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Introduction
• Business and commerce is:
• Production,
• Distribution, and
• Buying and selling of goods and services
• Buying and selling is also known as:
• Trading, and
• Exchange
• We buy:
• Generally not from producer
• But from intermediary
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Format Observation Card
8
Point of Observation Description
Group of Item/Industry
Whether procured directly
from the producer
The most likely source of
procurement
Chain up-to the original
producer
Remarks, if any
10. Points to Note
• Work and life
• Earning and spending is based on business
• Business and commerce is Production,
Distribution, and Buying and selling of goods
and services.
• Buy from producer or intermediary
• BCK domains are: activities, scale, geographic
space, ownership, markets, stakeholders,
functions, focus, concerns, mode, and
underlying disciplines.
11. 1.2 Domains of Business
and Commercial
Knowledge (BCK)
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Domains of BCK
• Domain - a specified sphere (area) of
knowledge
• Sphere is:
• Vast,
• Eclectic and
• Ever evolving and expanding
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Domains of BCK
• Vast:
• Manufacturing,
• Trading, and
• Services
• Eclectic: (Derives from various disciplines)
• Marketing,
• Accounting & finance,
• Operations,
• Human behavior (psychology, sociology),
• Laws,
• Economics,
• Ethics
• Vocabulary from different domains
13
16. Points to Note
• Domain: specified area of knowledge
• Sphere is vast, eclectic, ever evolving and
expanding
• Vast – Manufacturing to trade to service
• Eclectic: Derives from various disciplines
• Keeps on evolving with technology, society
and economy
• Vocabulary comes from various sources
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Importance of BCK for CAs
• CA - custodians of a nation’s resources
• Credibility of the systems rest on CAs
• Business and commerce is as vast as ocean
• CAs must understand the basics of it
• BQ – Business Quotient
• Quotient: a degree or amount of specified
quality or characteristics.
• How to enhance BQ?
18
22. Points to Note
• CAs are backbone of economy
• Their expertise is required in every economic
activity
• Onus is on you to enhance BQ
• BQ can be enhanced by:
• Self assurance
• Observation
• Six honest servants – what, Why, When, How,
Where, and Who
• Reflective thinking
24. 24
BCK Domain of BCK
Human Activities
Forms of Business
Organisations
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Human Activities
• Life is all about activities
• Activities are:
• Economic
• Non-economic
• Economic activities are:
• Oriented towards earning
• What am I going to get from it
• Rationality
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Human Activities
• Every activity has economic dimension in
terms of:
• Time,
• Money and
• Material
• Non-economic activity for one person may
be economic activity for other person
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Human Activities
• We need to understand
• That if we wish the best minds, hearts and
souls,
• To work for the solution of the problems facing
the humanity,
• We must find ways of offering them the best
rewards and compensations.
29
31. Points to Note
• Life is all about activities
• Economic activity is to earn – money or goods
• Economic activities are productive
• Even consumption is economic activity
• Unspent income leads to savings investment
and wealth
• Non-economic activity is driven by emotional
or sentimental reasons
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Business as an Economic Activity
• Subsistence driven production
• Supply side of economics – production for
market
• Commercialization of production or
production on a commercial scale.
• Wide array of interconnected activities
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Business as an Economic Activity
• Three-tier definition of business:
Broader perspective:
“An economic activity comprising the entire
spectrum of activities pertaining to
production, distribution and trading
(exchange) of goods and services.”
• Agriculture?
• Subsistence, hence not economic, however,
if done for commercial purpose, economic
activity
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Business as an Economic Activity
• Three-tier definition of business:
Medium perspective:
“Particular type of activity or industry such as
Retail Business, Real Estate Business, and IT
Business, Iron & Steel Industry, Transport
Business, etc.”
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Business as an Economic Activity
• Three-tier definition of business:
Narrow perspective:
“Business may be defined as one’s usual
occupation of creating, owning and actively
operating an economic organization i.e., a
firm.”
35
37. Points to Note
• Three definitions
• Broader – all encompassing
• Medium – particular type of activity or
industry
• Narrow – one’s usual occupation
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Business and Other Occupations
Business – Employment – Profession
• Employment:
• Contract of service
• Employee and the employer
• Job description
• Periodic compensation - wages & salaries
• Detailed process of recruitment & selection
• Minimum qualifications- educational/
technical/ professional
• Work experience are prescribed
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Business and Other Occupations
Business – Employment – Profession
• Employment:
• Terms of employment
• Performance targets
• Minimum assured income,
• Tenure certainty
• Career progression via promotions.
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Business and Other Occupations
Business – Employment – Profession
• Profession:
• Rendering of services
• Specialized nature
• Prescribed qualifications
• For a fee under a certificate of practice
• From an established certification /
accreditation / examination & assessment body
• Code of conduct
• Independent practice or under a contract of
employment
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Business and Other Occupations
Business – Employment – Profession
• Profession:
• Accountancy, architecture, designing,
engineering, law, medicine, management
• Non-practising allowance
• Perfectionism.
• Emerged in pursuit of nobility
• Demonstrated highest level of integrity and
ethics
• High esteem and social status /respect
• Chartered accountants an example
41
53. Points to Note
• Meaning
• Mode of establishment
• Source of livelihood
• Prescribed qualifications
• Ethical guidance
• Investment
• Autonomy/freedom
• Popular psychological motive
• Creation of income
• Tenure and transfer of interest
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Distinguishing Traits of Business
• Job creator, not job seeker
• Provides momentum to economic growth
