To Individual customer a/c 6800

Note: Now this is the actual sales hence it will be recorded in accounts books in the usual manner debiting individual customer account and crediting sales a/c.

(iv) Balance of goods at the end of the year
This will show the sales value of goods still lying unsold with customers. Cost of such goods will be included and accounted as stock in books of account.

Sale on Approval Basis – CA Foundation Accounts Study Material

Question 4.
‘X’ supplied goods on sale or return basis to customers, the particulars of which are as under:
Date of Despatch Party’s Name Amount Rs. Remarks

Date of Despatch Party’s Name Amount Rs. Remarks
10.12.2005

12.12.2005

15.12.2005

20.12.2005

25.12.2005

30.12.2005

ABC Co.

DEF Co.

GHI Co.

DEF Co.

ABC Co.

GHI Co.

10,000

15,000

12,000

16,000

11,000

13,000

No information till 31.12.2005

Returned on 16.12.2005

Goods worth Rs. 2,000 Return on 20,12.2005

Goods Retained on 24.12.2005

Goods Retained on 28.12.2005

No information till 31.12.2005

Goods are to be returned within 15 days from the date of despatch, failing which it will be treated as Sales. The books of ‘X’ are closed on the 31st December, 2005.
Prepare the following account in the book of ‘X’:
(i) Goods on Sales or Return, Sold and Returned Day Books.
(ii) Goods on Sales or Return Total Account.
Solution:
In the Books of ‘X’
(i) Goods on Sales or Return, Sold and Returned Day Books.
Sale on Approval Basis – CA Foundation Accounts Study Material 5

(ii) Goods on Sales or Return Total Account
Sale on Approval Basis – CA Foundation Accounts Study Material 6
Note: (1) Entry for recording sales of ₹ 47,000/- will be passed in Accounts book debiting customers (debtors) a/c and crediting sales a/c. & Goods lying with customer sale value ₹ 13,000 will be included in closing stock at cost.

(2) The above are memorandum records.

Question 5.
Mr. Badhri sends goods to his customers on Sale or Return. The following transactions took place during the month of December 2017.

  • December 2nd – Sent goods to customers on sale or return basis at ₹ 80,000 cost plus 25%
  • December 10th – Goods returned by customers ₹ 35,000
  • December 17th – Received letters from customers for approval ₹ 30,000
  • December 23rd – Goods with customers awaiting approval ₹ 15,000

Mr. Badhri records sale or return transactions as ordinary sales. You are required to pass the necessary Journal Entries in the books of Mr. Badhri assuming that the accounting year closes on 31st Dec. 2017.
Solution:
(I) In the books of Mr. Badhri
Journal Entries
Sale on Approval Basis – CA Foundation Accounts Study Material 7

Note:

  • Alternatively, Sales account or Sales returns can be debited in place of Return Inwards account.
  • No entry is required for receiving letter of approval from customer.
  • Cost of goods with customers = ₹ 15,000 x 100/125 = ₹ 12,000
  • It has been considered that the transaction values are at invoice price (including profit margin).

Sale on Approval Basis – CA Foundation Accounts Study Material

Question 6.
Mr. Ganesh sends out goods on approval to few customers and includes the same in the Sales Account. On 31.03.2018, the Trade Receivables balance stood at ₹ 75,000 which included ₹ 6,500 goods sent on approval against which no intimation was received during the year. These goods were sent out at 30% over and above cost price and were sent to –
Mr. Adhitya ₹ 3,900 and Mr. Bakkiram ₹ 2,600
Mr. Adhitya sent intimation of acceptance on 25th April, 2018 and Mr. Bakkiram returned the goods on 15th April, 2018.
Make the adjustment entries and show how these items will appear in the Balance Sheet as on 31st March, 2018. Show also the entries to be made during April, 2018. Value of Closing Inventories as on 31st March, 2018 was ₹ 50,000.
Solution:
In the Books of Ganesh
Journal Entries
Sale on Approval Basis – CA Foundation Accounts Study Material 8
Extract of Balance sheet of A & Co. as on 31st March, 2018
Sale on Approval Basis – CA Foundation Accounts Study Material 9

Notes:

  • Cost of goods lying with customers = \(\frac { 100 }{ 130 }\) x 6,500 = ₹ 5,000
  • No entry is required on 15th April, 2018 for goods returned by Mr. Bak-kiram.

True or False

Question 1.
Sales or Return Account in the Sale or return ledger represents the value of goods still lying with the customers for approval.
Answer:
True: The balance of Sale or Return Account in Sale or Return ledger represents the value of goods lying with the customers who have neither returned nor intimated for goods till date.

Financial Statement of Companies (Schedule III) – CA Foundation Accounts Study Material

Financial Statement of Companies (Schedule III) – CA Foundation Accounts Study Material is designed strictly as per the latest syllabus and exam pattern.

Financial Statement of Companies (Schedule III) – CA Foundation Accounts Study Material

Question 1.
List of requirements for preparation of financial statement of companies as per Companies Act, 2013.
Answer:
List of requirements for preparation of financial statement of companies as per Companies Act, 2013:
1. Books of Account etc. Section 128: Every Co. shall keep at its registered office, books of account and other relevant books and papers and financial statement for every financial year which gives true and fair view of the state of affairs of the Co., including branches.

It shall be kept on accrual basis and by double entry system. It can be maintained on electronic mode also. Such books of account & vouchers shall be maintained in good order for minimum 8 (eight) previous financial year.

2. As per section 2(40) Financial Statement includes –

  • Balance sheet
  • Profit & loss A/c
  • Cash Flow Statement
  • Statement of Changes in Equity
  • Explanatory Notes.

Note: One Person Co., Small Co., & Dormant Co. may not prepare Cash Flow Statement.

3. As per section 2(41) Financial Year should be ending on 31st March every year.

4. Balance Sheet should be in the Vertical Form given in Part I of Schedule III to the Companies Act, 2013 [u/s 129(1)]

5. Profit & Loss Account should be in the Vertical Form given in Part II of Schedule III [u/s 129(1)]

6. As per proviso to section 129 the companies for which separate forms are prescribed by the statute governing their activity need not follow Schedule III like Banking, Insurance & Electricity Companies. Acts & Regulations governing Electricity Co. do not provide any format for Financial Statement hence the same will be prepared as per Schedule III.

7. As per section 129(3) every Holding company (a company which has one or more subsidiaries) should in addition to its separate Financial statement, should also prepare & present Consolidated Financial Statement and also attach with its Financial Statements, a statement containing salient features of Financial statement of its subsidiary company or companies. Explanation to this sub-section says the word subsidiary shall include associate co. and joint venture. This means even if a company has only associate or joint venture, it will have to prepare Consolidated financial statement.

8. Schedule III do not prescribe any format for Cash Flow Statement hence it should be prepared as per AS-3 by direct method or by indirect method.

9. U/s 134 the financial statements shall be approved by Board of directors and signed on its behalf as prescribed. The directors report shall contain among other things (a) Directors responsibility statement, (b) explanation or comment on ever qualification, reservation or adverse remark or disclaimer by Auditor or Company Secretary, (c) propose transfer to reserves, (d) recommendation of dividend (e) material changes and commitments, if any, affecting the financial position which have occurred between the end of the year to the date of the report (i.e. non-adjusting event as per AS-4). Financial statement shall be issued, circulated or published with a copy of (a) any notes annexed to and forming part of such financial statement (b) the auditor’s report and (c) the board’s report.

Financial Statement of Companies (Schedule III) – CA Foundation Accounts Study Material

10. Section 130: A company shall re-open its books of account & recast its financial statements when ordered by court or tribunal, on application by Central Govt., Income Tax Authority, SEBI, any other statutory regulatory body or authority or any person concerned. Order states that relevant accounts were prepared in a fraudulent manner or affairs of the Co. were mismanaged casting doubt on the reliability of financial statement.

Court or Tribunal shall give notice to and consider representations received from above referred statutory authorities/Govt. Such revised or re-casted accounts shall be final. Any financial years accounts can be reopened, no time limit.

11. Section 131: The Directors can revise financial statements or boards report with the approval of tribunal for any of the 3 preceding financial year, if they do not comply with the provisions of section 129 or section 134. Tribunal shall give notice to and consider representation received from Central Govt, and the Income-tax authorities.

It shall not be done more than once in a financial year and a detailed reason for such revision shall be disclosed in the boards report of the financial year in which such revision is being made. Revision must be confined to corrections for non-compliance with the provisions of section 129 or 134 and any consequential alteration. Rules may be prescribed in this regard.

Example:
In the financial year 2014-15 company can revise only once, financial report or boards report of one or more of the year 2011-12, 2012-13 or 2013-14.

12. Section 132: Central Govt, may constitute a National Financial Reporting Authority (NFRA) consisting of Chairperson & members not exceeding 15. It shall (a) make recommendations to Central Govt, on formulation of accounting and auditing policies and standards to be followed by companies and their auditors, as the case may be (b) monitor & enforce # compliance with such standards (c) oversee the quality of services of the professions associated with the compliance of such standards (d) have power to investigate professional or other misconduct of Chartered Accountants.

On matters being investigated by NFRA no other institute or body shall initiate or continue proceedings (e) where professional or other misconduct is proved, have power to (A) impose penalties not less than ₹ 1 lac but may extend to 5 times of the fees received in case of individual & not less than ₹ 10 lac but may extend to 10 times of the fees received in case of firm (B) debarring the member or firm from practice as CA for minimum 6 months to maximum 10 years. Appeal against this order can be made to an Appellate authority appointed by Central Govt, u/s 132(6).

13. Private Co. [U/s 2(68)] is a company –

  • having minimum paid up capital of ₹ 1,00,000 (or higher amount if prescribed) and by its articles
    restricts the right to transfer its shares and
  • limits the number of member to 200 (employees or past employees who continued to be member shall not be counted).
  • prohibits any invitation to the public to subscribe for any securities of the Co.

14. Small Co. [U/s 2(85)] is a co. other than a public co. –

  • Paid up share capital of which does not exceed ₹ 50,00,000 (or higher amount if prescribed not exceeding ₹ 5 crore)
  • Turnover as per last Profit & loss account does not exceed ₹ 2 crore (or higher amount if prescribed not exceeding ₹ 20 crore) Provided it is not a Holding Co. or a Subsidiary Co.

15. One Person Company [U/s 2(62)] means a Company which has only one person as a member.

16. Public Co. [U/s 2(71)] means a company which is (i) not a private company and (ii) has minimum paid up share capital of ₹ 5,00,000 (or higher amount if prescribed). A Private co. which is subsidiary of a public co. shall be deemed to be public co.

17. Subsidiary Co. [U/s 2(87)] means a co. in which the holding co. (i) controls the composition of board of directors (i.e. can appoint or remove all or a majority of the directors) or (ii) exercises or controls more than one half of total share capital either at its own or together with one or more of its subsidiary co.

Financial Statement of Companies (Schedule III) – CA Foundation Accounts Study Material

18. Associate Co. [U/s 2(6)] is a Co. in which other Co. has significant influence, but is not a subsidiary of that Co. and includes a joint venture. Significant influence means control of 20% or more of total share capital or of business decision under an agreement.

19. Holding Co. [U/s 2(46)] means a Company which has one or more subsidiary co.

20. Dormant Co. [U/s 455] Where (i) a Co. is formed and registered for a future project or to hold an asset or intellectual property and has no significant accounting transactions such a Co. or (ii) an inactive Co. can apply to registrar to grant status of Dormant Co. Inactive Co. is a Co. which (i) has not been carrying on any business or operation or (ii) has not made any significant accounting transactions during the last two financial years or (iii) has not filed financial statement and annual returns during the last two financial years.

Question 2.
Operating Cycle.
Answer:
Operating Cycle:
Operating Cycle is defined in Schedule III of the Companies Act, 2013 as follows:
“Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Where the operating cycle cannot be identified, it is assumed to have duration of 12 months.”

Financial Statement of Companies (Schedule III) – CA Foundation Accounts Study Material

Question 3.
Contingent Liabilities.
Answer:
Contingent Liabilities:
(a) Contingent Liabilities are those liabilities which may or may not arise because they are dependent on a happening in future. For example, Proposed Dividend is shown as Contingent Liability because it is subject to approval of shareholders. Contingent liability is not recorded in the books of account but is disclosed in the Notes to Accounts for the information of the users.

It is to be classified into:

  • Claims against the company not acknowledged as debts
  • Bills Receivable discounted from Bank not yet due for payment
  • Proposed Dividend
  • Other money for which the company is contingently liable.

Question 4.
Commitments.
Answer:
Commitments :
(a) Commitments mean financial commitments due to activities agreed to by the company to be undertaken by it in future.
They are to be classified into:

  • Estimated amounts of contracts remaining to be executed on Capital Account and not provided for
  • Uncalled liability on shares and other investments partly paid
  • Other commitments (Nature to be specified).

Question 5.
Quoted Investment
Answer:
Quoted Investment:
Quoted Investment is an investment in respect of which a quotation or permission to deal on a recognized stock exchange has been granted.

Question 5.
Trade Investment
Answer:
Trade Investment:
Trade Investment is an investment by a company in the shares or debentures of another company, not being its subsidiary, for the purpose of promoting the trade or business of the Erst company.

Financial Statement of Companies (Schedule III) – CA Foundation Accounts Study Material

True or False

Question 1.
Maximum number of members in case of private company is 50.
Answer:
False: Maximum number of members in case of private company is 200.

Question 2.
While drafting the balance sheet of a company bills receivables are shown under the head Other Current Assets.
Answer:
False: While drafting the balance sheet of a company bills receivables are shown under the sub-head Trade receivables.

Question 3.
When duration of operating cycle cannot be identified, it is assumed of 12 months.
Answer:
True: Normally operating cycle is less than or more than 12 months in any business but when it is difficult to identify the duration of operating cycle of any business it is assumed as of 12 months.

Question 4.
Securities premium received by a company is added to share capital while preparing the balance sheet of a company.
Answer:
False: Securities premium is not added to share capital but is shown under the sub-head Reserves and Surplus.

Financial Statement of Companies (Schedule III) – CA Foundation Accounts Study Material

Question 5.
It is mandatory for a company to deduct provision for bad and doubtful debts from trade receivables.
Answer:
False: It is not mandatory for any company to deduct provision for bad and doubtful debts from trade receivables. A company may show their provision under the sub-head of short term provisions in the head of current liabilities as per their choice.

Question 6.
A company registered under Companies Act, 2013 in India may prepare its balance sheet in horizontal form only.
Answer:
False: A company registered under Companies Act, 2013 in India must prepare its balance sheet in vertical format only as stated in Schedule III.

Average Due Date – CA Foundation Accounts Study Material

Average Due Date – CA Foundation Accounts Study Material is designed strictly as per the latest syllabus and exam pattern.

Average Due Date – CA Foundation Accounts Study Material

Question 1.
What is average due date₹ List out various instances when average due date can be used.
Answer:
Average due date and various instances when average due date can be used:
Average due date is the weighted average date of different due dates relating to various transaction (debit and/or credit) due between the same parties. Average due date can be used anywhere, when items of same nature and between same parties are to be represented by a single date for convenience of interest calculation &/or settlement.

Example:

  • Payments due on different date by a debtor to a creditor.
  • Receivable and payables both due between parties.
  • Bills receivable and Bills payables falling due on different dates to be settled by a single new bill.
  • Interest on drawings made on different date.
  • Loans repayable in equal periodic instalment.
  • Loans distributed in equal periodic instalment etc.

Average Due Date – CA Foundation Accounts Study Material

Question 2.
Find out Average Due Date from the following:
₹ 6,000/- due on 05/02/96,
₹ 3,200/- due on 07/04/96,
₹ 5,700/- due on 15/07/96,
₹ 7,000/- due on
Solution:
Let the base date be 5.2.96
Average Due Date – CA Foundation Accounts Study Material 1
How to check leap year: 1996 ÷ 4 = 499
→ It is clear division that means, 1996 is a leap year comprising of 366 days with February of 29 days.

Question 3.
A trader having accepted bills falling due on different dates now desires to have his bills cancelled & to accept a new bill for the whole amount payable on the average due date. Calculate Average. Due date.

Date of Bill Date of Acceptance Amount Term/usance of bill
01/03/99 03/03/99 400.00 2 months from date bill
06/03/99 10/03/99 200.00 3 months from date of Acceptance.
05/04/99 10/04/99 200.00 2 months after sight
15/04/99 20/04/99 325.00 1 months from date of signing.

Solution:
Let the base date be 4.5.99
Average Due Date – CA Foundation Accounts Study Material 2

Question 4.
Two traders X & Y buy goods from one another each allowing the other 1 months credit. At the end of 3 months the details are as follows; calculate the date upon which the balance should be paid so that no interest is due to either X or Y.
Goods sold by X to Y → (i) 18/04/96 ₹ 60, (ii) 15/05/96 ₹ 70, iii) 16/06/96 ₹ 80.
Goods sold by Y to X → (i) 23/03/96 ₹ 52, (ii) 24/05/96 ₹ 50.
Solution:
Let base date be 23.4.96 (student can take any other date as base date, the ultimate answer will be same)
Average Due Date – CA Foundation Accounts Study Material 3
Therefore,
Average Due Date – CA Foundation Accounts Study Material 4
Therefore 14th July is the average due date.

Note:
Due date of each transaction is calculated by adding credit period of one month. These are not bills of exchange/promissory notes, hence days of grace will not be added.

Average Due Date – CA Foundation Accounts Study Material

Question 5.
₹ 10,000 lent (advanced) by Das Bros, to Kumar & Sons, on 1st Jan. 2009, is repayable in 5 equal annual instalments commencing on 1st January 2010. Find the Average Due Date & Calculate Interest at 5% p.a. which Das Bros, will recover from Kumar & Sons.
Solution:
Average Due Date – CA Foundation Accounts Study Material 5
Cross verification of formula: Base date 1.1.2009 is taken to prove above formula.
Average Due Date – CA Foundation Accounts Study Material 6

Question 6.
Amit purchased goods from Sumit, the average due date for payment in cash is 10.08.2011 and the total amount due is ₹ 50,000.
How much amount should be paid by Amit to Sumit if total payment is made on following dates & interest is to be considered at the rate of 12% p.a. i) on average due date ii) 25th August; iii) 30th July.
Solution:
Amit to pay to Sumit following amounts:
(i) If the full amount ₹ 50,000 is paid on average due date i.e. 10th August then there is neither delay nor an early payment, hence no interest/rebate. Amount to be paid is ₹ 50,000.

(ii) If total amount is paid on 25th August then there is delay of 15 days, hence interest will be charged.
Interest = 50,000 x \(\frac { 12 }{ 100 }\) x \(\frac { 15 }{ 365 }\) = ₹ 246.58
Total payment = 50,000 + 246.58 = ₹ 50,246.58

(iii) If that payment is made on 30th July then it is an early payment by 11 days.
Hence rebate will be granted Rebate = 50,000 x \(\frac { 12 }{ 100 }\) x \(\frac { 11 }{ 366 }\) = ₹ 180.82
Total amount = 50,000 – 180.82 = ₹ 49,819.18

Question 7.
A partner has withdrawn the following sums of money during the half-year ended 30th June, 2011:

January 15 300
February, 28 250
March, 10 150
March, 26 200
April, 20 400
May, 16 300
June, 18 500

Interest is to be charged at 8% per annum. Find out the average due date and calculate the amount of interest to be debited to the partner.
Solution:
Average Due Date – CA Foundation Accounts Study Material 7
Average due date = 15.1.2011 + (1,84,400 ÷ 2,100)
= 15.1.2011 + 88 days = 13th April 2011
Average due date is the representative date of all the due dates. That means we can say that drawing ₹ 2100 is made on 13.4.2011.
Interest on drawings is calculated from the date of drawing to the end of period.
∴ Here interest will be calculated from 13.4.2011 to 30.6.2011 = 78 days
∴ Interest = 2100 x \(\frac { 8 }{ 100 }\) x \(\frac { 78 }{ 365 }\) = ₹ 35.90; say ₹ 36/-

Note:
Even if we calculate individually on each drawing amount, from the date of drawing to 30.6.1994, the total interest will be ₹ 35.90 only.

Average Due Date – CA Foundation Accounts Study Material

Question 8.
₹ 50,000 lent (advanced) by Ambani Bros, to Tata Sons, on 1st Jan. 2011, is repayable in 5 equal annual instalments commencing on 1st January 2012. Find the Average Due Date & Calculate Interest payable at 15% p.a.
Solution:
Average Due Date – CA Foundation Accounts Study Material 8
Average due date = 1.1.2011 + \(\frac { 1+2+3+4+5 }{ 5 }\)
= 1.1.2011 + 3 years
= 1.1.2014
Interest = 50,000 x \(\frac { 15 }{ 100 }\) x 3 (1.1.2011 to 1.1.2014)
= 22,500.
This is simple interest.

Question 9.
Mr. A lends ₹ 25,000 to Mr. B on 1st Jan., 2000. Calculate the average due date and interest, if interest @ 1896 p.a. to be charged by A in each of the following alternative cases:
a. If the amount is repayable in 5 equal annual instalments commencing from 1st January, 2001.
b. If the amount is repayable in 5 half yearly equal instalments commencing from 1st January, 2001.
c. If the amount is repayable in three equal instalments at an interval of two years commencing from 30th June, 2002.
d. If the amount is repayable in 5 equal instalments as under:1(01.01.2001 ); 11(1.7.2001); 111(1.7.2002); IV(01.01.2003); V (01.01.2004)
Solution:
Period is in years or months, from the date of lending (i.e. 1.1.2000) to the due date of instalment.
Case (a):
Average Due Date – CA Foundation Accounts Study Material 9
= 01.01.2000 + \(\frac { 1+2+3+4+5 }{ 5 }\)
= 01.01.2000 + 3 years = 1st Jan., 2003
= 01.01.2000 + 24 Months = 1st Jan., 2002
Interest = ₹ 25,000 x 3 x \(\frac { 18 }{ 100 }\)
= ₹ 13,500

Case (b):
Average Due Date – CA Foundation Accounts Study Material 10
= 01.01.2000 + \(\frac { 12+18+24+30+36 }{ 5 }\)
= 01.01.2000 + \(\frac { 120 }{ 5 }\) months
= 01.01.2000 + 24 Months = 1st Jan., 2002
Interest = ₹ 25,000 x \(\frac { 24 }{ 12 }\) x \(\frac { 18 }{ 100 }\)
= ₹ 9,000

Case (c):
Average Due Date – CA Foundation Accounts Study Material 9
= 01.01.2000 + \(\frac { 2.5+4.5+6.5 }{ 3 }\)
= 01.01.2000 + 4.5 years
= 1st July, 2004
Interest = ₹ 25,000 x 4.5 x \(\frac { 18 }{ 100 }\) = ₹ 20,250

Case (d):
Average Due Date – CA Foundation Accounts Study Material 10
= 01.01.2000 + \(\frac { 12+18+30+36+48 }{ 5 }\)

= 01.01.2000 + 28.8 months
(28.8 month means 28 month complete and .8 portion of 29th month i.e. 31 x 8 = 25 days)
= 26th May, 2002
Interest = ₹ 25,000 x \(\frac { 28.8 }{ 12 }\) x \(\frac { 18 }{ 100 }\) = ₹ 10,800

Question 10.
Hari owes Ram ₹ 2,000 on 1st April, 1996. From 1st April, 1996 to 30th June, 1996 the following further transactions took place between Hari and Ram:
April 10 Hari buys goods from Ram for ₹ 5,000.
May 16 Hari receives cash loan of ₹ 10,000 from Ram.
June 9 Hari buys goods from Ram for ₹ 3,000.
Hari pays the whole amount, together with interest @15% per annum, to Ram on 30th June, 1996. Calculate the interest payable on 30th June, 1996 by the average due date method.
Solution:
In all transactions, Hari has to pay to Ram.
Average Due Date – CA Foundation Accounts Study Material 11
If total amount is paid on 6th May i.e. on Average due date then there is neither delay nor an early payment, hence, no interest/rebate to be charged/given.
As amount is paid on 30th June that means there is delay of 55 days (6.5.96 to 30.6.96) in payment, hence interest will be charged.
Interest charged = 20,000 x \(\frac { 15 }{ 100 }\) x \(\frac { 55 }{ 366 }\) = ₹ 451

Working Notes:
1. Working of days from base date to due date:
Average Due Date – CA Foundation Accounts Study Material 12

2.1st item of 1.4.96 is the Opening balance i.e. it is the balance of 31.3.96 hence instead of ‘0’ days (-) 1 day can be taken.

3. Assuming calendar year 1996 (leap year) 366 days taken. Alternatively if you take 1.4.96 to 31.3.97 (non-leap year) then take 365 days.

Average Due Date – CA Foundation Accounts Study Material

Question 11.
Mr. Black accepted the following bills drawn by Mr. White:

Date of Bill Period Amount (₹)
09-03-2010
16-03-2010
07-04-2010
18-05-2010
4 months
3 months
5 months
3 months
4,000
5,000
6,000
5,000

He wants to pay all the bills on a single date. Interest chargeable is @ 18% p.a. and Mr. Black wants to save ₹ 150 on account of interest payment. Find out the date on which he has to effect the payment to save interest of ₹ 150. Base date to be taken shall be the earliest due date.
Solution:
Calculation of Due date:
9 – 03 – 2010 + 4 months + 3 days → 12-07-2010
16 – 03 – 2010 + 3 months + 3 days → 19-06-2010
07 – 04 – 2010 + 5 months + 3 days → 10-09-2010
18 – 05 – 2010 + 3 months + 3 days → 21 -08-2010
Let Base date be 19.06.2010
Average Due Date – CA Foundation Accounts Study Material 13
If the full amount ₹ 20,000 is paid on average due date Le. 3rd August then there is neither delay nor an early payment.

If Mr. Black wants to save ₹ 150 on account of interest payment, he should make early payment as follows:
Interest = 20,000 x 18% = 3,600 p.a.
∴ Interest = \(\frac { 3,600 }{ 12 }\) = 300 p.m.
₹ 150 = \(\frac { 1 }{ 2 }\) month (15 days) interest
Hence, Mr. black should pay all bills amounting ₹ 20,000 net of rebate ₹ 150 on 19-07-2010.
or 150 = 20,000 x 18% x \(\frac { X }{ 365 }\) by solving it we get X = 15.20 days i.e. say 15 days.

Question 12.
‘R’ had the following bills receivable and bills payable against ‘S’. Calculate average due date when the payment can be made or received without any loss or gain of interest to either party.
Average Due Date – CA Foundation Accounts Study Material 14
Holiday intervening in the period 15th August, 2008,16th August, 2008 and 6th September, 2008
Solution:
Average Due Date – CA Foundation Accounts Study Material 15
Bills Payable
Average Due Date – CA Foundation Accounts Study Material 16
Difference of Products = ₹ 20,61,000 – ₹ 13,64,000 = ₹ 6,97,000
Difference of Amount = ₹ 46,500 – ₹ 43,000 = ₹ 3,500 receivable
Average Due Date = Base Date + \(\frac { Difference of Products }{ Difference of Amount}\)
July 12 + \(\frac { 6,97,000 }{ 3,500 }\)
= July 12 + 199.14 or 199 days
= 27th January, 2009

Note:
16th August & 6th September are not clarified whether public holiday or emergency holiday, hence we have taken all as public holiday and hence due date is taken as preceding working day.

Average Due Date – CA Foundation Accounts Study Material

Question 13.
A and B are partners in a firm and share profits and losses equally. A has withdrawn the following sum during the half year ending 30th June, 2010:

Date Amount
January 15

February 10

April 5

May 20

June 18

5.000

4.000

8.000

10,000

9,000

Interest on drawings is charged @ 10% per annum. Find out the average due date and calculate the interest on drawings to be charged on 30th June, 2010.
Solution:
Calculation of Average due date
(Base Date 15th January, 2010)
Average Due Date – CA Foundation Accounts Study Material 17
Average due date of drawings means as if ₹ 36,000 has been withdrawn on 19/4/2010. Interest on Drawing is charged from the date of drawing to the end of period.
Number of days from 19th April, 2010 to 30th June, 2010 = 72 days
Hence interest on drawings @ 1096 should be charged for 72 days
Interest = ₹ 36,000 x \(\frac { 72 }{ 365 }\) x \(\frac { 10 }{ 100 }\) = ₹ 710
Hence, interest on drawings ₹ 710 will be charged from A on 30th June, 2010.

Question 14.
Mr. Alok owes Mr. Chirag ₹ 650 on 1st January 2018. From January to March, the following further transactions took place between Alok and Chirag

January 15 Alok buys goods ₹ 1,200
February 10 Alok buys goods ₹ 850
March 7 Alok received Cash loan ₹ 1,500

Alok pays the whole amount on 31st March, 2018 together with interest @ 696 per annum. Calculate the interest by average due date method.
Solution:
Calculation of average due date
Alok pays the whole amount on 31st March, 2018 together with interest at 696 per annum.
Average Due Date – CA Foundation Accounts Study Material 18
Interest therefore has been calculated on ₹ 4,200 from 6th Feb. to 31st March, i.e., for 54 days.
4,200 x 696 x 54/365 = ₹ 37.28

Average Due Date – CA Foundation Accounts Study Material

Question 15.
Karan purchased goods from Arjun, the average due date for payment in cash is 10.08.2018 and the total amount due is ₹ 1,75,800. How much amount should be paid by Karan to Arjun, if total payment is made on following dates and interest is to be considered at the rate of 1596 p.a.
(i) On Average due date
(ii) On 28th August, 2018
(iii) On 29th July, 2018
Solution:
Average Due Date – CA Foundation Accounts Study Material 19

Question 16.
Two Traders Yogesh and Yusuf buy goods from one another, each allowing the others, one month’s credit. At the end of 3 months the accounts rendered are as follows :
Average Due Date – CA Foundation Accounts Study Material 20
Calculate the date upon which the balance should be paid so that no interest is due either to Yogesh or Yusuf.
Solution :
(i) Let the base date be May 18
Average Due Date – CA Foundation Accounts Study Material 21

True or False

Question 1.
If payment is made on average due date, it results in loss of interest to creditors.
Answer:
False: Average due date results in no loss to any party i.e. debtor or creditor.

Question 2.
Average due date is the median average of several due dates for payments.
Answer:
False: Average due date is mean date of several due dates for payments.

Average Due Date – CA Foundation Accounts Study Material

Question 3.
In the calculation of average due date, only the due date of first transaction must be taken as the base date.
Answer:
False: While calculating the average due date, any date may be taken as the base date.

CA Foundation Economics Chapter 1 MCQs Nature and Scope of Business Economics

CA Foundation Economics Chapter 1 MCQs Nature and Scope of Business Economics

Students should practice CA Foundation Economics Chapter 1 MCQs Nature and Scope of Business Economics – CA Foundation Economics MCQ with Answers based on the latest syllabus.

Nature and Scope of Business Economics CA Foundation MCQ Economics Chapter 1

Introduction:

1. The term ‘Economics’ owes its origin to the Greek word.
(a) Aikonomia
(b) Wikonornia
(c) Oikonomia
(d) None of the above
Answer:
(c) Oikonomia

2. Adam Smith published his master piece “An enquiry into the nature and causes of wealth of nations” in the year __________.
(a) 1776
(b) 1786
(e) 1789
(d 1790
Answer:
(a) 1776

3. Oikonomia means __________.
(a) Industry
(b Management of household
(c Services
(d) None of these
Answer:
(b Management of household

4. Economists regard decision making as important because:
(a) The resources required to satisfy our unlimited wants and needs are finite or scarce.
(b) It is crucial to understand how we can best allocate our scarce resources to satisfy society’s unlimited wants and needs.
(c) Resources have alternative uses.
(d) All of the above.
Answer:
(d) All of the above.

5. ‘Economics is the science of choice making’. It implies:
(a) No choice is to be made
(b) Choice to be made between alternative uses
(c) Choice to be made between means and ends
(d) None of the above
Answer:
(b) Choice to be made between alternative uses

6. Which one is the feature of Marshall’s definition?
(a) Limited ends
(b) Scarce means
(c) Study of wealth as well as study of man
(d) Study of allocation of resources
Answer:
(c) Study of wealth as well as study of man

7. According to Robbins, ‘means’ are:
(a) Scarce
(b) Unlimited
(c) Undefined
(d) All of these
Answer:
(a) Scarce

8. Economics is the study of:
(a) How society manages its unlim-ited resources
(b) How to reduce our wants until we are satisfied
(c) How society manages its scarce resources
(d) How to fully satisfy our unlimited wants.
Answer:
(c) How society manages its scarce resources

9. In Economics, we use the term scarcity to mean:
(a) Absolute scarcity and lack of resources in less developed coun¬tries.
(b) Relative scarcity i.e. scarcity in relation to the wants of the society.
(c) Scarcity during times of business failure and natural calamities.
(d) Scarcity caused on account of excessive consumption by the rich.
Answer:
(b) Relative scarcity i.e. scarcity in relation to the wants of the society.

10. What implication(s) does resource scarcity have for the satisfaction of wants?
(a) Not all wants can be satisfied.
(b) We will never be faced with the need to make choices.
(c) We must develop ways to decrease our individual wants.
(d) The discovery of new natural resources is necessary to increase our ability to satisfy wants.
Answer:
(a) Not all wants can be satisfied.

11. Adam Smith defined Economics in terms of:
(a) The Science of welfare
(b) The Science of scarcity
(c) The Science of wealth
(d) The Science of wealth and welfare
Answer:
(c) The Science of wealth

12. Who defines Economics in terms of Dynamic Growth and Development?
(a) Robbins
(b) Paul A Samuelson
(c) Adam Smith
(d) None of these
Answer:
(b) Paul A Samuelson

13. In every economic system, scarcity imposes limitations on __________.
(a) Households, business firms, governments and the nation as a whole.
(b) Households and business firms, but not the governments.
(c) Local and state governments, but not the federal government.
(d) Households and governments, but not business firms.
(e) Business firms, governments, and the nation as a whole.
Answer:
(a) Households, business firms, governments and the nation as a whole.

14. Economic goods are considered scarce resources because they __________.
(a) Cannot be increased in quantity.
(b) Do not exist in adequate quantity to satisfy the requirements of the society.
(c) Are of primary importance in satisfying social requirements.
(d) Are limited to man made goods.
Answer:
(b) Do not exist in adequate quantity to satisfy the requirements of the society.

15. ‘Economics is the study of mankind in the ordinary business of life’ was given by:
(a) Adam Smith
(b) Lord Robbins
(c) Alfred Marshall
(d) Samuelson
Answer:
(c) Alfred Marshall

16. Consider the following and decide which, if any, economy is without scarcity:
(a) The pre-independent Indian economy, where most people were farmers.
(b) A mythical economy where everybody is a billionaire.
(c) Any economy where income is distributed equally among its people.
(d) None of the above
Answer:
(d) None of the above

17. Human wants are in response to satisfy their wants?
(a) Unlimited
(b) Limited
(c) Scarce
(d) Multiple
Answer:
(a) Unlimited

18. Economic goods are considered as scarce resources because __________.
(a) Inadequate quantity to satisfy the needs of the society
(b) Not possible to increase in quantity
(c) Limited hands to make goods
(d) Primary importance in satisfying social requirements
Answer:
(a) Inadequate quantity to satisfy the needs of the society

19. The meaning of time element in Economics is:
(a) Calendar time
(b) Clock time
(c) Operational time in which supply adj usts with the market demand
(d) None of the above
Answer:
(c) Operational time in which supply adj usts with the market demand

20. All wants of an individual are not of:
(a) Equal importance
(b) Immediate importance
(c) Fixed importance
(d) All of the above
Answer:
(a) Equal importance

21. __________ refers to the process of selecting an appropriate alternative that will provide the most efficient means of attaining a desired end, from two or more alterative courses of action.
(a) Decision making
(b) Strategy
(c) Problem Solving
(d) Effectiveness
Answer:
(a) Decision making

22. Business Economics is __________.
(a) Abstract and applies the tools of Microeconomics.
(b) Involves practical application of economic theory in business decision making.
(c) Incorporates tools from multiple disciplines.
(d) (b) and (c) above.
Answer:
(d) (b) and (c) above.

23. Business Economics is also known as?
(a) Applied Economics
(b) Managerial Economics
(c) Micro Economics
(d) All of the above
Answer:
(b) Managerial Economics

24. The question of choice arises because our productive resources __________.
(a) Are limited
(b) Can be employed in alternatives
(c) Both (a) & (b)
(d) None of the above
Answer:
(c) Both (a) & (b)

25. The management of a business unit generally needs to make __________.
(a) Strategic Decision
(b) Tactical Decision
(c) Operational Decision
(d) All of the above
Answer:
(d) All of the above

26. Concept of Business Economics was given by:
(a) Joel Dean
(b) Alfred Marshall
(c) Adam Smith
(d) L. Robbins
Answer:
(a) Joel Dean

27. Which one of the following is incorrect about Business Economics?
(a) It is applied economics that fills the gap between economic theory and business practice.
(b) Business Economics integrates economic theory with business practice.
(c) Business Economics is also re-ferred to as Managerial Econom-ics.
(d) Business Economics is more concerned with Macro Economics.
Answer:
(d) Business Economics is more concerned with Macro Economics.

28. __________ defined Business Economics in terms of the use of eco-nomics analysis in the formulation of business policies.
(a) Joel Dean
(b) Karl Marks
(c) Adam Smith
(d) Schumpeter
Answer:
(a) Joel Dean

29. Business Economics is essentially a component of __________ as it includes application of selected quan-titative techniques.
(a) Pure Economics
(b) Applies Economics
(c) Statistical Economics
(d) None of the above
Answer:
(b) Applies Economics

30. Which of the following is not in-cluded in Economics?
(a) Family Structure
(b) Managerial Economics
(c) Micro Economics
(d) Macro Economics
Answer:
(a) Family Structure

31. The heart of Business Economics is __________.
(a) Micro Economic Theory of the behaviour of consumers and firms in competitive markets.
(b) Macro-Economic Theory of the national income
(c) Income Economic analysis to analyze the industry.
(d) All of the above.
Answer:
(a) Micro Economic Theory of the behaviour of consumers and firms in competitive markets.

32. Which one of the following is not a subject matter of Micro-Economics?
(a) Behaviour of Firms
(b) External Value of Currency
(c) Factor Pricing
(d) Location of Industry
Answer:
(b) External Value of Currency

33. Micro economics does not study __________.
(a) Consumer behaviour
(b) Factor pricing
(c) General price level
(d) Firms equilibrium
Answer:
(c) General price level

34. Micro Economics is the study of:
(a) Individual parts of the economy
(b) The economy as a whole
(c) Choice making
(d) Development of the economy
Answer:
(a) Individual parts of the economy

35. The branch of economic theory that deals with the problem of allocation of resources is __________.
(a) Micro-Economic theory.
(b) Macro-Economic theory.
(c) Econometrics.
(d) None of the above
Answer:
(a) Micro-Economic theory.

36. Which of the following is not the subject matter of Business Economics?
(a) Should our firm be in this busi-ness?
(b) How much should be produced and at price should be kept?
(c) How will the product be placed in the market?
(d) How should we decrease unem-ployment in the economy?
Answer:
(d) How should we decrease unem-ployment in the economy?

37. The branch of economic theory that deals with the problem of allocation of resources is:
(a) Micro Economics
(b) Macro Economics
(c) Econometrics
(d) None of these
Answer:
(a) Micro Economics

38. Micro Economics Covers:
(a) National Income and National Output
(b) External Value of Currency
(c) Overall level of Savings and Investment
(d) Location of Industry
Answer:
(d) Location of Industry

39. A study of how increase in the corporate income tax rate will affect the natural unemployment rate is an example of:
(a) Micro Economics
(b) Descriptive Economics
(c) Micro Economics
(d) Normative Economics
Answer:
(a) Micro Economics

40. __________ examines how the individual units (Consumers or firms) make decisions as to how to efficiently allocate their scare resources.
(a) Macro Economics
(b) Micro Economics
(c) Mathematical Economics
(d) Consumer Economics.
Answer:
(b) Micro Economics

41. Which of the following falls under micro economics?
(a) National Income
(b) General price level
(c) Factor pricing
(d) National saving and investment
Answer:
(c) Factor pricing

42. Which of these is a part of micro economics?
(a) Factor pricing
(b) National Income
(c) Balance of payment
(d) None of the above
Answer:
(a) Factor pricing

43. Micro economics is also known as __________.
(a) Public economics
(b) Price theory
(c) Income theory
(d) Demand theory
Answer:
(b) Price theory

44. Micro Economics is concerned with:
(a) Consumer Behaviour
(b) Product pricing
(c) Factor Pricing
(d) All of the above
Answer:
(d) All of the above

45. Macro Economics is also called __________ economics.
(a) Applied
(b) Aggregate
(c) Experimental
(d) None of the above
Answer:
(b) Aggregate

46. Which of the following does not suggest a macro approach for India?
(a) Determining the GNP of India.
(b) Finding the causes of failure of ABC Ltd.
(c) Identifying the causes of inflation in India.
(d) Analyse the causes of failure of industry in providing large scale employment
Answer:
(b) Finding the causes of failure of ABC Ltd.

47. Macro Economics is the study of __________.
(a) All aspects of scarcity.
(b) The national economy and the global economy as a whole.
(c) Big businesses.
(d) The decisions of individual businesses and people.
Answer:
(b) The national economy and the global economy as a whole.

48. A study of how increases in the corporate income tax rate will affect the national unemployment rate is an example of __________.
(a) Macro-Economics.
(b) Descriptive Economics.
(c) Micro-economics.
(d) Normative economics.
Answer:
(a) Macro-Economics.

49. Which of these is an example of macro economics:
(a) Problem of unemployment in India
(b) Rising price level in the country
(c) Increase in disparities of income
(d) All of the above
Answer:
(d) All of the above

50. Macro economics include __________.
(a) Product pricing
(b) Consumer behaviour
(c) External value of money
(d) Location of industry
Answer:
(c) External value of money

51. Which of the following is not a subject matter of Micro-economies?
(a) The price of mangoes.
(b) The cost of producing a fire truck for the fire department of Delhi, India.
(c) The quantity of mangoes pro-duced for the mangoes market.
(d) The national economy’s annual rate of growth.
Answer:
(d) The national economy’s annual rate of growth.

52. Which of the following would be considered a topic of study in Macro-economics?
(a) The effect of increase in wages on the profitability of cotton industry
(b) The effect on steel prices when more steel is imported
(c) The effect of an increasing infla¬tion rate on living standards of people in India
(d) The effect of an increase in the price of coffee on the quantity of tea consumed
Answer:
(c) The effect of an increasing infla¬tion rate on living standards of people in India

53. Which of the following is a part of the subject matter of macro economics?
(a) Study of firms
(b) Aggregate profits of a firm
(c) Market demand for a product
(d) Net national product
Answer:
(d) Net national product

54. The Macro Economics does not cover the area of __________.
(a) General price level and interest rates
(b) Level of employment and rate of economic growth
(c) Balance of trade & Balance of payments
(d) Product Pricing.
Answer:
(d) Product Pricing.

55. Shyam : This year due to heavy rainfall my option crop was damaged
Krishna: Climates affects crop yields. Some years are bad, other are good
Hari: Don’t worry – Price increase will compensate for the fall in quantity supplied
Radhe: The Government ought to guarantee that our income will not fall.
In this conversation, the normative statement is made by
(a) Shyam
(b) Krishna
(c) Hari
(d) Radhe
Answer:
(d) Radhe

56. Business Economics enables appli-cation of economic logic and analytical tools to __________.
(a) Bridge the gap between theory and practice.
(b) Increase the implementation sci-ence.
(c) Increase the effectiveness.
(d) Apply tools of macro economics.
Answer:
(a) Bridge the gap between theory and practice.

57. Business Economics relies heavily on the techniques of __________.
(a) Micro Economics
(b) Macro Economics
(c) Normative Science only
(d) Economics discipline only.
Answer:
(a) Micro Economics

58. Which of the following is a norma-tive statement?
(a) Planned economies allocate re-sources via government depart-ments.
(b) Most transitional economies have experienced problems of falling output and rising prices over the past decade.
(c) There is a greater degree of consumer sovereignty in market economies than planned econo-mies.
(d) Reducing inequality should be a major priority for mixed econo-mies
Answer:
(d) Reducing inequality should be a major priority for mixed econo-mies

59. An example of ‘positive’ economic analysis would be:
(a) An analysis of the relationship between the price of food and the quantity purchased.
(b) Determining how much income each person should be guaran-teed.
(c) Determining the ‘fair’ price for food.
(d) Deciding how to distribute the output of the economy.
Answer:
(a) An analysis of the relationship between the price of food and the quantity purchased.

60. Business Economics is __________ in its approach as it tackles practical problems which the firm faces in the real world.
(a) Scientific
(b) Programmatic
(c) Theoretical
(d) Mathematical
Answer:
(b) Programmatic

61. The difference between positive and normative Economics is:
(a) Positive Economics explains the performance of the economy while normative Economics finds out the reasons for poor perfor¬mance.
(b) Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.
(c) Normative Economics describes the facts of the economy while positive Economics involves evaluating whether some of these are good or bad for the welfare of the people.
(d) Positive Economics prescribes while normative Economics de-scribes.
Answer:
(b) Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.

62. Normative aspect of Economics is given by:
(a) Marshall
(b) Robbins
(c) Adam Smith
(d) Samuelson
Answer:
(a) Marshall

63. Normative Economics is based on:
(a) Ethical Considerations
(b) Facts and Generalization
(c) What is?
(d) All of the above
Answer:
(a) Ethical Considerations

64. Deductive and Inductive methods are complimentary to each other. It is:
(a) Absolutely correct
(b) Absolutely incorrect
(c) Partially incorrect
(d) None of the above
Answer:
(a) Absolutely correct

65. In inductive method, logic proceeds from:
(a) General to Particular
(b) Particular to General
(c) Both (a) and (b)
(d) None of these
Answer:
(b) Particular to General

66. Which of the following is a norma-tive economic statement?
(a) Unemployment rate decreases with industrialization
(b) Economics is a social science that studies human behaviour.
(c) The minimum wage should be raised to ₹ 200 per day
(d) India spends a huge amount of money on national defence.
Answer:
(c) The minimum wage should be raised to ₹ 200 per day

67. Ram: My corn harvest this year is poor.
Krishan: Don’t worry. Price increases will compensate for the fall in quantity supplied.
Vinod: Climate affects crop yields. Some years are bad, others are good.
Madhu: The Government ought to guarantee that our income will not fall.
In this conversation, the normative statement is made by
(a) Ram
(b) Krishan
(c) Vinod
(d) Madhu
Answer:
(d) Madhu

68. Positive science only explains __________
(a) What is?
(b) What ought to be?
(c) What is right or wrong
(d) None of the above
Answer:
(a) What is?

69. Under Inductive method logic proceeds from:
(a) General to particular
(b) Positive to normative
(c) Normative to positive
(d) Particular to general
Answer:
(d) Particular to general

70. __________ analyses causes and effect relationship between variables in an objective and scientific manner.
(a) Positive Science
(b) Normative Science
(c) Negative Science
(d) Analytical Science
Answer:
(a) Positive Science

71. Business Economics is generally in nature.
(a) Normative
(b) Prescriptive
(c) Normative or Prescriptive
(d) Theoretical
Answer:
(c) Normative or Prescriptive

72. Which of the following statements is incorrect?
(a) Business economics is normative in nature.
(b) Business Economics has a close connection with statistics.
(c) Business Economist need not worry about macro variables.
(d) Business Economics is also called Managerial Economics.
Answer:
(c) Business Economist need not worry about macro variables.

73. Under Inductive method, the logic proceeds from:
(a) General to particulars
(b) Particular to general
(c) Both (a) and (b)
(d) None
Answer:
(b) Particular to general

73A. Who gave the positive aspect of science?
(a) Alfred Marshall
(b) A.C. Pigou
(c) Adam Smith
(d) Robbins
Answer:
(d) Robbins

74. Although business economics combines the essentials of normative and positive economic theory but the emphasis is on :
(a) Positive
(b) Normative
(c) Both Positive and Normative
(d) Neither Positive nor Normative.
Answer:
(b) Normative

75. Business Economics is __________.
(a) Normative in nature
(b) Interdisciplinary in nature
(c) Both
(d) None
Answer:
(a) Normative in nature

76. Find out the correct statement __________
(a) Higher the prices, lower the quality demanded of a product are a normative statement
(b) Micro and macro-economics are interdependent
(c) In a capitalist economy, the eco-nomic problems are solved by planning commission
(d) In deductive method logic pro-ceeds from particular to the general
Answer:
(b) Micro and macro-economics are interdependent

77. “Economics is neutral between ends”. The statement is given by:
(a) L. Robbins
(b) Mrs. Joan
(c) Alfred Marshall
(d) A.C. Pigou
Answer:
(a) L. Robbins

78. Economics which is concerned with welfare propositions is called __________.
(a) Socialistic economics
(b) Capitalistic economics
(c) Positive economics
(d) Normative economics
Answer:
(d) Normative economics

79. The Business Economics incorpo-rates tools from other disciplines such as Mathematics, operations Research, Management theory, Accounting, etc. Therefore, Business Economics is
(a) Intra-disciplinary
(b) Inter-disciplinary
(c) Multi-disciplinary
(d) Flexi-disciplinary
Answer:
(b) Inter-disciplinary

80. Under inductive method logic proceeds from:
(a) General to particular
(b) Positive to narrative
(c) Normative to positive
(d) Particular to general
Answer:
(d) Particular to general

81. Business Economics involves the elements of __________.
(a) Micro Environment
(b) Macro Environment
(c) Both (a) and (b)
(d) None of the above.
Answer:
(c) Both (a) and (b)

82. In which of the following methods conclusions are drawn on the basis of collection and analysis of facts?
(a) Deductive method
(b) Scientific method
(c) Inductive method
(d) Experimental method
Answer:
(c) Inductive method

83. Business economy involves theory of Business economics with __________.
(a) Normative Economics
(b) Business practices
(c) Micro Economics
(d) Macro Economics
Answer:
(b) Business practices

84. The operational or interval issues to which economic theories can be directly applied are related with.
(a) Micro Economics
(b) Macro Economics
(c) Business Economics
(d) Environmental Economics
Answer:
(a) Micro Economics

85. Which factor is included in business Economics?
(a) Business Economics is an art
(b) Inter-disciplinary in nature
(c) Normative in nature
(d) All of the above
Answer:
(d) All of the above

86. Applied economics includes __________.
(a) Regression analysis and math-ematical linear programming
(b) Capital budgeting
(c) Both (a) and (b)
(d) None
Answer:
(c) Both (a) and (b)

87. Which of the following is not within the scope of Business Economics?
(a) Capital Budgeting
(b) Risk Analysis
(c) Business Cycles
(d) Accounting Standards
Answer:
(d) Accounting Standards

88. __________ explains the rela-tionship between inputs and output.
(a) Production Theory
(b) Demand Analysis
(c) Inventory Management
(d) None of the above
Answer:
(a) Production Theory

89. Business Economics with the help of advanced tools like __________ enables the firm to arrive at the best course of action for optimum utilisation of available resources.
(a) Accounting
(b) Finance
(c) Linear Programming
(d) Marketing Mix
Answer:
(c) Linear Programming

90. Business Economists use method(s) __________ to maintain optimum stock of inventories.
(a) ABC Analysis
(b) Simple simulation exercises
(c) Mathematical models
(d) All of the above
Answer:
(d) All of the above

91. Which of the following Macro-Economic Factor is considered in Business Economics?
(a) Business Cycles
(b) Employment, Prices
(c) Saving & investment
(d) All of the above.
Answer:
(d) All of the above.

92. Which of the following statement is false?
(a) The Resources are limited.
(b) The Resources have alternative uses.
(c) If resources are unlimited, people would be able to satisfy all their wants.
(d) The economics problem arises because resource has only a single use.
Answer:
(d) The economics problem arises because resource has only a single use.

93. Which of the following economic system has to deal with the control problem of scarcity of resources?
(a) Capitalist
(b) Socialist
(c) Mixed
(d) All of the above
Answer:
(d) All of the above

94. The Central problem in every eco-nomic society is:
(a) To ensure a minimum level of income for every individual.
(b) To allocate scarce resources in such a manner that societies unlimited wants are satisfied in the best possible manner.
(c) To ensure that production occurs in the most efficient manner.
(d) Toprovidejobtoeveryjobseeker.
Answer:
(b) To allocate scarce resources in such a manner that societies unlimited wants are satisfied in the best possible manner.

95. A developed economy uses technique in production.
(a) Labour intensive.
(b) Capital intensive
(c) Home-based
(d) Traditional
Answer:
(b) Capital intensive

96. The central problem in economics is that of __________.
(a) Comparing the success of com-mand versus market economies.
(b) Guaranteeing that production oc¬curs in the most efficient manner.
(c) Guaranteeing a minimum level of income for every citizen.
(d) Allocating scarce resources in such a manner that society’s un-limited needs or wants are satis-fied in the best possible manner.
Answer:
(d) Allocating scarce resources in such a manner that society’s un-limited needs or wants are satis-fied in the best possible manner.

97. Capital intensive technique would get chosen in a __________.
(a) Labour surplus economy where the relative price of capital is lower.
(b) Capital surplus economy where the relative price of capital is lower.
(c) Developed economy where technology is better.
(d) Developing economy where technology is poor.
Answer:
(b) Capital surplus economy where the relative price of capital is lower.

98. Which of the following is not a part of central economic Problem?
(a) What to Produce?
(b) How to Produce?
(c) For whom to Produce?
(d) Price fixation of Production.
Answer:
(d) Price fixation of Production.

99. refers to the sum total of arrangements for the production and distribution of goods and services in a Society.
(a) Economic System
(b) Social System
(c) Business system
(d) Comprehensive System
Answer:
(a) Economic System

100. Economic Problem arises when:
(a) Wants are unlimited
(b) Resources are limited
(c) Alternative uses of resources
(d) All of the above
Answer:
(d) All of the above

101. Which of the following is not one of the four central questions that the study of economics is supposed to answer?
(a) Who produces what ?
(b) When are goods produced?
(c) Who consumes what?
(d) How are goods produced?
Answer:
(b) When are goods produced?

102. The classification of economies into Capitalist, Socialist and Mixed is based on their:
(a) Mode of Production, exchange and distribution
(b) Government’s role in economic activity.
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(c) Both (a) and (b)

103. The choice between labour and Capital intensive techniques is related with.
(a) What to Produce?
(b) How to Produce?
(c) For whom to Produce
(d) All of the above.
Answer:
(b) How to Produce?

104. Which one of the following is not an example of capitalist economy?
(a) Japan
(b) Mexico
(c) Germany
(d) Cuba
Answer:
(d) Cuba

105. Freedom of choice is the advan-tage of __________.
(a) Socialism
(b) Capitalist
(c) Mixed economy
(d) None of the above
Answer:
(b) Capitalist

106. A capitalist economy consists of __________.
(a) Central planning authority
(b) A mechanism to decide as what, how and for whom to produce
(c) Both (a) and (h)
(d) None of the above
Answer:
(b) A mechanism to decide as what, how and for whom to produce

107. In a free market economy the al-location of resources is determined by __________.
(a) Voting done by consumers
(b) A central planning authority.
(c) Consumer preferences.
(d) The level of profits of firms.
Answer:
(c) Consumer preferences.

108. A capitalist economy uses __________ as the principal means of allocating resources.
(a) Demand
(b) Supply
(c) Efficiency
(d) Prices
Answer:
(d) Prices

109. Price Mechanism is the main feature of which economy __________.
(a) Capitalistic Economy
(b) Mixed Economy
(c) Socialist Economy
(d) All of the above
Answer:
(a) Capitalistic Economy

110. Which out of these are the feature of capitalism?
(i) Profit motive
(ii) Human welfare
(iii) Work through price mechanism
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) All of these
Answer:
(c) (i) and (iii)

111. __________ is an economic system in which all means of production are owned and controlled by private individuals for profit.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) None of the above
Answer:
(a) Capitalist

112. Which of the following is consid-ered as a disadvantage of allocating resources using the market system?
(a) Income will tend to be unevenly distributed.
(b) People do not get goods of their choice.
(c) Men of Initiative and enterprise are not rewarded.
(d) Profits will tend to be low.
Answer:
(a) Income will tend to be unevenly distributed.

113. Exploitation and inequality will be more in __________.
(a) Socialism
(b) Capitalism
(c) Mixed
(d) All of the above
Answer:
(b) Capitalism

114. __________ means that buyers ultimately determine which goods and services will be produced and in what quantities.
(a) Capitalist Economic
(b) Socialist Economy
(c) Mixed Economy
(d) Consumer Sovereignty
Answer:
(d) Consumer Sovereignty

115. In which type of economy do consumers and producers make their choices based on the market forces of demand and supply?
(a) Open Economy
(b) Controlled Economy
(c) Command Economy
(d) Market Economy
Answer:
(d) Market Economy

116. The economic system in which all the means of production are owned and controlled by private individuals for profit.
(a) Socialism
(b) Capitalism
(c) Mixed economy
(d) Communism
Answer:
(b) Capitalism

117. In a free market economy, when consumers increase their purchase of a goods and the level of exceeds then prices tend to rise:
(a) Demand, supply
(b) Supply, demand
(c) Prices, demand
(d) Profits, supply
Answer:
(a) Demand, supply

118. Capitalistic Economy uses as principal means of allocating resources.
(a) Demand
(b) Supply
(c) Price
(d) All of the above
Answer:
(c) Price

119. In a capitalist economy, allocation of resources is done by:
(a) Producers
(b) Government
(c) Planners
(d) Price mechanism
Answer:
(d) Price mechanism

120. A Free Market economy solves its Central Problems through __________.
(a) Planning authority
(b) Market mechanism
(c) Both
(d) None
Answer:
(b) Market mechanism

121. A capitalist economy is by and large __________.
(a) A closed economy
(b) A free market economy
(c) A centrally controlled economy
(d) An economy in which a govern-ment neither collects any taxes nor incurs any expenditure.
Answer:
(b) A free market economy

122. Which one is not the characteristic of capitalistic economy?
(a) Profit motive
(b) Income inequality
(c) Free employment
(d) Collective ownership
Answer:
(d) Collective ownership

123. Capitalistic Economy uses as principal means of allocating resources.
(a) Demand
(b) Supply
(c) Price
(d) All of the above
Answer:
(c) Price

124. Which one of the following is not true about capitalist economy?
(a) There is freedom of economic choice.
(b) Profit motive is the driving force.
(c) It is also called as free market economy or laissez Faire economy.
(d) Producer is the king under capitalism
Answer:
(d) Producer is the king under capitalism

125. The merits of Capitalist economy do not include:
(a) Faster process of economic growth
(b) Efficient economic decisions and their implementation
(c) Incentives for innovation and technological progress
(d) Welfare of labour
Answer:
(d) Welfare of labour

126. A free market economy’s driving force is:
(a) Profit motive
(b) Welfare of the people
(c) Rising income and levels of living
(d) None of the above.
Answer:
(a) Profit motive

127. An economic system in which all means of production are owned and controlled by private individuals for profit is called:
(a) Mixed Economy
(b) Socialist Economy
(c) Capitalist Economy
(d) Developed Economy
Answer:
(c) Capitalist Economy

128. Where does price mechanism exists?
(a) Capitalist Economy
(b) Socialist Economy
(c) Both type of economies
(d) None of the above.
Answer:
(a) Capitalist Economy

129. In which among the following systems the ‘right to property’ exists __________.
(a) Mixed economy
(b) Capitalist economy
(c) Socialist economy
(d) Traditional economy
Answer:
(b) Capitalist economy

130. A system of economy in which all the means of production are owned and controlled by the private individuals for the purpose of profit, is called:
(a) Socialist Economy
(b) Capitalist Economy
(c) Mixed Economy
(d) All of the above
Answer:
(b) Capitalist Economy

131. Capitalistic Economy user __________ as principal means of allocating resources:
(a) Demand
(b) Supply
(c) Price
(d) All of the above
Answer:
(c) Price

132. Which of the following is not demerit of Capitalism?
(a) Precedence of property rights over human rights.
(b) Misallocation of resources.
(c) Punishment for inefficient & imprudent men.
(d) Environmental degradation due to excessive materialism.
Answer:
(c) Punishment for inefficient & imprudent men.

133. Freedom of choice is the advan-tage of __________.
(a) Socialism
(b) Capitalism
(c) Mixed Economy
(d) Communism
Answer:
(b) Capitalism

134. Under a free economy, prices are:
(a) Regulated
(b) Determined through free inter-play of demand and supply
(c) Partly regulated
(d) None of these
Answer:
(b) Determined through free inter-play of demand and supply

135. Which of the following statements does not apply to a market economy?
(a) Firms decide whom to hire and what to produce.
(b) Firms aim at maximizing profits.
(c) Households decide which firms to work for and what to buy with their incomes.
(d) Government policies are the pri-mary forces that guide the deci-sions of firms and households.
Answer:
(d) Government policies are the pri-mary forces that guide the deci-sions of firms and households.

136. Which of the following is not a feature of a capitalist economy?
(a) Right to private property
(b) Restrictions on consumers Right to choose
(c) Profit motive
(d) Freedom of enterprise
Answer:
(b) Restrictions on consumers Right to choose

137. Freedom of choice is the advan-tage of __________.
(a) Socialism
(b) Capitalism
(c) Communism
(d) None of the above
Answer:
(b) Capitalism

138. A Capitalist Economy follows the policy of:
(a) Laissez faire
(b) Regulated markets
(c) Promoting public sector
(d) None of the above
Answer:
(a) Laissez faire

139. In a capitalist economy the allocation of resources is performed by:
(a) Producers
(b) Government
(c) Planners
(d) Price mechanism
Answer:
(d) Price mechanism

140. The Concept of socialist economy was propounded by __________.
(a) Karl Mark
(b) Frederic Engels
(c) Adam Smith
(d) Both (a) & (b)
Answer:
(d) Both (a) & (b)

141. Socialist economy is __________.
(a) Self regulation
(b) Profit Oriented
(c) Command economy
(d) Allocation of resources as per market requirements
Answer:
(c) Command economy

142. Exploitation and inequality are minimal under:
(a) Socialism
(b) Capitalism
(c) Mixed economy
(d) None of the above
Answer:
(a) Socialism

143. Socialist Economy was pro-pounded by:
(a) Karl Marx
(b) Samuelson
(c) A.C. Pigou
(d) Adam Smith
Answer:
(a) Karl Marx

144. Socialist economy is also called as __________.
(a) Command Economy
(b) Centrally Planned Economy
(c) Free market Economy
(d) Both (a) & (b)
Answer:
(d) Both (a) & (b)

145. Although Price mechanism exists in __________, but it has only a secondary role.
(a) Capitalist economy
(b) Socialist economy
(c) Mixed Economy
(d) Price Economy.
Answer:
(b) Socialist economy

146. Inequalities of income do not perpetuate in __________.
(a) Socialism
(b) Mixed economy
(c) Capitalism
(d) None
Answer:
(a) Socialism

147. Administered prices refer to:
(a) Prices determined by forces of demand and supply
(b) Prices determined by sellers in the market
(c) Prices determined by an external authority which is usually the government
(d) None of the above
Answer:
(c) Prices determined by an external authority which is usually the government

148. Socialism ensures __________.
(a) Rapid growth and balanced development
(b) Right to work
(c) Incentives for efficient economic decisions
(d) Both (a) and (b)
Answer:
(d) Both (a) and (b)

149. The erstwhile U.S.S.R. is an example of __________ economy.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) Price
Answer:
(b) Socialist

150. Which one of the following is Not a feature of socialist economy?
(a) Collective ownership
(b) Absence of consumer choice
(c) Minimum role of Price Mechanism
(d) High Competition
Answer:
(d) High Competition

151. Which of the following is an example of Socialist economy?
(a) Erstwhile U.S.S.R.
(b) North Korea
(c) China and Cuba
(d) All of the above
Answer:
(d) All of the above

152. The demerits of Socialism do not include:
(a) Predominance of bureaucracy
(b) Red tapism & favoritism
(c) Corruption
(d) Consumer Sovereignty
Answer:
(d) Consumer Sovereignty

153. Under __________, the Consumers have no freedom of choice.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) None of the above
Answer:
(b) Socialist

154. Socialist Economy is also known as __________.
(a) Mixed Economy
(b) Planned Economy
(c) Capitalist Economy
(d) None of the above
Answer:
(d) None of the above

155. In which economy market and government both play on important role?
(a) Mixed economy
(b) Socialistic economy
(c) Capitalistic economy
(d) Business economy
Answer:
(a) Mixed economy

156. Which economic system is de-scribed by Schumpeter as capitalism in the oxygen tent?
(a) Laissez-faire Economy
(b) Command Economy
(c) Mixed Economy
(d) Agrarian Economy
Answer:
(c) Mixed Economy

157. The Government itself must run important and selected industries and eliminate the free play of profit motive and self-interest. It is applicable in case of economy.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) Price
Answer:
(c) Mixed

158. The term “Mixed Economy” denotes:
(a) Co-existence of both consumers and producers goods’ industries in the economy.
(b) Co-existence of both private and public sectors in the economy.
(c) Co-existence of both rural and urban sectors in the economy.
(d) Co-existence of both large and small industries in the economy
Answer:
(b) Co-existence of both private and public sectors in the economy.

159. Mixed economy means __________.
(a) All economic decisions are taken by Central Authority
(b) All economic decisions are taken by private entrepreneurs
(c) Economic decisions are partly taken by the state and partly by private entrepreneurs
(d) None of these
Answer:
(c) Economic decisions are partly taken by the state and partly by private entrepreneurs

160. Which of the following are the features of a mixed economy?
(a) Planned economy
(b) Dual system of pricing exists
(c) Balance regional development
(d) All of the above
Answer:
(d) All of the above

161. In a mixed economy __________.
(a) All economic decisions are taken by the central authority.
(b) All economic decisions are taken by private entrepreneurs.
(c) Economic decisions are partly taken by the state and partly by the private entrepreneurs.
(d) None of the above.
Answer:
(c) Economic decisions are partly taken by the state and partly by the private entrepreneurs.

162. Dual system of pricing exist in:
(a) Free market economy
(b) Socialistic economy
(c) Mixed economy
(d) None of the above
Answer:
(c) Mixed economy

163. Which Economic System is de-scribed by Schumpeter as ‘capitalism in the oxygen tent’?
(a) Laissez- Faire Economy
(b) Command Economy
(c) Mixed Economy
(d) Agrarian Economy
Answer:
(c) Mixed Economy

164. The existence of three sectors of industries (Private, Public and Combine sector) is one of the futures of __________.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) Price
Answer:
(c) Mixed

165. Mixed economy means:
(a) Coexistence of both private and public sector
(b) Coexistence of poor and rich people
(c) Both (a) and (b)
(d) None
Answer:
(a) Coexistence of both private and public sector

166. Mixed economy means:
(a) Co-existence of small and large industries
(b) Promoting both agriculture and industries in the economy
(c) Co-existence of rich and poor
(d) Co-existence of public and private sectors
Answer:
(d) Co-existence of public and private sectors

167. __________ is a sector in which both the government and the private enterprises have equal access and join hands to produce commodities and services, leading to the establishment of joint sector.
(a) Private Sector
(b) Public Sector
(c) Combined sector
(d) Price
Answer:
(c) Combined sector

168. In India Mixed Economy exists due to:
(a) Coexistence of public sector and private sector.
(b) Individual forces of demand and supply.
(c) Orders by government.
(d) None of these.
Answer:
(a) Coexistence of public sector and private sector.

169. Larger production of __________ goods would lead to higher production in future.
(a) Consumer goods
(b) Capital goods
(c) Agricultural goods
(d) Public goods
Answer:
(b) Capital goods

170. __________ refers to the work area where surplus manpower is employed out of which some individuals have zero or almost zero marginal productivity, such that if they are removed the total level of output remains unchanged.
(a) Voluntary
(b) Disguised
(c) Structural
(d) Technological
Answer:
(b) Disguised

171. Which of the following statements is incorrect?
(a) Alfred marshall propagated the wealth definition of Economics
(b) L. Robbins introduces the “Scarcity” definition of Economics
(c) Samuelson emphasized upon the “growth” aspect of Economics
(d) A.C. Pigou believed in “welfare” aspect of Economics
Answer:
(a) Alfred marshall propagated the wealth definition of Economics

172. Who has defined economics as “Science which deals with wealth”?
(a) Adam Smith
(b) Canon
(c) J.B. Say
(d) A.C. Pigou
Answer:
(c) J.B. Say

173. Who is the author of “The Nature and causes of wealth of Nation”?
(a) Karl Marx
(b) Adam Smith
(c) JB Say
(d) AC Pigou
Answer:
(b) Adam Smith

174. “Features of the book wealth of __________.
(a) It was the first book user on economics
(b) It was created in 1776.
(c) It was also known as ‘wealth of nations” nations’.
(d) All of the above.
Answer:
(d) All of the above.

Precis Writing – CA Foundation BCR Notes

Precis Writing – CA Foundation BCR Notes

Browsing through Precis Writing – CA Foundation BCR Notes Pdf help students to revise the complete subject quickly.

Precis Writing – BCR Notes CA Foundation

In today’s fast paced and technology driven world, the art of summarising and abstracting has become crucial. This skill helps to save time and facilitates effective communication. This skill is useful in writing synopses, executive summaries, and abstracts which are essential elements of technical writing. The art of summarising is also known as precis writing.

On many occasions, we need a summery of detailed information. Therefore, it is important to know how to summarise information without distorting the meaning.

Precis Writing – CA Foundation BCR Notes

Meaning of A Precis:
A precis or summary is a shortened version of lengthy matter. It provides a short but accurate account of the original information. It is concise statement of the substance of a longer passage in the precis in own words. A precis must be brief, accurate and clear. Is is about one-third of the original matter. A precis is really a re-statement of the main ideas in a short and clear form. It does not copy words and sentences of the original passage.

The words ‘precis’ and ‘summary’ are used interchangeably. But there is one difference between them. A precis is in the form of a paragraph. But a summary can also be in the form of notes with just headings and sub-headings and numbered points under them.

Thus, a precis is an abridgement of the original passage. An ‘abstract’ is a summary constructed by extracting the key sentences of a paragraph and putting them together in a coherent format.

There are three essentials (A, B, C) of a good precis:

  • A – Accurate
  • B – Brief
  • C – Clear

A precis means an abridged form of a piece of writing. Precis writing involves summarizing a document to convey the information in few words, It does not merely involving para phrasing (writing in one’s own words) from the original text. The precis or the summary must ‘stand alone’ and make sense. There is no fixed length prescribed for a precis. It is usually written in one third of the number of words in the original passage. A precis is not the reproduction of important sentences in the original passage.

Need And Importance of A Precis:
At several occasions we require a short and concise version of some lengthy material such as an article, a report, etc. These days, people have to attend to a variety of jobs. They do not have enough time to go into all the details of documents, etc. They want to know the essence of a matter as briefly and clearly as possible. For example, a finance manager may like to know the main points of the budget. His secretary is expected to prepare a summary or precis of the Finance Minister’s budget.

Similarly, a sales manager may want to know the main points of the company’s correspondence with a client. A trade union leader may have to report to the workers what happened in his meeting with the human resource manager of the company. In each of these situations a precis has to be prepared. A good precis helps to save the valuable time of busy executives, bureaucrats and politicians.

Precis Writing – CA Foundation BCR Notes

Steps In Precis Writing:
Precis writing involves the following steps:
1. Identify the Reader and Purpose of the Precis: This step will determine how much detail to include and how formal the precis should be. For example the executive summary of a formal report has to be more formal them the precis from a text book chapter for study purpose.

2. Understand the Passage: First of all read the passage thoroughly to properly understand its meaning. You may have to read the passage more than once to get a general idea of its theme. You cannot summarise the original matter without understanding it. In the absence of a thorough reading you will not be able to recognise what it is all about or appreciate its theme and arguments given in it.

3. Recognise the Essential Points: After understanding the passage, recognise the essential points and underline them. Irrelevant or non essential points are to be ignored or dismissed. You must avoid repetitions, digressions, examples, idiomatic expressions and jargon.

4. Select the Title: A suitable title that sums up the theme of the passage is selected. The title can be a word, phrase or even a short sentence. But it must reflect the central idea of the passage.

5. Rewrite the essential points: The main points of the passage selected in step 2 are to be written in fewer words and in your own language. For this purpose you require an extensive vocabulary. Only then you can convey the exact meaning of a whole sentence or paragraph in a few words. Compare your points with the passage to ensure that no important points are left out and nothing insignificant is included. The ideas in the precis must be presented in logical and concise manner. Considerable language skill is required for expressing idea in short and direct style.

6. Prepare a Draft: Write a draft using your points. The draft should be in the form of a well-connected and readable paragraph containing the sum and substance of the original. You need the ability to write a coherent piece of English prose. The facts should be presented in a logical sequence and the language used needs to be concise. A passage of a narrative passage is always written in reported speech and in the past tense.

It does not include conversations, questions or exclamations. You are not supposed to change the line of arguments or insert any facts not included in the original even if you do not agree with them. There is absolutely no scope for your personal views in a precis. Use only the third person and indirect speech. Eliminate any repetitions or irrelevant details. No personal comments should be included.

7. Review and Edit: Check the draft to ensure that it is clear, concise, readable and about one third of the original material. The meaning and intent of the passage must be retained in your draft. Re-phrase your rough draft wherever desirable. You may reconsider and modify the title, if necessary.

Precis Writing – CA Foundation BCR Notes

Guidelines For Precis Writing:
Precis writing is not a mechanical process but an intellectual and methodical exercise. It cannot be done by merely omitting words and sentences from,the original passage. A precis must be a good piece of composition.

Precis writing is an art that can be mastered only with practice. However, the following points can be helpful in writing a precis:
(i) Find out the Central Idea:
It is very important to determine the central idea or theme of the passage. A thorough understanding of the passage is necessary for this purpose. While analysing the passage the major points can be determined only with reference to the theme of the passage.

(ii) Be Brief but Clear:
Brevity is the soul of summarising. But brevity should not be at the cost of clarity. If the retention or addition of a few words makes the precis clear, they should be included to avoid ambiguity. Use of words in place of phrases, avoidance of repetition, omission of examples and comparison will help to ensure brevity.

(iii) Do not Reproduce, Remodel:
Prices writing is not the art of selection and deletion, it is the art of remodelling. Instead of reproducing a few important sentences and deleting others, prepare the abridged version of the original.

(iv) Use your Own Language:
Summary should, as for as possible, be written in your own words.

(v) Make it Intelligible:
Your precis should be intelligible even to a person who has not read the original passage.

(vi) Write in the Third Person:
Avoid the use of direct speech in your summary. The use of indirect speech will make your precis more compact. Impersonal style should be used.

(vii) Reduce the Passage to One-third:
Unless otherwise indicated, the precis should be one-third of original passage.

(viii) Observe Proportion:
Your summary should be well-proportioned. Each part of the original passage should be summed up according to its relative importance rather than according to the space assigned to it. All the main ideas in the passage should be given equal treatment in the precis.

Essential Qualities of A Good Precis:
A good precis must contain the following qualities –
1. Clarity: A good precis must have clarity of expression. It must be easy to read and intelligible to even those readers who have not read the original passage. It must be free from ambiguity and circumlocution.

2. Completeness : A good precis contains all the essential points of the original passage. No important fact or idea is left out. The precis is complete and informative.

3. Compactness : There must be unity among the words and sentences used in a precis. All the ideas reproduced from the original passage must form a compact whole.

4. Conciseness : All the essential ideas in the precis must be stated in brief. There must be no repetition or ornamental phrases, unessential details. However, conciseness should not be achieved at the cost of clarity.

5. Coherence: A precis should not be a collection of disjointed sentences. All sentences and ideas in the precis should be well connected and follow a logical order.

Precis Writing – CA Foundation BCR Notes

Tips For Condensation:
1. Avoid redundancy – “The movie was entertaining” is better than “The movie was thoroughly and wholly entertaining.”

2. Avoid circumlocution – example “The workers were upset because their boss was angry with them” rather than. “The reason why the workers were so upset was because their boss was angry with them”.

3. Avoid wordiness – example “The chairman’s proposal was adopted with the full agreement of all the members of the Board of directors” should be replaced by “The members unanimously adopted the chairman’s proposal.”

4. Avoid passive voice – example “After the pacemaker was fitted a series of problems were faced by the patient is longer than “The patient faced a series of problems with the pacemaker.”

5. Use words in place of phrases and phrases in place of clauses.

6. Use one word substitutions.

7. Link various sentences.

8. Avoid all unnecessary repetitions.

9. Delete example, comparisons digressions and needless details.

Illustration 1:
Precis writing is a step by step exercise. Let us, therefore, illustrate as follows:
Brazil is noted for being the world’s largest coffee exporter. But the Brazilian economy does not grow and thrive on coffee exports alone. In 1981 more than half of Brazil’s 23 billion U.S. dollars in exports consisted of industrial products and sophisticated services. Compare this with 1970 when exports totalled a mere 2.75 billion U.S. dollars. Today, thanks to the nation’s economical, efficient hydro-electrical power with a potential estimated at 213,000 megawatts – Brazil ranks as one of the ten most heavily industrialised nations in the west.

Between 1970 and 1980, agricultural production increased 66.7% and now Brazil is close to becoming the second largest food exporter in the world. In addition, Brazil also exports planes, ships, shoes, textiles, canned sweets, diverse technology and many other products and services to the markets spanning the globe. In recent years, The average yearly increase in the nation’s Gross National Product has been one of the highest in the world and per capita income in 1981 was in the area of 1000 US dollars.

Brazil has a national territory of 8% million square kilometres and a population of 120 million, half of whom are under the age of 20 years. Gross national savings are equal to 25% of the Gross National Product.

Foreign investors have discovered Brazil’s financial potential in the areas of business dealings, investment and mutually profitable joint ventures with their Brazilian counterparts and investment by European as well as North American business interests and multi-national corporations has more than doubled in the past ten yea rs.

Note: Names of persons, places, companies, countries etc., that consist of more than one word, are counted as one word. So is the case with numbers, sums of money, dates etc. whether written in numbers or words. They are all counted as single word. Hyphenated words are also counted as one.

Now let us see how we can extract the absolute essentials from this report and reduce the number of words by skilful sentence construction and use of vocabulary. The aim of this exercise is to produce the essential points of the passage in a one-paragraph summary of coherent prose. Let us take these points one by one.
Point 1. Though the world’s largest coffee exporter, more than half of Brazil’s exports for 1981 consisted of industrial products and services. ‘

Point 2. In a decade its exports have risen from 2.75 billion US dollars to 23 billion ‘A decade’ means the same as ‘ten years’.

Point 3. Brazil ranks as one of the ten most heavily industrialised western nations. ‘Industrial nations in the west’ is reduced to ‘industrialized western nations.

Point 4. In the same decade agricultural production increased 66.7% and Brazil is fast becoming the world’s second largest food exporter.
‘Between 1970 and 1980’ becomes ‘In the same decade’.

Point 5. In recent years the average annual increase in Gross National Product has been one of the world’s highest and in 1981 per capita income was approximately 1,990 US dollars.
Was in the area of becomes ‘approximately’.

Point 6. Gross national savings equal 25% of the Gross National Product ‘are’ and ‘to’ are dropped.

Point 7. Brazil covers a territorial area of 854 million square kilometres and has a population of 120 million half of whom are under 20 years old.
Under the age of 20 years, becomes ‘20 years old’

Point 8. Foreign investment doubled in the past decade with overseas investors recognising Brazil’s financial potential.

Brazil’s Flourishing Economy:
Brazil covers a territorial area of 8 Vi million square kilometres and have a population of 120 million, half of whom are under 20 years old. Though the world’s largest coffee exporter, more than half of the exports of 1981 consisted of the ten most heavily industrialised western nations. In a decade its exports have risen from 2.75 billion U.S. dollars to 23 billion.

In the same decade agricultural production increased 66.7% and Brazil is fast becoming the world’s second largest food exporter. In recent years the average annual increase in Gross National Product has been one of the world’s highest and in 1981 per capita income was approximately 1990 U.S. dollars, with gross national savings equal to 25% of GNP. Foreign investment doubled in the past decade with overseas investors recognising Brazil’s financial potential.

  • Is it as clear and concise as we can make it?
  • Is the length approximately what we have been aiming at?
  • Have we managed to retain the essential meaning and intention of the original without adding ideas of our own?

If we can answer ‘yes’ to all these questions, then we can produce our final clear copy. This should always carry a title even if the original material does not have one. The title of the original text may not be appropriate to reflect accurately the contents of our summary. So we have to make a title ourselves, keeping in mind that it reflects the contents.

Precis Writing – CA Foundation BCR Notes

Illustration 2:
There is a common tendency among the people in management to view the results of our efforts in terms of statistical reports, graphs and overall trends without adequate study of the real changes and improvements that take place in the individuals on the pay roll Management, however, attains its objective by increasing the knowledge, adding to the skills, changing the habits and influencing the attributes of people. The real measure of the effectiveness of leadership at all level is what is actually happening to the individuals directly responsible to that leadership – what changes are really taking place in the relationships of supervisor and the supervised.

The most vital spot in management is the point of contact between worker and boss. More attention should be paid to making this contact constructive arid productive at all levels of management, than to any other activity. Constructive conditions prevail in an organisation when mutual confidence and respect exist between supervisor and the supervised. This usually results from a conviction on the part of an individual that the boss is genuinely interested in him, that he is giving him every possible opportunity to develop to his higher potential in character, personality and productiveness and that he is providing every practical assistance toward that end.

Management should get its job done by increasing the personal growth and output, ie., productivity of individual worker. When satisfactory results are being realised, both the boss and the worker benefit. Each achieves greater work satisfaction and should receive due recognition through commensurate rewards. Thus the vital spot in management exists between the healthy and productive relations that are fostered between the top management, the departmental officers and between each officer and other members of the staff and among foremen, supervisors and respective workers.

Incentives and training facilities are to be provided and opportunities are to be created for workers to develop initiative, drive and ambition, which will certainly put the undertaking on road to enduring prosperity.- This is the kind of management that guides the future. (352 words) (conviction-belief; commensurate-in proportion; foster – to develop; incentive – encouragement).
(a) Choice of title:
The Importance of a Creative Relationship between the Management and the Employees in an Undertaking seems to be the suitable title. Do not be put off by its inordinate length. If we were to give our precise the title Effective Management or Boss-worker Relationship, do you think it would adequately describe the passage? The title should cover the spirit of the entire passage.

(b) Main points:
1. The Management usually assesses its efforts at improving the lot of the employees in terms of quantitative change. It tends to ignore qualitative change.

2. Effective management tries to multiply the knowledge and skill of the employees and influence their working with a view to increasing their working capacity and improving the mutual relationship between the management and the employees.

3. The boss-management relationship is of vital importance in management.

4. Mutual confidence and respect can lead to a creative relationship.

5. An employee must be helped to believe that his boss is genuinely interested in his welfare and will readily give him opportunities and assistance to develop and progress.

6. If both the boss and the employees are satisfied with each other, both of them tend to benefit.

7. Healthy and creative relationship should be fostered at all levels of the staff in an undertaking. It will ensure prosperity.

(c) Precis:
The Importance of a Creative Relationship between the Management and the Employees in an Undertaking The management of an undertaking usually assesses its efforts to improve the lot of the employees in terms of quantitative changes capable of concrete representation.

Efficient management, however, aims at qualitative improvement-multiplication of knowledge, development of skills, improvement in working habits – to increase the working capacity of the employees and to promote their relations with the management. Healthy and creative boss-subordinate relationship fostered in an atmosphere of mutual confidence and respect is of paramount importance in management.

An employee, satisfied that his boss is genuinely interested in his welfare and will readily allow him opportunities and assistance to develop, will surely work to the satisfaction of the management. The promotion of congenial relationship at all levels of the staff is the key to the prosperity of an undertaking.

To make the most effective use of the potential of information systems now provide for organising a business more efficiently, companies and other organisations are having to make radical changes to their organisation structures and operations, management methods, working practices and other aspects of organisational culture.

Hierarchical and bureaucratic organisation structures are disappearing in the favour of “flatter” organisation structures with fewer tiers of management. Middle managers, who previously relayed information upwards and downwards through the organisation structure, can be bypassed (and dispensed with) as top managers access and analyse information directly.

These flatter business structures often now consist of a federation of loosely knit and fluid strategic units such as multidisciplinary activity and task-oriented project teams, with an IT executive placed at board or top management level alongside representatives of other business functions such as personnel, marketing and finance. IT is also changing the nature of people’s job and work practices in the new organisation structure.

Most obviously, communication between computers is enabling people to work from remote sites, encouraging the development of staff working from home. And by freeing workers from the need to undertake the routine manual chores of handling and processing data and information, IT enables a business’s human resources to be used more effectively and efficiently for innovation and planning, production, decision- making and the servicing of customers needs.

In his book information Technology, Roger Carter defines information technology as ‘the use of modern technology to aid the capture, processing, storage and retrieval, and communication of information, whether in the form of numerical data, text sound, or ‘image.’

The various hardware devices in a computer system can best be understood in terms of how they function with regard to these four operations of capture, processing, storage and retrieval, and communication, which are involved in the handling of any kind of information. Input devices capture the information, which is fed into the system. At the heart of the computing systems are the central processing unit (CPU) and the control unit, which are usually housed in the box we think as ‘computer’.

The CPU performs the logical and arithmetical calculations which are what computing is all about, while the control unit executes the commands which are either typed in at the keyboard or are already stored in the software loaded in the system.

Storage is split between short-term memory within the computer and long-term memory, normally using magnetic skills’, which may also be within the computer or external to the computer itself. Finally, output devices communicate the information, which results from the computer processing to the people who wish to make use of this information. (Number of words: 436)
(From Business Environment and Information Technology by R. Powell)

Main Points:

  • Radical changes in organisation structures and practices
  • Multifunctional teams
  • Better Communications
  • More effective management of information

Precis Writing – CA Foundation BCR Notes

The Effect of Information Technology on Business:
Information systems are forcing changes in the structure, hierarchy, policies and working of companies. The middle rung of the vertical chain of command is being replaced as the top executive directly handles duties namely the passing of information. An information Technology specialist sits along with the experts of other fields such as finance, personnel and marketing to create teams for varied purposes. The use of computers now allows communication from far and distant sites.

It also saves manpower, as monotonous and routine data processing is no longer done manually. This resource can be used in areas like customer servicing and product innovations. Hardware, mainly central processing unit performs complicated arithmetical calculations. The control unit through the loaded software or the keyboard does this. These functions enable computers to capture, process, store and retrieve vital information, which is passed on through output devices.

In all modern economies, money plays a crucial role as a tool of motivation. It is recognized to have the ability to satisfy several types of needs and wants of people; the basic creature comforts pertaining to food, clothing and shelter; the psychological needs for safety and security as also the need for status, prestige and esteem. All these needs have both quantitative and qualitative implications.

People not only seek to have more of the same thing, but they also aspire to have better quality of things such as an independent house instead of an apartment, exclusive club membership and so forth. As more and more things are monetised, money is in a position to buy several types of tangible and intangible satisfactions. In a way, for a large majority of people, the need for money almost replaces several other needs with the result that money earning becomes an obsession and mission for them.

Yet it is physically impossible for a well-educated, intellectual, or brave man to make money the chief object of his thoughts; just as it is for him to make his dinner the principal object of them. All healthy people like their dinners, but their dinner is not the main objective of their lives. So also, all healthy-minded people like making money-ought to like it, and enjoy the sensation of getting it; but the main object of their life is not money-it is something better than money. A real soldier, for instance, mainly wishes to do his fighting well.

He is glad of his pay- very properly so, and justify complains when he is not given it. Still, his main notion of life is to win battles, not to be paid for winning them. Same is true of doctors. They like fees no doubt, ought to like them; yet if they are brave and well-educated, the entire object of their lives is not fees. They, on the whole, desire to cure the sick; and if they are good doctors, and the choice was fairly put to them, they would rather cure their patient, and lose the fee than kill him and get it.

And so with all other brave and rightly trained men; their work is first, their fee second-very important no doubt, but still second. However, in every nation, there are vast numbers of people who are ill- educated, cowardly, and more or less stupid. And with these people, just as certainly the fee is first and the work second; as with brave people the work is first and the fee second.
Answer:
Work Before Money:
In contemporary economies and societies, money is important for satisfying several needs, both physiological and psychological and also helps to improve the quality of life. Money can buy both tangible and intangible satisfactions. Money can be an obsession and chief mission for many people. Yet money is not the main goal for well-educated,’intelligent or brave men; but something more nobler is the ideal. A good soldier, though glad to get his pay when due, aims at victory in war, not monetary rewards. Similarly, doctors need money, but success in their profession comes before fees. Likewise for other good men; their work comes first, money afterwards. But universally there are unworthy people who have the opposite view.

Precis Writing Notes Exercise Questions

1. Write a precis of the passage given below and suggest a suitable title.
Far from being dropped like a hot potato, the humble spud has been given a year all of its own by the United Nations. Yes, next year is the International Year of the Potato. Food security and poverty alleviation are two of the things that the funds from the promotion of the potato will go into. Well, let’s not say that the UN does not peel for the dispossessed. This is good news for us, as we are the third largest alooproducing nation in the world. Its significance and utility has not been lost on our political establishment, not least the irrepressible Railway Minister Lalu Yadav. Once asked about his future, he replied, “Jab tak samosa mein aloo, tab tak Bihar mein Lalu’’.

Now the potato lends itself, chameleon-like, to just about any form of cooking. For the gastronomically-inclined who fear no calories, there is nothing quite like a creamy dish of mashed potatoes. Not for nothing is talk show host Oprah Winfrey considered literally larger-than-life. Her Hurtfulness said, “My idea of heaven is a great big potato and someone to share it with.” Such is the demand for it, we see many new hybrids coming into the market. A chip of the old stock, really. When the chips are down, is there anything more comforting than a large bag of chips, flavoured or plain?

For those who don’t want to ingest the potato in its solid form, there are other options. Keep your spirits up with vodka made from the plain potato. You can have your tot an eat it too: the Russians wolf down potatoes with the same zeal with which they knock back its liquid from. To be called a couch potato may imply that you are lazy but don’t let that dishearten you. According to A. A. Milne whose Winnie Pooh we love so much, “If a fellow really likes potatoes, he must be a pretty decent sort of fellow.” On which note, let’s pass the chips around.

2. Read the passage given below and write a precis with a suitable title.
The forests of country are a natural asset of immense value. If of adequate extent, ideally dispersed, scientifically managed and judicially utilised, they can be kept perpetually productive and useful, conferring many benefits, direct and indirect, on the people. Directly, they meet the domestic needs of pole wood, fuel, bamboos and a variety of other products including fodder and grazing for the livestock, which are the indispensable requirements of the population living in close proximity of the forest. Forests also yield a variety of products of commercial and industrial value, such as structural timber, charcoal, raw materials for making paper and newsprint, panel products, bidi leaves, gums, resin, tan stuff and a number of other economic products.

They provide employment to a large population engaged in their protection, tending, harvesting and regeneration of also in ancillary occupations processing forest raw material. Indirectly, forests preserve the physical features, check soil runoff, mitigate floods and make the streams flow perennially, all of which directly help agriculture. They also make the climate equable and have a definite hygiene and strategic value, and harbour wild life which is of scientific and recreational value.

It is a happy augury that these facts are now being appreciated by the public at large, apparently as consequence of persistent propaganda by the foresters, who have to manage the forests – mostly owned by government in the long-term national interest. A spurt was given to the campaign by government by bringing ‘forests’ under the concurrent list and ordering the no forest of more than ten hectares can be cleared without prior sanction of the Union Government. Efforts are also being made to create extensive forests, out side government forests, so that within 10 years or so from now, they will meet all the domestic needs of the local population and thus relieve the pressure on government forests of heavy felling and uncontrolled grazing so that they could then be developed to cater to the commercial and industrial demand.

3. Make a precis/summary of the following passages:
(a) For the first time, all kinds of information – numbers, text, sound, video-put into a digital form that any computer can store, process, and forward. For the first time, standard hardware combined with a standard software plat form has created economies of scale that make powerful computing solutions available inexpensively to companies of all sizes. And the “personal” in personal computer means that individual knowledge workers have a powerful tool for analysing and using the information delivered by these solutions. The microprocessor revolution not only is giving PCs an exponential rise in power, but is on the verge of creating a whole new generation of personal digital companions – hand helds, Auto PCs, smart cards, and other on the way – that will make the use of digital information-pervasive. A key to this pervasiveness is the improvement in internet technologies that are giving us worldwide connectivity.

In the digital age, “connectivity” takes on a broader meaning than simply putting two or more people in touch. The internet creates a new universal space for information sharing, collaboration, and commerce. It provides a new medium that takes the immediacy and spontaneity of technologies such as the TV and the phone and combines them with the depth and breadth of internet in paper communications. In addition, the ability to find information and match people with common interests is completely new.

4. Write a precis of the following passage in about one-third of its length and suggest a suitable title.
India is making tremendous progress in every field. Educational, social and economic level of the people is going up. The buying power of the middle class is attracting the big multinational corporations and the consumer goods are being offered to them on instalment basis or through bank finances. At least ten new models of the best cars in the world will be available in India very soon. People are almost in a frenzy and are on a buying spree. Our own business houses have found and easy way out.

They are collaborating with the foreign companies and are offering them 51% equity in the joint ventures. In many ways a good thing is happening to India as people can expect at least good quality products or imported consumer goods. But does it augur well for the nation? Since independence the malady of the Indian economic system has been that it has never cared for the R&D and has never attended to the quality aspect. Despite the best trained technical and managerial personnel, we have only produced second-rate goods to make fast buck. Our best brains got frustrated in the process and emigrated to the developed nations.

Our emphasis was never on quality whether goods or manpower. We patronised mediocrity as that was an easier option. Once again we are resorting to the easier option: important technology and all sorts of things. May be after our first blunder. We do not have any way out except to import modern technology in order to come upto the requisite level and earn a reasonable share of exports. But that can only be temporary measure. We must lay emphasis on the development of our own technologies suiting to the Indian conditions, at the same time matching the international standards rather excelling them in many areas.

For that every industrial house, in collaboration with the best universities and technical institutions must be obliged to contribute a part of its profits to the development of the new technologies. R&D must be an integral part of every business house: it should no merely be a formality like it has been but it must engage the best brains in the area and contribute to the development and improvement of the indigenous technologies. Borrowed technology can never turn India into an Asian giant for that it has to adopt the tougher option and show a new path to the world.

Japan has done it; why can’t we? Otherwise, our country and people once again would be exploited by the foreign giants and it might become the dumping ground of the outdated foreign technologies. India may be a tiger, but in the absence of the proper growth of R&D units in industries, it would continue to sleep. In case we want this tiger to wake up and roar, we must provide adequate funds to our research institutes and give enough incentives to the personnel there so that instead of fleeing this country, they put in their best. At the same time we must learn to respect their silent but nation building work.

5. Write a precis of the passage given below and suggest a suitable title:
The whole point of technical advance is that it enables man to manipulate his environment-to live in the sort of conditions he wants to live in. So you ask, “What will man’s everyday surroundings be like in forty years time?” Other animals will get the environment they deserve man will get the one he wants.

And will man be so very different in forty years time? I do not think so. Healthier, yes; I imagine we shall have mastered the virus and the problems of cancer in the young: and I am sure we know enough to be able to avoid passing on hereditary abnormalities to our children, but I suspect that the illnesses and hurts of the old age will still be with us, because I doubt whether we shall have overcome the necessity of growing old.

And shall we be any more sensible? No, certainly not. The recorded history of several thousand years shows that all the logical absurdities of man have always been with us; what we have not outgrown in 4,000 years shall not outgrow in another forty.

Food is already becoming increasingly hygienic, quick frozen, packaged and pre-packaged and in impressive plastic containers; increasingly free from all taint of decay-forgetting the fact that many of the flavours which we prize most highly are due to the early stages of decay of one sort or another. Already the production of our organic food is becoming increasingly mechanized. One obvious step remains, and that is to produce all our food-the proteins, carbohydrates, fats, vitamins, roughage and what have you entirely synthetically.

And how shall we communicate? We shall talk to each other. Shall we write? No, I think in the way we do today. Even today, handwriting is dying out. Typing will last longer, but the time will come when the manual typewriter will become obsolete and will be relegated to the status of a toy, like a child’s printing set. For already computers are beginning to tackle the problem of recognition of ordinary written texts; and already a simple computer exists which will obey verbal instructions. Put these ideas together and you will see that even today we are within sight of possibility of a machine that will take dictation, and will then automatically print out the dictated text.

Do you find this sort of prospect worrying, even frightening? I have envisaged nothing that will be technically impossible in forty years, if we really want it. For it is what we want now that will decide what we get in the future. Man, as ever, will make his own environments.

6. How summarizing is different from abstracting?

7. Write a precis of the passage given below and suggest a suitable title.
I remember last winter there were several young girls of the neighbourhood sitting about the fire with my landlady’s daughters, and telling stories of spirits and apparitions. Upon my opening the door the young women broke off their discourse, but my landlady’s daughters calling them that it was nobody but the gentleman, for that is the name that I go by in the neighbourhood as well as in the family, they went on without minding me I seated myself by the candle that stood on a table at one end of the room, and pretending to read a book that I took out of my pocket, heard several dreadful stories of ghosts as pale as ashes that had stood at the feet of a bed, or walked over a churchyard by moonlight; and of others that had been conjured into the Red sea, for disturbing people’s rest and drawing their curtains at midnight, with many other old women’s tables of the like nature. As one spirit raised another I observed that at the end of every story, the whole company closed their ranks, and crowded about the fire.

I took notice in particular of a little boy, who was so attentive to every story that I am mistaken if he ventures to go to bed by himself this twelve month. Indeed, they talked so long that the imaginations of the whole assembly were manifestly crazed and I am sure will be the worse for it as long as they live. I heard one of the girls, that had looked upon me over her shoulder, asking the company how long I had been in the room, and whether I did not look paler than I used to do. This put me under some apprehensions that I should be forced to explain myself if I did not retire; for which reason I took the candle into my hand and went up into my chamber, not without wondering at this unaccountable weakness in reasonable creatures, that they should love to astonish and terrify one another.

8. Write a Precis for the following passage.
Speech is a great blessing, but it can also be a great curse, for while it helps us to make our intentions and desires known to our fellows, it can also, if we use it carelessly, make our atti¬tude completely misunderstood. A slip of the tongue, the use of an unusual or an ambiguous word, and so on, may create an enemy where we had hoped to win a friend. Again, different classes of people use different vocabularies, and the ordinary speech of an educated man may strike an uneducated listener as showing pride; unwittingly we may use a word which bears a different meaning for our listener from what it does to men of our own class. Thus, speech is not a gift to use lightly without thought, but one which demands careful handling; only a fool will express himself alike to all kinds and conditions of men.

9. Write a precis of the passage given below and suggest a suitable title.
The whole point of technical advance is that it enables man to manipulate his environment to live in the sort of conditions he wants to live in. So you ask, “What will man’s everyday surrounding be like in forty years’ time?” Other animals will get the environment they deserve man will get the one he wants. And will man be so very different in forty years’ time? I do not think so. Healthier, yes; I imagine we shall have mastered the virus and the problems of cancer in the young: and I am sure we shall know enough to be able to avoid passing on hereditary abnormalities to our children: but I suspect that the illnesses and hurts of the old age will still be with us, because I doubt whether we shall have overcome the necessity of growing old.

And shall we be any more sensible? No, certainly not. The recorded history of several thousand years shows that all the logical absurdities of man have always been with us; what we have not outgrown in 4,000 years shall not outgrow in another forty.

Food is already becoming increasingly hygienic, quick frozen, packaged and pre-packaged and in impressive plastic containers; increasingly free from all taint of decay forgetting the fact that many of the flavours which we prize most highly are due to the early stages of decay of one sort or another. Already the production of our organic food is becoming increasingly mechanized. One obvious step remains, and that is to produce all our food-the proteins, carbohydrates, fats, vitamins, roughage and what have you entirely synthetically.

And how shall we communicate? We shall talk to each other. Shall we write? No, I think in the way we do today. Even today, handwriting is dying out. Typing will last longer, but the time will come when the manual typewriter will become obsolete and will be relegated to the status of a toy, like a child’s printing set.

For already computers are beginning to tackle the problem of recognition of ordinary written texts; and already a simple computer exists which will obey verbal instructions. Put these ideas together and you will see that even today we are within sight of possibility of a machine that- will take dictation, and will then automatically print out the dictated text.

Do you find this sort of prospect worrying, even frightening? I have envisaged nothing that will be technically impossible in forty years, if we really want it. For it is what we want now that will decide what we get in the future. Man, as ever, will make his own environments.

10. Write a precis of the passage below and suggest a suitable title.
When a boy has finished his education, I would have him bear in his memory a stock of songs which should cheer his toil for life-songs full of affection towards everything around him, literally filling his heart with love for his home, making him believe it to be, however humble, the happiest and most sacred sport on earth, love of the very earth itself which submits to his rude handling and repays the labour of his hands and the sweat of his brow by filling his.

arm with the teeming abundance of is womb-love of the various domestic creatures the look up to him for their subsistence love for nature in every form, making him always appear to him fair, whether it be in the storm or in the sunshine, in the gloom of winter or in the bloom of summer, always the same, glowing and joyful; but however bright, ever showing him, leaving ever upon him, the face of a gracious and bountiful God.

11. Write a precis of the passage given below and suggest a suitable title.
The perfect historian is he in whose work the character and spirit of an age is exhibited in miniature. He relates no fact, he attributes no expression to his characters, which is not authenticated by sufficient testimony. But by judicious selection, rejection and arrangement, he gives to truth those attractions which have been usurped by fiction. In his narration a due subordination is observed some transactions are prominent, other retire.

But the scale on which he represents them is increased or diminished not according to the dignity of the persons concerned in them, but according to the degree in which the elucidate the condition of society and the nature of man.

He shows us also the nation. He considers no anecdote, no peculiarity of manner, no familiar saying, as to insignificant for his notice, which is not too insignificant to illustrate the question of laws, or religion and education and the question . of laws of religion and education, and to mark the progress of the human mind. Man will not merely he described, but will be made intimately known to us. The changes of manners will be indicated, not merely by a few extracts from statistical documents, but by appropriate images presented every line.

12. Write a precis of the passage given below and suggest a suitable title:
The mistaken belief that democracy means the rule of the majority is exceedingly widespread and it has vitiated a great deal that has been said about the subject. On the one hand, champions of majority rule have seen themselves as champions of democracy: while on the other, critics of majority rule have supposed themselves to be critics of democracy. For example, when communists claim to be democrats they are claiming that the dictatorship of the proletariat which is their goal, is the fulfilment of democracy. Their case is a simple one.

The argue that since the proletariat constitutes a permanent, numerical majority in an industrialized capitalist society the rule of the proletariat is the same thing as democracy. This is an important argument and it cannot be refuted by demonstrating that in all existing communist societies it is the party, not the proletariat, that rules, the crucial point is that if democracy means the rule of a permanent majority and if the proletariat forms such a majority then its rule (if not its dictatorship) is democracy. The only effective refutation is to be found in showing that democracy is not the rule (let alone the dictatorship) of the majority.

Much the same thing has to be said in answer to the critics on the right to those who think that a case can be made against democracy if a case is made against the rule of the majority their argument has almost always been the same, the majority of men are ignorant, democracy means the same, the majority of men are rule of the majority. Their argument has almost always been the ignorant, democracy means the rule of the majority therefore democracy means the rule of the ignorant and the rule of the ignorant is bound to be bad.

13. Write a precis of the passage given below and suggest a suitable title:
I belong to that classification of people known as wives. I am a wife. And, not altogether incidentally, I am a mother.
Not too long ago a male friend of mine appeared on the scene fresh from a recent divorce. He had one child, who is, of course, with his ex-wife. He is looking for another wife. As I thought about him while I was ironing one evening, it suddenly occurred to me that I, too, would like to have a wife. Why do I want a wife?

I would like to go back to school so that I can ‘ become economically independent, support myself and if need be, support those dependent upon me. I want a wife who will work and send me to school. And while I am going to school I want a wife to take care of my children. I want a wife to keep track of the children’s doctor and dentist appointments. And to keep track of mine too I want a wife who will wash the children’s clothes and keep them mended. I want a wife who is a good nurture attendant to my children, who arranges for their schooling, makes sure that they have an adequate social life with their peers, takes them to the park, the zoo, etc.

I want a wife who takes care of the children when they are sick, a wife who arranges to be around when the children need special care because, of course, I cannot miss classes at school. My wife must arrange to lose time at work and not lose the job. It may mean a small cut in my wife’s income from time to time, but I guess I can tolerate that. Needless to say, my wife will arrange and pay for the care of the children while my wife is working.

I want a wife who will take care of my physical needs. I want a wife who will keep my house clean. A wife who will pick up after my children, a wife who will pick up after me. I want a wife who will keep my clothes clean, ironed, mended, replaced when need be, and who will see to it that my personal things are kept in their proper place so that I can find what I need the minute I need it.

I want a wife who cooks the meals a wife who is a good cook. I want a wife who will plan the menus, do the necessary grocery shopping, prepare the meals, serve them pleasantly, and then do the cleaning up while I do my studying. I want a wife who will care for me when I am sick and sympathize with my pain and loss of time from school. I want a wife to go along when our family takes a vacation so that someone can continue to care for me and my children when I ‘ need a rest and change of scene.

14. Write a precis of the following passage in about one-third length and give it a suitable title:
Ever since after the discovery of transistor by Brattain and Shokley in 1948, attempts are being made of make smaller and smaller transistors. And in 1959 it was Richard R Feynman who predicted a technological world composed of self replicating molecules whose purpose would be the production of nanotre objects. Almost 40 years after Feynman’s initial proposition the nanometic scale looms large on the research agenda. This was about the same time that Ari Aviram and Marx Ratner, at IBM proposed the idea of a single-molecules rectifier.

Scientific discoveries and inventions have in fact, propelled man to challenge new frontiers. Nano-technology is one such technological wonder that we are experiencing now. Coverage of various events led to the recognition of nanotechnology as an area for special emphasis. These included recognition of new phenomena that would be necessary to extend the progress associated with the general area of information technology, scientific discoveries of new instruments and materials, and an awareness of an information frontier that offered a rich supply of new principles, phenomena, materials and opportunities to enrich social functions.

In fact, with the evolving strength of discipline, the fertile frontier of discoveries requiring knowledge across discipline boundaries had been some what neglected for decades. This is where the concept and thrust in nanotechnology represents a substantial difference to the manner in which knowledge and technological innovation is pursued [1]. Semiconductor behaviour has provided the electronics engineers with remarkably productive developments and semiconductor industry is edging closer to the world of nanotechnology where components are miniaturised to the point of individual molecules and atoms. Miniaturisation is known to follow Moore’s law since its depiction in 1960.

Nanotechnology was originally defined in the 1970s as the science of manipulating atoms and single molecules. Its remit has since expanded to embrace all technologies capable of building structures at the scale of a billionth of a metre. Until the 1990s, atomic manipulations were developed with sustainability in mind. Hope was that building machines from the bottom up atom by atom, rather than top down, etching them from larger blocks, would minimise the energy and materials expended in manufacturing.

US industrial lobbies then broadened the definition as a way of accessing public funds earmarked for materials and chemistry research and development. These lobbies convinced the Clinton administration to launch the National Nanotechnology initiative in 1999, which fostered energy-intensive top-down techniques for fabricating and sculpting objects less than a micrometer in size.

The initiative’s generous funding boosted industrial development and innovation in globally competitive areas such as microelectronics and biotechnology. For fear of being left behind, funding agencies world-wide, including in Europe and Japan, quickly adopted similarly broad definitions. More recently, nanotechnology has ventured even further. It is now portrayed as a key and novel way of tackling the world energy crisis and water shortage. Yet top-down production is intrinsically wasteful of materials and energy.

The drive to miniaturise has been with us a long time. Joachim and Plevert chart the progression from ancient Greek astrological clocks to James Watt’s steam engine to the discovery of the electron and finally today’s microelectronics, when applied to integrated electronics and electromechanical systems, lithographic techniques are reaching a physical limit. Moreover, below a scale of tens of nanometres, fundamental problems such as inter-connection and quantum effects arise.

Today, nanotechnology is embracing biology. Not only our DNA may be modified by nanobots capable of getting into cells as well as nanotechnology’s dubious association with genetically modified organisms. But bacteria less than 100 nanometres long might be incorporated into molecular machines. With the help of nanotechnology, it is possible to build machines from self- assembly and supramolecular chemistry.

Research in this field fall roughly into two groups: those designing new materials and devices from the bottom up, using nano-metre-scale structures as building-blocks; and those creating new tools to investigate matter- mainly biological structures -at the nanometre scale. The minimum feature size has already reached- 120nm and device density 40 million/chip, chip area being-1 cm sq. The trend in miniaturisation should continue to fulfil the demands of society in general include improved food, clothing, shelter, safety, trans¬portation, communication, energy, information, health and medicines.

Nanotechnology is, quite simply, the manipulation of matter at the molecular level to create new products with atom-by-atom precision. Atomic diameters represent the lower end of this range at tenths of nanometres. Transistors used in the present generation of the microprocessors with dimensions of the order of the 100 nanometres are at the upper end of the nanotechnology range.
Write an executive summary of the above passage in about one fifth of the original.

15. Write a precis of the following with a suitable title.
The world today thrives on technology and science. Since the dawn of civilization man has been treading on the path of progress with the help of technology. Technology is the pulse of life whose presence and contribution are tangibly felt at each and every beat.

Undeniably the primary goal of technological advancement should be to increase human efficiency. When we look back to the yesteryears and juxtapose those days with the present day, we find there has been a considerable leap in human efficiency in all spheres of life. And we know this has been possible because of techno¬logical advancement.

Precis Writing – CA Foundation BCR Notes

The boon that technology bequeaths on human life is comfort and ease. The electronic gadgets, the fast and rapid means of communication, the wonderful media of entertainment are some of the few among the endless list of technological advancement. They have all proved to be the source of comfort, leisure and efficiency.

Technological advancement has ushered in a number of gadgetry aids. The electronic devices that we relentlessly use since morning till night help us to execute and perform all our tasks efficiently. The implementation of technology has enabled us to do our work in any situation with more of precision and accuracy. Hence it cannot be denied that the object or goal of technology and its application for any kind of advancement should always be to increase man’s efficiency.

The recent and most advanced technology has been the Information Technology. The computer, its network and various software applications have transported human beings into a realm of wonder and comfort. Any kind of work can be done within the blink of an eye with the assis¬tance of the Information technology. Undeniably all these technological advancement have been aimed to better the prevailing condition of human beings and to alleviate their ordeal. The tremen¬dous change that has been brought about by it can never be exaggerated. It is indeed a blessing. Without this technology we would not have had such a smooth life. Its amazing impact is to be seen in the sphere of commerce, trade, academy, health and hygiene sports, communication and soon.

Information technology has made life wonder-fully changed. Any task related to any field can be performed adroitly and skillfully with the help of information technology. Even advancement in technology has helped in increasing efficiency in the field of health and medicine. By the help of Internet and online operation medicos in the health centers can work expeditiously and efficiently.

Electronic gadgets and machines help in medical research and investigation. Hospitals are well equipped where patients can receive utmost care in times of crises. Gadgets and technology have been a boon to the world of medicine. Financial organization, banks and other trade centers do business with telecom facilities. They offer and receive online services. All that one needs to do is logon to the website and perform one’s transaction. A person sitting on a cyber cafe can do Internet shopping.

Even in the field of agriculture we find the technological advancement has increased efficiency of human beings and save time. The farmers can do their jobs faster and more easily with the help of tools and machinery. But it is not always that technology has been advanced with the primary goal of increasing people’s efficiency or giving him more leisure. Launching of satellites or embarking on space exploration has little to do with the increase of human efficiency and providing man with more leisure.

Sometimes technological application helps us in the advancement of arms, ammunition and missiles. It helps us in creating destructive explosives leading to the unfathomable catastrophe. Such an objective of technological advancement surely does not have the desirable goal that human beings seek. Rather it causes destruction to making. These examples prove that technology can also be used in a negative fashion. The networked information in technology may be misused. Skilful hackers may gain access to any important information and siphon it off.

Juxtaposing the two we are convinced that technological advancement should be aimed at increasing the efficiency and skill of humans and give respite from the toil that he undergoes. The implementation of technology in spheres where humans do not reap any advantage should not be the primary spheres where humans do not reap any advantage should not be the primary goal of technology. After all technology is a boon. Hence all efforts of improving technology should be aimed at giving one more time to indulge in rest and relaxation.

16. Make a precis of the following and give a suitable heading.
Telecommunication is a major segment of fast developing technology. The world of communication is vast. Whatever electronic gadgets or media we use for communication belong to this domain. It is not limited to radio, television, telephone or telegraph. It has extended its sphere to a wider horizon. We communicate through satellite and transmit information through computer network. It is needless to say telecommunication has sig-nificantly led to human development.

Communication has been the initial stage of development of mankind. Gradually the necessity to communicate with people in a distant location arose. This led to the invention of various modes of telecommunication necessitating the purposes. There emerged the telegraph, the telephone and the wireless network for transmission of news. On the basis of these, further advancements have relentlessly been made since the last century. Now we have television, computer and cellular phone to communicate with whomever we want and whenever we desire.

In each and every sphere of life telecommunication has been playing its important role. Right in the morning we get the newspaper that informs us of any event taking place across the world. The news or programmes aired in the radio or television are but modes of telecommunication.

We get to know so many things just sitting in our drawing room, either reading the newspaper, or listening to the radio and watching the television. Telecommunication has facilitated the development of human life and made it easier. In any field, we look at we find telecommunication has been instrumental in developing civilization. We can cite lots of examples to prove the fact.

When a patient is in a critical condition, the doctor has to be informed immediately, the telephone or the cell phone acts as a boon. Cellular phone is even more useful since it helps in communication when one is mobile. In a predicament one has always an access to communicate with the help of this technology or means of telecommunication. This has progressed human life and made life easy and smooth for them.

Television, another mode of telecommunication, has been a blessing to mankind. It is a source not only of amusement, but a resourceful one for procuring information and news. There are so many beneficial aspects of television. One can be highly amused by watching television even if , one is without company.

In utter loneliness one can find television a source of amusement. After a day’s work it is always a pleasure to watch some of our favourite television programmes. It is not only a medium of entertainment. It is also a medium of instruction. We learn many things by watching some of the programmes that are designed for giving information to the viewers. Visual effect is more profound and effective.

The national geography, the Discovery channel, programmes especially framed for educational values are useful. Various television shows are there that have their pedagogic values. Naturally one can learn from what they see. Television pro-grammes can thus produce sources of knowledge. Children get fascinated. They learn and acquire information that is revealed in the programme meant for amusement.

Apart from television we have the world of computers. Computer technology has benefited astoundingly in amusement, communication, work and information. The engineers, laymen or businessmen all depend on this mode of technology. Students navigate the Internet to look for information. Many of the lectures and university examinations are conducted online. It is possible for us to take online test via computer for the pursuit of any academic course. Computer chips are used to bring about a revolution in the world of machines used in for domestic purposes.

Precis Writing – CA Foundation BCR Notes

Cars, mobiles, refrigerators, washing machines vacuum cleaners have paved the way to a comfortable life. Information technology has changed the scenario in the financial world. It has enabled the bank to invest in ATMs (Automatic Teller Machines) thereby increasing the reach and accessibility. E-commerce is a boon to the world of trade. In fact information Technology is the latest development in telecommunication. Different software serves various purposes. We can communicate through computer network to any people belonging to any part of the globe in no time. We derive information from the website. Websites give us an access to any unknown region in the fastest possible time. This helps tremendously.

Especially when one is in haste one can down load relevant information one intends to acquire from the websites within the spur of the moments. Any fact, information or knowledge pertaining to any field, research or project is available in the websites. One can own access to the required information from the sites he would like to. One can execute any task starting from railway reservation, air ticket booking, down load materials from libraries, find details about universities, hospital or for that matter look for job vacancies. In fact this mode of telecommunication has radically changed the life of people. Such are the benefits reaped by computer network and it has surely helped in human development.

In health centres, hospitals, trade houses, educational institutes, railways, airways, private residences in fact everywhere we see the application of various modes of telecommunication. Telecommunication has brought the world closer and has paved the way for better living.

17. Make a precis of the following, giving a suitable heading
The most common feature in today’s world is to see one surfing the net, using electronic mail or chatting with others through Internet. In fact he is in communication with the world. Internet is a connecting medium through which people can communicate to anyone under the sun.

Internet has become an indispensable and integral part of human life. It provides us with information, communication and entertainment. It can perform many of the difficult tasks. Internet connects millions of people into a global network. Connection and communication through Internet are built rapidly and easily. A holder of credit card can easily own access to a line of credit. Any one willing to purchase any item can do so by the help of the Internet with the click of mouse. The credit card helps him to do this shopping. The credit card is linked with his bank account and the money is debited from his account. Thus business transaction is executed with the Internet where personal relationship between the shop owner and the customer does not feature in.

A person chatting through Internet gets entertained. He may make friends with people whom he has never seen or perhaps will never see. Each of them shares their moments by chatting through Internet thus building and developing connection. But this remains the mode of acquaintance. One cannot go beyond that. In other words Internet helps us to establish connection but not relationship rooted on emotions and delicate senses.

Use of Internet is.quite rampant in the field of education and academics. Universities conduct online lectures and examinations. This process is smoother and more convenient. One can gain access to online examination from any remote part. Lectures conducted online may be beneficial to students who cannot attend regular classes. Undeniably these are the more convenient methods. Yet when we consider the classroom situation and the student teacher relationship we discover the strong bonding and rapport between the two are priceless and irreplaceable.

This relationship is not to be formed when one conducts online class. Effective teaching and learning depends upon student teacher relationship. When a teacher delivers a lecture and the students attentively listen to it a special ambience is created. That makes the teaching learning process more fruitful. Learning through network does not provide this.

Again the students who download information from the websites find the process convenient and they can do it according to their suitability. But when they acquire information from their tutors that definitely has a positive impact. They can learn more and get the exact information. While they choose and opt for information from the websites they may be bewildered.

Besides imparting information a teacher plays the role of a mentor and a guide. A student can always confide in the teacher his personal difficulties and problems. Internet is not human being. Its artificial intelligence will never allow it to probe into human mind and emotions. It will provide information. It will not have sympathy and understanding. Distance learning, online programmes in academics gradually destroy the age old relationship that existed between teacher and students.

E-mail is another mode of Internet connection that helps in quick and fast interaction. Short notes or message sent through Emails serve the purpose of connection between one person and other. The hand written letter delivered via postman has its charm. It creates a bond and can never be substituted. While we process words in Email we are provoked by precision and swiftness. The result is a precise informative message written in the form of a letter. Quite on the other hand letters written on a paper are impregnated with emotions that can be conspicuously felt missing in Emails.

Nevertheless we have recourse to modern method of telecommunication. That indeed helps one to pursue and maintain connection. But in the long run personal relationship that has always been in existence will be on the wane. It will be diminished and destroyed. Letters written on papers bear the personal touch of warmth and cordiality that Email cannot produce.

People remain glued to Internet leaving little space for social gathering and rendezvous. Internet is given preference and priority to any other mode of communication for some obvious reasons. It connects us to the world. By sitting at home we do our work. The work may be multidimensional. It may be official work or it may be personal work. It may be video conferencing or it may be designing websites. These invariable extend our connection. They develop connection to an extensively wide and incredible range. After all Internet is built on hardcore reality of facts and figures.

Human relationship on the other hand in built on metaphysics of compassion and love. The quintessence of human relationship is emotion. The throb of human relation depends on those emotions. Internet weaves the world through chips and microprocessor. Human relationship weaves the world with love faith aspiration and hope. Communication through technology is devoid of the human touch. In fact the two are diametrically opposed to each other. Naturally when one dominates the other is bound to recede into nothingness.

18. Write a precis of the following and give a suitable title
As fire enabled man to melt down metals and reform them into new materials, genetic engineering, the manipulation of life at its most basic level, is at par with the discovery of fire and the splitting of atom. Little did man know that one day he could grow rice on the barren lands of Africa.

It was because of the genetically modified seeds that the developing nation like India could see “The Green Revolution”. Lower costs, pest and disease resistant seeds, cold, drought and salinity tolerant seeds with a high nutritional value led to increased income through higher yields, lower production costs and the more efficient use of farm labour. Research indicates an increase in income is consistent with significant economic benefits realized by small-scale and large-scale farmers alike.

Farmers growing biotech crops increased their income by US$ 44 billion (1996-2007), half gen-erated in industrial countries and half in devel-oping nations. Farmers have decreased pesticide applications by 359,000 metric tons – a savings of 9 per cent in pesticides (1996-2007).

So what is it, that even though total acres of biotech crops harvested exceed more than 2 billion, we still are not comfortable in using the GMO food?
The answer is not that difficult. Tinkering with the process of evolution could, equally unleash unforeseen biological and economic problems. Environment and Forests Minister Jairam Ramesh’s decision to impose an open-ended moratorium on the commercial introduction of privately developed Bt Brinjal is being criticized. Well, when Bt Cotton was introduced in March 2002, after similar noise, farmers in the first major field study reported using up to 80 per cent less pesticide. Bt cotton helped boost yields from 308 kg per hectare to 508 kg. per hectare between 2001 and 2006.

Here’s the rub: Bt cotton seeds can cost up to 200 per cent more than normal seeds. This is just one case where genetically modified seeds could have economic disadvantages. Not only is the buyer dependent for purchase from only single source, requirement to pay royalties if the crops mix with the GMO crops (even without one’s fault) adds a lot of burden. Patent enforcement may also be difficult, as the contention of the farmers that they involuntarily grew Monsanto-engineered strains when their crops were cross-pollinated shows. One way to combat possible patent infringement is to introduce a ‘suicide gene’ into GM plants. These plants would be viable for only one growing season and would produce sterile seeds that do not germinate.

Farmers would need to buy a fresh supply of seeds each year. However, this would be financially disastrous for farmers in third world countries who cannot afford to buy seed each year and traditionally set aside a por¬tion of their harvest to plant in the next growing season. Potential lack of buyers like in the case of Brown rice (high in nutrition containing niacin riboflavin) in Africa, where villagers refused to consume it because of their fear and cultural and religious beliefs, could raise the costs to a firm along with the high research and development costs.

GM crops over-utilize the land leading to its deg-radation. For example in the case of strawberries that survive cold climates, by the time they get deported to the super-market the whole stock may get rotten, and hence no profits would be made. In a dirty room full of insects, what would an intelligent person do? Spray insecticides or clean the room? Well, spraying insecticides shows one’s myopic vision, whereas, as intelligent being would obviously clean up the whole room.

Organic Agriculture is therefore the best economic option available with us, across the globe and especially in developing nations like ours. Organic farms have lower costs of production than conventional farms, with much less emphasis on purchased inputs. Synthetic fertilizer and pesticide purchases are eliminated, and costs of purchased feed, veterinary bills, and replacement livestock are lower. By improving soil structure and with good management practices, organic farmers have discovered that they require no more, and in some case less, tillage than their conventional neighbours.

In addition, organic farmers have lower fixed (overhead) costs for depreciation and interest charges attached to capital inputs, such as machinery and equipment. The net income of organic farms appears to be slightly higher than for conventional farms. In general, expenses are lower and the income is greater (due to the price premium). Price premiums vary between crops and overtime.

The organic industry is changing rapidly leading to price instability. For example, a high premium price for one crop can lead many farmers to grow that crop. The market is then flooded and the price plummets. Many believe that overtime, the price premiums will stabilize. The high value of organic crops is offset by including lower-value crops in rotation. Intercropping is one way to incorporate low-value crops into the rotation, while still growing valuable cash crops. Crop rotations also reduce risk. By growing several crops at any one time, the farm income will be buffered from both price fluctuations in any one crop and crop failure.

The demand for organically-produced foods is growing rapidly in North America, Japan and Europe. This rapid growth has resulted in fluctuations in the market. For example, some of the markets have very specific demands in terms of crop quality and the demands change from year to year. The organic industry is still developing, and the infrastructure in terms of transportation system, wholesalers and distributors is in its infancy.

It surely is a forward looking concept. Organic farming is common sense farming, and common sense is always profitable!

Precis Writing – CA Foundation BCR Notes

19. Write a precis of the following passage reducing it to about one-third of its length and give a suitable title.
The key to a nation’s future is in its schools. If that is so our future is bleak. The World Bank’s Development Policy Review for India gives two interesting facts. One, a nationwide study on teacher presence in schools found that it is less than 50 per cent in most States. Even in States like Kerala which has achieved significant progress in literacy, teacher absenteeism is as high as 40 per cent. Two, more than 50 per cent of children living in urban areas in eight major states are dependent on private schools for elementary education.

What these data reveal is the lack of involvement on the pan of the state in primary education. It appears to have abandoned its con-stitutionally-bound role of providing education to children. In the private sector, studies have found that most of these schools function outside the purview of all regulations and hence have no obligation to maintain minimum standards expected in teaching and learning.

A recent study of rural schools claimed that more than half of Class V students in five states that came low on education infrastructure could not read at the levels expected of Class II students. More than two-thirds of the students could not cope with elementary moths. The refusal of the state to address the disastrous condition of primary education, both in terms of shortage of schools and poor standards, has spawned un¬aided, unregulated and expensive institutions. A gullible and desperate people who have realised the worth of quality education, are forced to send their children to these teaching shops. The shortage of good, affordable schools is spawning a social apartheid that will severely impact the equality and quantity of workers in the future.

The Right to Education Bill was a step in the right direction to address these anomalies. Sections within the government seem to be against the Bill and have stymied its introduction in Parliament. As in the case of most public institutions, state-run schools are also in need of institutional reforms. These would require them to be accountable to the community rather than to a state bureaucracy. It has also been suggested that Panchayati Raj institutions should have a say in the running of schools and even recruitment of teachers.

Evidence from Kerala and Nagaland suggests that community supervision, particularly parent- teacher committees, can significantly improve standards in schools. Institutional reforms are linked to political process at the grass roots. Politics that recognises education as a right of the citizen and will build organic links between educational institutions and the community is essential for reforms to succeed.

20. Write a precis of the following and give a suitable title.
For the past decade, Russia has been pouring money into scientific research, trying to make up for the collapse of the 1990s, but innovation is losing out to exhaustion, corruption and cro-nyism. In a rut and out of favour, the labs are barely wheezing here at Pushchino, once one of the brimming engines of Soviet science, a special closed city devoted to prestigious biological research. The government has turned its focus to newer ventures.

But the result has been like a great deal else in this country: expensive, flashy and largely hollow. Shot through with back-scratching and favorit-ism, the government’s science program has tripled its spending in the past 10 years – and achieved very little. The number of papers published in scientific journals is the same as it was in 2000 and as it was in 1990, even while the rest of the world’s output has exploded.

The impact could extend even to the United States, which depends on Russian rockets, troubled by engineering failures, to carry astronauts to the international space station. Twenty years after the breakup of the Soviet Union, a generation of scientists has been lost, young scientists say, and another is on the way out. Many are lining up to escape abroad, just as in the dark, poverty-stricken 1990s.

Science had prestige and plenty of support in the U.S.S.R. The Soviets wielded a formidable nuclear arsenal, put the first satellite into space, then the first man into space. Dedicated biologists nurtured what may have been the world’s foremost seed bank, ensuring its survival even through the 900-day Nazi siege of Leningrad. Nine Nobel Prizes for physics and one for chemistry acknowledged Soviet achievements.

Pushchino, founded in 1966 in a woodsy spot along the Oka River, about 75 miles south of Moscow, was one of several dozen special science cities built across the Soviet Union, owned and governed by the Soviet Academy of Sciences.

21. Write the precis of the following:
Men are not made in the same mould, like a lot of bricks. It would have ill suited the wants of the world. If it would have been so consequently, even in the same country, men differ in disposition, inclination and manners and opinions more probably than they do in face or form. And between the people of different countries the contrast is even more striking. We have then, also different sentiments, different sympathies, different hopes, different ways altogether. It will always be so, so long as there are different minds, there will be different views on all the matters, that admit of opinion.

So long as there are different degrees or latitude or Longitude, as well as differing circumstances there will be different interests, different attachments and different habits. It behoove us, therefore, to cultivate a generous spirit of forbearance towards those of whatever race, who may think differently and act differently, from ourselves. Even though we may be convinced that they are wrong, if we know them to be sincere, we should still bear with them, and give them credit for their sincerity.

This is the virtue of toleration or bearing with others when we may differ from them, or may not like their ways. Toleration should be shown in all differences of opinion on even the highest matters of life and death, and here it is of more value than anywhere else. When we cannot agree with one about a point of science or philosophy or faith, we can at least agree to differ from him and there is an end. We must always remember that we are all likely to make mistake and possess weaknesses, and that we ourselves need the same forbearance and sympathy. We are, besides all of the same human brotherhood and should “Like brothers, agree”.

22. Make a precis of the following passage.
It is possible to score goals and lose the game. It is possible to win battles and lose the campaign. It is possible to make money and miss a fortune. The short sighted man suffers, no matter where he is found; he may see some things with excessive clarity, but he fails to get the true perspective which will enable him to arrive at wise conclu-sions. He gains one thing but he loses something better.

This is a very common error. The student makes it when he forgets the life goal in thinking of the medal or scholarship. The businessman misses his way when he chooses a present gain forfeits ten times as much in the future. The youth makes such a mistake when he marries good looks, and forgets the character which will be necessary to command his respect for years to come.

Man was made to think, and unless he uses his brain he will stumble into no end of unseen problems. There is a future, and it cannot be evaded, and when it is reached it cannot be changed, for we are deciding what it shall be. We are our own destiny-makers, it is well to face the future with care and caution.

23. Make a precis of the following passage.
Speech is great blessing, but it can also be great curse, for while it helps us to make our intentions and desires known to our fellows, it can also, if we use it carelessly make our attitude completely misunderstood. A slip of the tongue, the use of an unusual word, or of an ambiguous word and so on, may create an enemy where we had hoped to win a friend. Again different classes of people use different vocabularies, and the ordinary speech of an educated man may strike an uneducated listener as showing pride, unwittingly we may use a word which bears a different meaning to our listener from what it does to men of our own class. Thus speech is not a gift to use lightly without thought, but one which demands careful handling. Only a fool will express himself alike to all kinds and conditions of men.

Precis Writing – CA Foundation BCR Notes

24. Read the following passage and write its summary.
Science has made our lives more comfortable. Modern technology has contributed towards the progress of society. Gone are the days of rubber and pencil, nib and pen. Children need not strain their heads for memorizing dirty math tables or go on cramming formulae or facts. In short the memory of students need not be over loaded. Science has done wonders for us. Today we have access to knowledge contained in books in any language, experiments or research going on in various countries.

Newspapers, Magazines and periodicals are becoming-obsolete. Information technology has been revolutionized with the invention of computers. It has opened a new window on the world. Computer based information technology has increased efficiency and human capacity to work. One person can do the work of fifty persons and that too more efficiently and precisely. Computer technology may be used for storing, transferring and improving knowledge.

The interlinking of computers through worldwide network like internet provides instantaneous knowledge and service. E-mail and E-commerce ( have come in vogue. Computer has indeed opened new vistas for humanity. The future of information technology is bright.

25. Make a precis. Also suggest a suitable titles:
A vital factor in the success of any business is the right selection of its administrative staff. In this matter, management has the in escapement function not only of making the right selection, but also having made it, of providing the fullest scope for legitimate ambition and individual advancement. A management which is so petty as to be jealous of the powers and authority of the officers will naturally select staff of the sub-missive type, docile men who are accustomed to obey without question. It would not take the risk of engaging able and independent-minded employees for the fear that it may one day be supplanted by them.

A really go-ahead management which understands the mood of the present times will do the direct opposite. It will seek out men capable of evolving policies within their own sphere and will train them to rise to the highest position. In connection with most administrative bodies, management is self-perpetuating and is responsible for its own succession. Even the ablest management cannot foresee the future with certainty; its decisions, for the future, are at best intelligent guesses.

What, however, it can and must do is to make available the enterprise to the men who will be capable of taking the decisions of the future and who are qualified, trained, and tested during the present to do so. No management can rely upon a constant supply of geniuses. It must so train its staff that, during normal times, the enterprise is capable of being run effectively by men of not much more than average ability and with a robust sense of purpose.

26. Write a precis of the following passage reducing it to about one-third of its length and give a suitable title.
Creative and innovative thought is at the heart of the learning organization. An organization’s ability to innovate is perhaps the most important source of competitive advantage. Organizations who know how to stimulate and leverage innovative thought are able to respond more rapidly and resourcefully to market changes and customer requirements than their slower, less innovative competitors. Despite the tremendous contribution innovative thought makes to organizational survival, most organizations don’t realize how they prevent such thought from being exercised in their organization. The typical high stress workplace, the physiological and psychological affects of stress on the human brain and mind compromises such creativity and innovation.

Studies show that when people are under stress, their thought processes narrow. This narrowing of attention, by definition, prevents divergent thinking, which is the foundation of creativity. Divergent thinking is the ability to see connections between very distantly related ideas and context. It is an important component of “thinking outside the box.” When people are stressed, they are able to perceive obvious connections and associations between ideas. When people are in a positive emotional state, their ability to make more distant, novel connections and associations increases. Thus, stress compromises, at the most fundamental neurological level, one of the foundational skills of creativity and innovation.

Research by Dr. James Pennebaker of Southern Methodist University has demonstrated a very serious consequence of uncontrollable stress on thought processes. In an experiment performed by Dr. Pennebaker, subjects wrote about whatever was going on in their mind – their “stream of consciousness.” One group was subjected to a loud noise in the middle of the exercise and told there was nothing they could do about it; they had to “grin and bear it.” The other group was subjected to the same loud noise in the middle of the exercise, but they were told they could have the noise stopped if they chose. The results were both fascinating and disturbing in their implications for organizational performance.

The group that had no control demonstrated a significant deterioration in their thought pro¬cess during and after the noise. Their thinking became unemotional, unimaginative, and dull. It was as if they became temporarily dumb in order to endure the stressful situation. Even more interesting was the other group’s response although they were told they could stop the noise if they needed to, not one person chose to do so. Therefore, they experienced the same amount of unpleasant noise as the group which wasn’t given that option.

Despite being subjected to the same amount of noxious noise, their thought process remained unaffected. They engaged in deep, reflective, creative thought. Thus, it wasn’t the negative external situation, but the perceived lack of control, which resulted in a diminished thinking capacity. The operative term here is perceived. This study and others like it show that even if a person’s perception is wrong – if in fact they really don’t have control, the effect is the same as if they truly had control. It’s the perception, the belief, that matters.

Closely linked to this sense of perceived control is predictability. As long as a person knows when the next painful situation will occur, they do not suffer the same kind of psychological and physiological harm as those who don’t know “when the other shoe will drop.” Simply knowing creates a feeling, even if ill-founded, of control.

In thinking about organizational implications, we need to realize that the word “perceived” in the term “perceived control” is important. It is important because in reality, there is no way we can create a workplace in which a person has total control over their work and over their destiny. No organization can guarantee lifelong employment, no one can foresee market changes or economic downturns. But, as long as people have open lines of communication and know that they can get the information they need – even if it’s “we don’t know yet,” they experience a sense of control. Thus, organizations which enable open, honest communication create a context in which people are less likely to be stressed out, and because of that, more likely to utilize their capabilities.

27. Write a precis of the following passage reducing it to about one-third of its length and give a suitable title.
It is hard to pick up a training, HR, or management journal without seeing an article about Intellectual Capital and what a critical source of competitive advantage it is, or can be. The field of Knowledge Management – technology to harvest and leverage this vital asset, is growing by leaps and bounds. Yet, we see very little written about a core component of Intellectual Capital – human emotions.

Contrary to the popular view that emotions are the “opposite” of intellect, a wealth of research shows they are an integral part of intellect. In fact, neurobiologists state that a central purpose of emotions is to influence attention, perception, and cognition. We know intuitively that emotions influence the quality, focus, and style of our thought process. If we feel anxious, angry, or hopeless; we think far differently than when we feel confident, benevolent, and hopeful.

What does this mean to the organization hoping to compete based on its Intellectual Capital? It means management cannot afford to ignore how their workforce’s emotional state effects this critical asset. Research shows that emotional distress seriously compromises intellectual functioning in a variety of ways. As people become more stressed; their thinking becomes increasingly more simplistic, unimaginative, rigid, and even primitive. They literally become “dumbed down.”

Research from the psychobiology and trauma fields also indicates that both traumatic and chronic stress can cause biochemical, psychological, and neurological changes which hinder a person’s ability to notice and understand other’s feelings, intentions, and nonverbal communication. This “numbed out” state results in social obtuseness, a lack of empathy, and interpersonal insensitivity; or in the popular terminology of today -low Emotional Intelligence.

In short, the natural psychological neurological, and physiological responses which protect us from emotional pain also make us less intelligent – both cognitively and emotionally. Thus, in an emotionally painful workplace climate, an organization’s valuable Intellectual Assets literally depreciate. Such an environment also causes the depreciation of Customer Capital – the strong, loyal relationships created by consistent, positive interactions with the organization (i.e. its people). Customer Capital depends upon the interpersonal component of Intellectual Capital – the knowledge and know how required to create a positively memorable, totally satisfying, customer service experience.

With studies showing that 68% of customer defections are caused by front line employee’s “attitude of indifference,” the Employee Emotion/ Customer Capital connection is obvious. Landmark research published in the Harvard Business Review by Richard Reich held and Earl Sasser also shows the huge economic consequences of creating a totally satisfying customer service experience. 15% to 40% of a company’s customers who are “only” satisfied – not totally satisfied, defect to a competitor each year. Totally satisfied customers are 6 times more likely to repurchase than satisfied customers. Their research also revealed that reducing customer defections by 5% can translate into a 30% to 85% increase in profits.

Thus, “delighting the customer” has major financial implications. Creating such an experience requires addressing the emotional state of the front line workers and thoseintemal departments who serve them. Creating such an experience requires inspired, proud, upbeat employees. If employees are emotionally depleted, depressed, or resentful; service will obviously be anything but delightful.

The bottom line is clear: If we want to compete in the 21 st Century marketplace, we can’t do it with “dumbed down” and “numbed out” employees. Creating a workforce that is fast, flexible, focused, and friendly and smart; requires a workplace which elicits and sustains positive emotional states. Those organizations which know how to do this will flourish in this new, more demanding marketplace.

Precis Writing – CA Foundation BCR Notes

28. Write a precis of the following passage reducing it to about one-third of its length and give a suitable title:
If you observe people in conversation carefully, you will begin to notice that human communication works by leaving many things unsaid and depending on the listener to fill in the missing-but-implied information. For example, a receptionist may tell another employee, “Your two o’clock is here,” a sentence which, on the face of it, makes no sense at all. She means “Your client who made an appointment for two o’clock has arrived in the waiting room,” and the employee knows that. It’s amazing how much of the time this abbreviating and implying process works just fine.

But, in situations of change, ambiguity, conflict, or great emotional need, our “shorthand” way of speaking may not work at all for at least three possible reasons. First, our listeners may fill in a completely different set of details than the one we intended. Second, our listeners may not understand the significance of what we are saying (they get only some of the details, so miss the big picture). And finally, without actually intending to mislead anyone, we may leave out important parts of our experience that we find embarrassing or imagine will evoke a hostile reaction. The more serious the consequences of misunderstanding would be, the more we need to both understand our own experience better and help our listeners by giving them a more complete picture of our experience in language that does not attack them.

Anytime one person sincerely listens to another, a very creative process is going on in which the listener mentally reconstructs the speaker’s experience. The more facets or dimensions of your experience you share with easy-to-grasp “I statements,” the easier it will be for your conversation partner to reconstruct your experience accurately and understand what you are thinking, feeling and wanting.

This is equally worthwhile whether you are trying to solve a problem with someone or trying to express appreciation for them. Expressing yourself this carefully might appear to take longer than your usual quick style of communication But if you include all the time it takes to unscramble everyday misunderstandings, and to work through the feelings that usually accompany not being understood, expressing yourself more completely can actually take a lot less time.

By listening and then repeating back in your own words the essence and feeling of what you have just heard, from the speaker’s point of view, you allow the speaker to feel the satisfaction of being understood, (a major human need). Listening responsively is always worthwhile as a way of letting people know that you care about them. Our conversation partners do not automatically know how well we have understood them, and they may not be very good at asking for confirmation. When a conversation is tense or difficult it is even more important to listen first and acknowledge what you hear. Otherwise, your chances of being heard by the other person may be very poor.

Capacity of Parties – MCQ on Business Law with Answers

Capacity of Parties – MCQ on Business Law with Answers

Students should practice Capacity of Parties – CA Foundation Business Law MCQ Questions with Answers based on the latest syllabus.

Capacity of Parties – Business Law MCQ Questions with Answers

1. For necessaries supplied to a minor __________.
(a) he is personally liable
(b) his parents are liable
(c) his estate is liable
(d) the contract is valid under Indian law
Answer:
(c) his estate is liable

2. A minor is a person who has not attained the age of:
(a) 15 years
(b) 18 years
(c) 21 years
(d) 25 years
Answer:
(b) 18 years

3. An agreement with a minor is:
(a) Void
(b) Voidable
(c) Valid
(d) Illegal
Answer:
(a) Void

4. A contract for the benefit of the minor is:
(a) Valid
(b) Void
(c) Voidable
(d) Illegal
Answer:
(a) Valid

Capacity of Parties – MCQ on Business Law with Answers

5. Minor’s contract is __________.
(a) Voidable
(b) Voidable at the option of the minor
(c) Illegal
(d) Void
Answer:
(d) Void

6. A supplies B, a lunatic, with necessaries suitable to his condition in life. A is __________.
(a) Not entitled to be reimbursed from B’s property
(b) Entitled to be reimbursed from B’s property
(c) Personally liable
(d) None of these
Answer:
(b) Entitled to be reimbursed from B’s property

7. A mortgage executed by minor is __________.
(a) Void
(b) Voidable
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(a) Void

8. __________ is the most extreme form of mental un-soundness?
(a) Lunacy
(b) Incapacity
(c) Minority
(d) Idiocy
Answer:
(d) Idiocy

9. A minor __________.
(a) Can be a promisee
(b) Cannot be an agent
(c) Can be a principal
(d) Can ratify a past contract entered during minority
Answer:
(a) Can be a promisee

Capacity of Parties – MCQ on Business Law with Answers

State Whether The Following Are True or False:

  1. A minor can be a promisee in a contract.
  2. A person, who is usually of unsound mind but occasionally of sound mind, can always enter into a valid contract.
  3. A minor can be a partner in a firm.
  4. A minor can ratify his contract after attaining majority.
  5. Minor can be held personally responsible for the necessaries supplied to him.
  6. A person who is usually of unsound mind cannot enter into a contract even when he is of a sound mind.
  7. Contracts with a lunatic during lucid intervals are valid.
  8. A minor can be declared as an insolvent.
  9. A minor can be an agent.
  10. Husband and wife cannot enter into a valid contract.
  11. A contract to take a loan by a boy of sixteen years of age from a money lender of 50 years old is a valid contract.
  12. A promissory note duly executed in favour of a minor is void.
  13. A person who is usually of sound mind, but occasionally of unsound mind cannot enter into contract when he is of unsound mind.

Answer:

  1. True
  2. False
  3. False
  4. False
  5. False
  6. False
  7. True
  8. False
  9. True
  10. False
  11. False
  12. False
  13. True

Accounting as a Measurement Discipline-Valuation Principles, Accounting Estimates – CA Foundation Accounts Study Material

Accounting as a Measurement Discipline-Valuation Principles, Accounting Estimates – CA Foundation Accounts Study Material is designed strictly as per the latest syllabus and exam pattern.

Accounting as a Measurement Discipline-Valuation Principles, Accounting Estimates – CA Foundation Accounts Study Material

Question 1.
Historical Cost
Answer:
Historical Cost:

  • It means acquisition price.
  • According to this base, assets are recorded at an amount of cash or cash equivalent paid or the fair value of consideration given at the time of acquisition.
  • Liabilities are recorded at the amount of proceeds received in exchange for the obligation. In some circumstances a liability is recorded at the amount of cash or cash equivalent expected to be paid to satisfy it in the normal course of business.

Example:

  • On 1.1.1995, a businessman ‘Ram’ paid ₹ 5,00,000 to purchase the building, its acquisition price ₹ 5,00,000 is the historical cost of building.
  • Loan taken from Bank ₹ 4,00,000 @ 15%, the liability will be recorded at the proceeds received ₹ 4,00,000.
    Services received for which it is expected that ₹ 20,000 will be paid, hence liability will be recorded at ₹ 20,000.

This base is most commonly followed in accounting.

Accounting as a Measurement Discipline-Valuation Principles, Accounting Estimates – CA Foundation Accounts Study Material

Question 2.
Current Cost.
Answer:
Current Cost:

  • Current cost gives an alternative measurement base (for existing assets and liabilities).
  • Assets are carried at the amount of cash or cash equivalent that would have to be paid if the same or an equivalent asset was acquired currently.
  • Liabilities are carried at the un-discounted amount of cash or cash equivalents that would be required to settle the obligation currently.

Example:

  • Take that as on 1.1.06, ‘Ram’ found that it would cost ₹ 15,00,000 to purchase that building. So as per current cost base the machine value is ₹ 15,00,000.
  • Take also that as on 1.1.06 the bank announces a discount @10% on the loan amount if it is paid by 15 days starting from that day. So as per current cost base the value of bank loan is ₹ 3,60,000 (₹ 4,00,000 less 10% discount).

At foundation level of study you may not use it anywhere in Accounting.

Question 3.
Realisable Value.
Answer:
Realisable Value:

  • As per realisable value, assets are carried at the amount of cash or equivalent that could currently be obtained by selling the assets in an orderly disposal. Haphazard disposal may yield something less.
  • Liabilities are carried at their settlement values; i.e., the undiscounted amounts of cash or cash equivalents expressed to be paid to satisfy the liabilities in the normal course of business.

Example:

  • Suppose ‘Ram’ found that he can get ₹ 14,00,000 if he would sell the building purchased on 1.1.95. So the building should be recorded at ₹ 14,00,000 the realisable value in an orderly sale.
  • Take also that ‘Ram’ found that he had no money to pay off the bank loan currently and will pay in the normal course. So the bank loan should be recorded at ₹ 4,00,000 the settlement value in the normal course of business.

You may find use of it only in Inventory Valuation which is valued at cost or net realisable value whichever is lower.

Question 4.
Present Value.
Answer:
Present Value:

  • As per present value, an asset is carried at the present discounted value of the future net cash inflows that the item is expected to generate in the normal course of business.
  • Liabilities are carried at the present discounted value of future net cash flows that are expected to be required to settle the liabilities in the normal course of business.

Example:
(1) Suppose we were talking as on 1.1.06 take it as time of reference. Now think the building purchased by ‘Ram’ on 1.1.95 can work for another 10 years and is supposed to generate cash @ ₹ 75,000 p.a. and scrap value ₹ 50,000.
Present value of building = 75,000 x 5.019 + 50,000 x .247 = 3,76,425 + 12,350 = ₹ 3,88,775

(2) Also that bank loan taken by ‘Ram’ is to be repaid as on 31.12.2010, annual interest is ₹ 60,000.
Present value of loan = 60,000 x 5.019 + 4,00,000 x.247 = 3,01,140 + 98,800 = ₹ 3,99,940
(For above discounting 15% rate has been assumed)

This also you may not use in your foundation study except small reference in goodwill valuation. The above used Present value factors (@15%) are available from Statistical tables. The calculation thereof is covered in Intermediate syllabus.

Accounting as a Measurement Discipline-Valuation Principles, Accounting Estimates – CA Foundation Accounts Study Material

Question 5.
Accounting Estimate.
Answer:
Accounting Estimate:
Meaning:

  • Accounting estimates are an essential part of accounting.
  • Accounting is a process of recording, classifying and analyzing transactions and events with reference to an accounting period usually a year, whereas transactions and events may occur at different point of time and may have impact on longer periods hence requiring estimations.
  • Example: Estimating life of fixed asset for depreciation, Estimating bad & doubtful debts etc.

Change in Accounting Estimate:
→ An estimate may have to be revised if –

  • changes occur regarding the circumstances on which the estimate was based, or
  • as a result of new information, more experience or subsequent developments.

→ The revision of the estimate is not an extraordinary item or a prior period item.

→ If sometimes, it is difficult to distinguish between a change in an accounting policy and a change in an accounting estimate, the change should be treated as a change in an accounting estimate, with appropriate disclosures.

→ The effect of a change in an accounting estimate should be included in the determination of net profit or loss in:

  • the period of the change, if the change affects the period only; or
  • the period of the change and future periods, if the change affects both.

→ A change in an accounting estimate may affect the current period only or both the current period and future periods.

→ For example, a change in the estimate of the amount of bad debts is recognised immediately and therefore affects only the current period.

→ However, a change in the estimated useful life of a depreciable asset affects the depreciation in the current period and in each period during the remaining useful life of the asset.

→ In both cases, the effect of the change relating to the current period is recognised as income or expense in the current period.

→ The effect, if any, on future periods, is recognised in future periods.

→ The nature and amount of a change in an accounting estimate which has a material effect in the current period, or which is expected to do so in subsequent periods, should be disclosed.

→ If it is impracticable to quantify the amount, this fact should be disclosed.

→ The effect of a change in an accounting estimate should be classified using the same classification in the statement of profit and loss as was used previously for the estimate.

Examples of changes in accounting estimates:

  • Change in useful life of fixed assets.
  • Actual bad debts turning out to be more or less than the provision.
  • Actual liability turning out to be more than or less than the provision.
  • Actual gratuity liability/retirement benefits turns out to be more than the provision.

Discharge of a Contract – MCQ on Business Law with Answers

Students should practice Discharge of a Contract – CA Foundation Business Law MCQ Questions with Answers based on the latest syllabus.

Discharge of a Contract – Business Law MCQ Questions with Answers

1. Ordinary damages will be awarded in cases where _________.
(a) The loss naturally flows from the breach of contract
(b) The loss is remotely connected with the breach of contract
(c) The loss is unusual and arises out of special circumstances peculiar to the contract
(d) None of these
Answer:
(a) The loss naturally flows from the breach of contract

2. Where the parties to a contract have agreed that a certain sum of money would be paid in case of breach of contract, the Court will ensure that _________.
(a) The exact amount mentioned in the contract is paid to the injured party
(b) An amount not exceeding the stipulated amount is awarded
(c) Reasonable compensation not exceeding the amount stipulated is awarded
(d) A sum exceeding the amount stipulated is awarded
Answer:
(c) Reasonable compensation not exceeding the amount stipulated is awarded

3. The word ‘impossible’ in section 56 connotes _________.
(a) Physical impossibility
(b) Literal impossibility
(c) Commercial impossibility
(d) Impracticability of performance
Answer:
(d) Impracticability of performance

4. In the case of wrongful dishonour of a cheque by a banker the damages awarded will be _________.
(a) Nominal
(b) Special
(c) Exemplary
(d) Ordinary
Answer:
(c) Exemplary

Discharge of a Contract – MCQ on Business Law with Answers

5. If loss or damage arose naturally and directly in the usual course of things from a breach of contract, the aggrieved party would be eligible for _________.
(a) Special damages
(b) Nominal damages
(c) Ordinary damages
(d) Exemplary damages
Answer:
(c) Ordinary damages

6. Anticipatory breach of contract takes place when there is _________.
(a) Breach of contract when performance is actually due
(b) Breach of contract in the course of perfor-mance of the contract
(c) Breach of contract prior to the date of performance
(d) None of the above
Answer:
(c) Breach of contract prior to the date of performance

7. Impossibility of performance occurs due to:
(a) Strike
(b) Lock-out
(c) Partial failure of object
(d) Destruction of subject-matter.
Answer:
(d) Destruction of subject-matter.

8. Object of granting damages is:
(a) to penalize the party,
(b) to monetarily compensate the party,
(c) to set an example before the society,
(d) none of the above.
Answer:
(b) to monetarily compensate the party,

9. Specific performance is ordered where:
(a) the contract is of personal nature,
(b) monetary compensation is an adequate remedy,
(c) monetary compensation is not an adequate remedy,
(d) performance is illegal.
Answer:
(c) monetary compensation is not an adequate remedy,

10. An injunction order is granted by the Court in case:
(a) specific performance of the contract is possible.
(b) specific performance of the contract is impossible.
(c) the Court wants to restrain a party from committing a breach of contract.
(d) the contract is against public interest.
Answer:
(c) the Court wants to restrain a party from committing a breach of contract.

11. In the Indian Contract Act, Novation means _________.
(a) Substitution of an existing contract with a new one
(b) No frustration of executed contracts
(c) Frustration due to change of circumstances
(d) Impossibility does not mean mere commercial difficulty
Answer:
(a) Substitution of an existing contract with a new one

12. Hadley v. Baxendale case is a leading case on _________.
(a) Breach of implied term
(b) Anticipatory breach
(c) Law of damages
(d) None of these
Answer:
(c) Law of damages

13. The remedies open to a person, suffering from breach of contract are _________.
(a) Damages
(b) Injunction
(c) Quantum Meruit
(d) All of the above
Answer:
(d) All of the above

Discharge of a Contract – MCQ on Business Law with Answers

14. Where the parties to a contract agree to substitute a new contract for it, it is known as _________.
(a) Injunction
(b) Novation
(c) Rescission
(d) Alteration
Answer:
(b) Novation

15. A party to a contract committing breach, is liable to pay compensation in respect of _________.
(a) The direct consequences flowing from the breach
(b) Loss or damage caused indirectly
(c) Losses caused whether directly or indirectly
(d) Losses caused remotely
Answer:
(a) The direct consequences flowing from the breach

16. A borrows ₹ 10,000 from B with interest at 12 per cent per annum, with a stipulation that in case of default A shall be liable to pay interest at 75 per cent from the date of default. A commits the default. B is entitled to recover from A _________.
(a) 12% interest
(b) 75% interest
(c) 8796 interest
(d) Such compensation as the Court considers reasonable
Answer:
(d) Such compensation as the Court considers reasonable

Discharge of a Contract – MCQ on Business Law with Answers

State Whether The Following are True or False:

  1. A claim for Quantum Meruit cannot succeed when an indivisible contract for a lump sum is partly performed.
  2. Nominal damages are never granted by way of compensation for loss.
  3. Penalty can be recovered under the Indian Contract Act.
  4. A person who himself is guilty of breach of contract cannot get compensation under the doctrine of quantum meruit.
  5. The order for injunction and specific performances are simultaneously issued by the court.
  6. The aggrieved party is always entitled to compensation no matter whether he has suffered some loss or not.
  7. Special damages are recoverable only when the parties knew about them.
  8. The aggrieved party is not responsible to mitigate the loss caused by the breach.
  9. The measure of ordinary damages is the difference between the contract price and the market price.
  10. The claim for quantum meruit can be made only when the original contract has been discharged.
  11. Commercial impossibility is not a valid excuse for the non performance of a contract.
  12. For the default in the repayment of loan on the agreed date, interest can be increased retrospectively from the date of lending.
  13. Commercial impossibility does not make the contract void.
  14. Cancellation of a contract by mutual consent of the parties is called waiver.

Answer:

  1. True
  2. True
  3. False
  4. True
  5. False
  6. False
  7. True
  8. False
  9. True
  10. True
  11. True
  12. False
  13. True
  14. False

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material is designed strictly as per the latest syllabus and exam pattern.

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 1.
Double Entry System.
Answer:
Double Entry System:

  • This system was invented by an Italian merchant named Fra Luco Pacioli in 1494 A.D.
  • According to this system, every transaction has got a two-fold aspect (dual aspect), i.e. one party giving the benefit and the other receiving the benefit and it has effect of opposite nature on two financial items.
  • Information of one financial nature at one place is known as an account which is divided into two sides, debit and credit.
  • In short, one account is to be debited and another account is to be credited for every transaction in order to have a complete record of the same.
  • Therefore, every transaction affects two accounts in opposite direction.
  • For example, if goods are sold to Mr. A on credit, the same will affect goods /sales account and A’s account and entries will be made in opposite direction in these two accounts.
  • This system is called Double Entry System since it keeps records for every transaction in two accounts.
  • Therefore, the basic principle, under this system, is that for every debit there must be a corresponding credit or vice versa.
  • Before going to discuss the double entry principle it becomes necessary to explain certain terms which are frequently used in accounting. They are discussed in later questions.

Question 2.
Meaning of Transactions and events
Answer:
Meaning of Transactions :

  • A business dealing, which can be measured and expressed in terms of money and must be recorded in the books of account, is called a ‘transaction’.
  • In a transaction, there must be some monetary change between the parties.
  • In other words, the meaning of a transaction is to ‘receive’ and ‘give’, viz., one party receive and the other party gives, e.g. if X gives ₹ 400 to Y, Y is receiving ₹ 400 whereas X is giving the same and there is a monetary change between the parties.
  • This give and take can be of Cash, Property, Goods, Services and benefits etc. which has monetary value.
    So, a transaction also means a change in affairs that alters the financial state of parties in any way.
  • There are always two parties in a transaction of which one must be the entity in whose books, accounting is being done.

Transaction
(Transaction is a give & take which has some financial effect on entity)
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 1

1. Goods a/c if prepared is treated as a real a/c but instead of preparing goods a/c, we prepare Purchase a/c, Sale a/c etc. to get full information, which are treated as nominal a/c.

2. In the above analysis you can observe:

  • There are two persons of which one is the entity.
  • Something (i.e, cash, property, goods, service or benefits) is given & in return something else is taken.
  • These both the arrows indicating give & take may take place at the same point of time (known as cash transaction) or at different point of time (known as credit transactions).
  • Irrespective of whether both give & take is done at same time or at different point of time (i.e. indicating only one arrow at a time), there are always two accounts involved in a transaction (dual aspect concept).
  • These accounts can be classified according to function into Real, Nominal & Personal a/c or according to nature into Expense, Income, Asset or liability.

Meaning of Events:

  • Event is happening of something, which has financial effect on the entity.
  • Example – A fire destroys furniture, Stock Balance at the end of the year etc.

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 3.
Petty Cash Book.
Answer:
Petty Cash Book:

  • This is to be prepared to record the petty (small) expenses, which are incurred frequently.
  • On the payment side the amount is classified into various columns depending upon the account to which it has to be debited.
  • The columns can be for conveyance expenses, postage, repairs & maintenance, printing & stationery, salary, wages and so on.
  • It is also known as analytical cash book.
  • In petty cash book receipt will be from main cash book.

Posting:

  • The total of this column is debited to respective expense accounts in the ledger after a specific period may be monthly, weekly etc.
  • The Balance of petty cash book (i.e. receipts (-) payments) shows the balance of cash in hand which will be shown in Trial balance.

Question 4.
Imprest System.
Answer:
Imprest System:

  • An amount is fixed which is given to petty cashier who meets expenses out of it & periodically or when the amount is spent, he takes reimbursement from main Cashier exactly equal to amount spent hence his cash balance again becomes equal to fixed imprest amount.
  • This is the upper limit of cash which petty cashier can have.
  • It is a version of Petty cash book only.
  • Example – Imprest amount is fixed at ₹ 1,000. Petty cashier has spent ₹ 785 in that period, thus he has balance of ₹ 215. Now he will get reimbursement from main cashier ₹ 785, thus his balance will again become ₹ 1000.

Question 5.
Sales Book.
Answer:
Sales Book:

  • The Sales Day-Book is a register specially kept to record credit sales of goods dealt in by the firm.
  • Cash sales are entered in the Cash Book and not in the Sales Day Book.
  • Credit sales of things other than the goods dealt in by the firm are not entered in the Sales Day Book, they are journalised.
  • For accounting, Goods means only those items in which the particulars concern is doing business i.e. purchasing & selling it.
  • It is a subsidiary book/subsidiary journal & posting is made from it to the sales account and accounts of the customers.

Posting:

  • The total of sales register is credited to sales a/c periodically say monthly.
  • And individual amounts are debited to respective parties (debtors) a/c.

Sales Account is a final record and postings are made to it from Cash Book (cash sales) and Sales Day Book (credit sales). Sales Account is maintained in the ledger in the manner, the other accounts are maintained. Sales Account is a nominal account and its balance is used for ascertaining gross profit or gross loss.

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 6.
Purchase Book.
Answer:
Purchase Book:

  • All credit purchases of goods are recorded in Purchase Book.
  • Cash purchases are entered in the Cash Book and not in the Purchases . Day Book.
  • Credit purchases of things other than the goods dealt in by the firm are not entered in the Purchases Day Book; they are journalised.
  • It is a subsidiary book/subsidiary journal & posting is made from it to the purchases account and accounts of the suppliers.

Posting:

  • The total of purchase register is debited to purchase a/c periodically say monthly &
  • Individual amounts are credited to respective parties (suppliers) a/c.

Cash Sales & Cash Purchases will be recorded in Cash Book and credit sales & credit purchase of Assets will be recorded in Journal. Comments for sales account made above equally apply to purchase account.

Question 7.
Principal Book (Ledger).
Answer:
Principal Book (Ledger):

  • All accounts are opened in a separate register known as a ledger
  • Only exception is cash & Bank a/c which are not prepared in ledger because cash & Bank book itself is Cash & Bank account also (when Cash-cum-Bank Book is prepared).
  • All other books are only books of entry they are not ledger accounts.
  • Hence when we enter a transaction in a book of entry, we decide/write which account should be debited & which account should be credited.
  • But actual debit & credit gets completed only when we write the amount from this book to respective accounts in ledger on debit or credit side as the case may be.
  • This process of writing the amount from books of entry to ledger account is known as ‘posting’.

Posting:

  • Each account will have two sides, left hand side is known as debit side & right hand side as credit side.
  • If the amount is written on debit side that means that account is debited
  • If written on credit side means that account is credited.
  • All these accounts are then totalled & balanced.
  • All the accounts which are having balances either debit or credit are listed on a statement known as Trial Balance.
  • With the help of this Trial Balance, Final accounts namely Trading & P&L A/c and Balance Sheet is prepared.

Instead of one ledger, concern can maintain multiple ledgers like Debtors ledger, Creditors ledger, General ledger etc.

Ledger Account
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 2

Question 8.
Mercantile System of Accounting and Cash System of Accounting
Answer:
Mercantile System of Accounting (Accrual basis of accounting) and Cash System of Accounting:

  • A transaction is recognized when either a liability is created (i.e. when goods/services/benefits or properties are received) and/or an asset is created (i.e. when goods/services/benefits or properties are given).
  • Whether payment is made or received is immaterial in accrual basis accounting.
  • Accrual basis of accounting is also known as mercantile basis of accounting.
  • On the other hand, cash basis of accounting is system of accounting by which a transaction is recognized only if cash is received or paid, no entry is being made when a payment or receipt is merely due.
  • Accrual basis accounting is the only generally accepted accounting method for business entities which are supposed to operate for long period.
  • Cash basis accounting is suitable for short duration ventures.
  • All the chapters which you will study are on accrual basis only exception may be joint venture.

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 9.
Journal proper.
Answer:
Journal proper:
If there is no special book meant to record a transaction, it is recorded in the Journal (proper).
(i) Opening entries: When books are started for the new year, the opening balance of assets and liabilities are journalised.

(ii) Closing entries: At the end of the year nominal accounts are transferred to the profit and loss account. This is done through journal entries called closing entries.

(iii) Rectification entries: If an error has been committed, it is rectified . through a journal entry.

(iv) Transfer entries: If some amount is to be transferred from one account to another, the transfer will be made through a journal entry.

(v) Adjusting entries: At the end of the year the amount of expenses or income may have to be adjusted for amounts received in advance or for amounts not yet settled in cash. Such an adjustment is also made through journal entries. Usually, the entries relating to Outstanding expenses, Prepaid expenses, Interest on Capital and Depreciation are necessary.

(vi) Entries on dishonour of Bills: If someone who accepted a promissory note (or bill) is not able to pay it on the due date, a journal entry will be necessary to record the non-payment or dishonour.

(vii) Miscellaneous entries: The following entries will also be shown in Journal proper:

  • Credit purchase of things other than goods dealt in or materials required for production of goods e.g. credit purchase of asset will be journalised.
  • An allowance to be given to the customers.
  • Receipt of promissory notes or issue to them if separate bill books have not been maintained.
  • On an amount becoming irrecoverable, because of the customer becoming insolvent.
  • Effects of accidents such as loss of property by fire etc.

Question 10.
Trade discount and Cash discount.
Answer:
Trade discount and Cash discount:

  • Trade discount is a discount on the selling price for bulk purchase or for purchasing above a minimum quantity or is offered generally to regular customers.
  • It is also called quantity discount.
  • This is a technique of sales promotion.
  • It is generally determined at the stage of sale itself & is deducted from the sale/purchase value & hence doesn’t appear separately in the Books of accounts & Final a/cs.
  • Cash discount is the discount offered by the supplier in consideration of early or timely payment.
  • It may vary with the period of payment.
  • It is accounted as a separate item & appears in the Profit & loss a/c.
  • Cash discount is usually given at the time of payment/receipt as against trade discount is given at the stage of sale/purchase.

Question 11.
Debit Note and Credit Note.
Answer:
Debit Note and Credit Note:
Debit Note:

    • A debit note is a statement sent by one party to the other stating/informing him that his account has been debited with a specified amount and the reason for debit.
    • A debit note is sent to the supplier when the goods purchased from him are returned (purchase return) or for discount to be received from him or for any expenses incurred for him.

Entry:

In the books of sender of Debit note In the books of receiver of Debit note
Party (to whom it is sent) a/c Dr. Sales return/Discount allowed etc. a/c Dr.
To Purchase return/Discount received etc. To Party (who sent it) a/c

Credit Note:

  • A Credit note is a statement/letter sent by one party to the other stating/informing him that his account has been credited with a specified amount and the reason for credit.
  • A credit note is sent to the customer when we receive good returned by them or for discount to be allowed to him or for any expenses incurred for us by him.

Entry:

In the books of sender of Debit note In the books of receiver of Debit note
Sales return/Discount allowed etc. a/c Dr. To Party (who sent it) a/c
To Party (to whom it is sent) a/c. To Purchase return/Discount received etc.

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 12.
Classify the following accounts into Personal, Real and Nominal.
a. Cash Account
b. Wages Account
c. Building Account
d. Calcutta Tramway Co. Account
e. East Bengal Club Account
f. Rent Account
g. Capital Account
h. Drawings Account
i. Interest Account
j. Trade Mark Account
k. Dividend Account
l. Land Account
m. Goodwill Account
n. Patent Account
o. Bad Debts Account
p. Bank Account
q. Discount Allowed Account
r. Interest Received Account
s. Discount Received Account
t. Salary Payable
u. Bills Receivable
Solution:
Personal Accounts – d, e, g, h, p, t, u
Real Accounts – a, c, j, l, m, n
Nominal Accounts – b, f, i, k, o, q, r, s

Question 13.
From the following transactions prepare the Cash Book with cash and discount columns:

Aug. 2006
1 Opening cash balance 2500.00
3 Received from D & Co. ₹ 1,350 in full settlement of ₹ 1,400
4 Received for cash sales           1250.00 1250.00
5 Paid to Rajesh & Co. ₹ 775 in full settlement of his account for 800.00
7 Purchased office furniture 670.00
13 Paid for postal stamps 25.00
15 Paid for office rent for month of July, 2006 125.00
17 Used office cash for meeting personal expenses 150.00
19 Sold goods on credit to Mr. Faithful 1700.00
20 Paid to Rajnikant ₹ 670 in full settlement of his account for ₹ 70
20 Deposited in the bank all cash in excess of ₹ 1,200

Solution:
Double Column Cash Book:
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 3
It is assumed that in July month provision for rent payable was made, hence now on payment rent payable account is debited.
Credit sale of 19.08.06 will be entered in sales book or in Journal, if sales book is not maintained.

Question 14.
Write up a three column cash book from the following:
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 4
Solution:
Triple Column Cash Book
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 5

Cheque received but not deposited in bank:
The usual practice in the books on ac-counting is to show such amount as cash and when the same is deposited in bank then cash a/c is credited and bank a/c debited (As done for ₹ 860 in above problem). I (author) don’t consider it appropriate and suggest the following –
a. In real life it will be a daily routine to receive cheque and deposit it next day hence to obviate unnecessary confusion and complication, it should be debited to bank a/c on receipt itself.

b. When it is a year end situation, debit such cheque to cheques in hand a/c rather than in cash a/c. So that in balance sheet we will show cash balance (which is actual cash), cheques in hand and bank balance (which does not include cheque received but not deposited).

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 15.
Enter the following transactions in a three column cash book of M/s. Barket & Co.
April, 2006
1 Cash on hand t 237; Balance at bank ₹ 6,594.
2 Received from K. Agrawal cash ₹ 590, allowed him discount ₹ 10.
4 Paid salaries for March by cash t 200. Cash sales, ₹ 134.
5 Paid B.K. Bose by cheque ₹ 300. Cash Purchases ₹ 60.
7 Paid Question Ahmad by cheque ₹ 585; discount received 21/2%.
8 Cash Sales ₹ 112. Paid cartage and coolie ₹ 6.
10 Paid rent in cash ₹ 50
14 Cash Sales ₹ 212. Received from G.C. Dhar ₹ 194 by cheque discount 3%.
16 Deposited into Bank ₹ 600. Purchased a motor car for ₹ 5,800 and drawn a cheque for the amount
23 Received a cheque from Robert & Co. for ₹ 291; discount received 3%.
28 Cash Sales t 298.
29 Bank notifies that Robert & Co’s cheque has been dishonoured.
30 Deposited with Bank t 300. Paid wages ₹ 72. Bank charges as shown in Pass Book ₹ 5.
Solution:
Triple Column Cash Book
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 6
Posted to discount account in ledger

Question 16.
Enter the following transactions in a columnar Petty Cash Book kept on the Imprest System and balance the cash book. Also post the transaction to the respective ledger accounts.

Jan. 2006
1 The Petty Cash received by cheque 300.00
2 Carriage 4.00
3 Coolie charges 5.50
6 Postal stamps 17.75
8 Revenue stamps 4.50
10 Bought stationery for office use 14.90
13 Bought envelopes 9.40
17 Safety pin box 5.00
19 Printing bill 25.00
23 Travelling expenses to salesman 45.25
25 Subscription to Economic Times 10.50
26 Paid to Waikar on account 17.00
27 Railway fare for sale executive 35.60
28 Tea to office staff 31.40
30 Paid advertising bill 10.25

Solution:
Petty Cash Book (Analytical Cash Book)
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 7
Posting from above petty cash book to ledger accounts will be made as follows:
Carriage and Coolie Charges Account
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 8

Question 17.
From the transactions given below prepare the Sales Book of Amin Chand, a furniture dealer:

June, 2006
5 Sold on credit to Ideal College : 10 tables @ ₹ 25 less 10%
8 Sold Mohan Bros.: 5 stools @ ₹ 10 10 chairs @ ₹ 15
10 Sold on credit M/s. Golchand & Co.: 3 tables @ ₹ 75, 5 chairs @ ₹ 30
20 Sold to M/s. Ram Lai & Sons for cash 5 tables @ ₹ 40
27 Sold on credit to Anand Pal & Co. old type-writer for ₹ 400

Solution:
Sales Book of Amin Chand
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 9
→ Cash transaction of 20.6 will not be entered in sales book. Asset sale will not be recorded in sales book. Cash sale will be recorded in cash book & sale of Asset on credit will be recorded in Journal.

→ Additional columns to note other details, can be made as per requirement.

→ Posting from sales book will be done as follows: (hypothetical folio numbers have been used)
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 10
→ Balancing of accounts is not done because these are not yet complete.

→ Folio numbers have been hypothetically given to explain the concept of folio number.

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 17.
From the following transactions prepare the purchase book of Admas for July, 2006 and prepare ledger accounts connected with this book.

1.706 Purchased on credit from Paul & Co.: 50 Electric Irons @ 25, 10 Toasters @ ₹30
6 Purchased for Cash from John & Bros.: 25 Table Lamps @ ₹ 15
10 Purchased from Harsh & Sons on credit: 20 Electric Stoves @ ₹ 20, 10 Heaters @ ₹ 30.
16 Purchased on credit from More & Co.: 15 Heaters @ ₹ 20.
20 Purchased on credit one typewriter from Remington and for 1,500/-

Solution:
Purchase Book of Admas
Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material 11
Posting: Total ₹ 2,550 shall be debited to purchase a/c & individual figures will be credited to respective parties a/c.

Note: Cash purchase of 6.7 will be entered in Cash Book & Purchase of Asset (Type writer) on Credit will be recorded in Journal.

True or False

Question 1.
Wages paid for erection of machinery is debited to Profit and Loss Account.
Answer:
False: Wages paid for erection is a capital expenditure, so it should be debited to the machinery account.

Question 2.
The balance in the cash book shows net income.
Answer:
False: The balance in the cash book shows cash in hand at the end of the period.

Question 3.
The debts written off as bad, if recovered subsequently are credited to Debtors Account.
Answer:
False: The debts written off as bad, if recovered subsequently, shall be credited to Bad Debts Recovered Account.

Question 4.
The sales day book is a part of the ledger.
Answer:
False: The sales day book is a book of prime entry and so it is part of journal.

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 5.
Patent right is in the nature of nominal account.
Answer:
False: Patent right is an intangible asset, so it is a real account.

Question 6.
Goods costing ₹ 600 taken by the proprietor for personal use should be credited to Sales Account.
Answer:
False: Goods taken by the proprietor for personal use should be credited to Purchase Account at a cost price of ₹ 600.

Question 7.
If a cheque received is further endorsed, it must be entered on both sides of the cash book.
Answer:
True: The cash book is debited in cash column when the cheque is received and it is credited when it is endorsed.

Question 8.
Rent paid account is Nominal Account whereas, rent received account is a Real Account.
Answer:
False: Rent paid and rent received-both are nominal accounts because they are expenses and incomes of the business.

Question 9.
A tallied Trial balance is a conclusive proof of accuracy of books of account.
Answer:
False: Agreement of trial balance is not a conclusive proof of the accuracy, because there may be some errors like errors of principle, compensating errors etc. which do not affect the total of trial balance.

Question 10.
Opening, Closing, Rectifying and Adjusting entries are recorded in journal proper.
Answer:
True: All the Opening, Closing, Rectifying and Adjusting entries are recorded in journal proper because these are not recorded in any other subsidiary book.

Question 11.
Sale of office furniture should be credited to Sales Account.
Answer:
False: Sale of office furniture is a capital receipt, so it should be credited to Furniture Account.

Question 12.
The balance in the Petty Cash Book represents expenses.
Answer:
False: The balance in the Petty Cash Book represents petty cash balance lying with the Petty cashier. It is treated as an asset of the business.

Accounting Process (Journal, Ledger, Trial Balance, Cash Book, Subsidiary Books) – CA Foundation Accounts Study Material

Question 13.
The purchase day book is a part of the ledger.
Answer:
False: Purchase day book is a book of original entry and so it is a part of journal.

Question 14.
In a Cash Book, Discount Columns may show either debit balance or credit balance.
Answer:
False: Discount Columns of a Cash Book are totalled but never balanced. These are totalled and transferred to Discount Allowed and Discount Received Account respectively.

Question 15.
Purchase book records all purchases of goods.
Answer:
False: Purchase book records only credit purchases of goods.

Question 16.
The Sales book is kept to record all sales.
Answer:
False: The Sales book is kept to record only the credit sales of goods.

Question 17.
The debit notes issued are used to prepare sales return book.
Answer:
False: The credit notes are used to prepare sales return book.

Question 18.
Bank column of the cash book will show only a debit balance.
Answer:
False: Bank column of the cash book may show debit or credit balance.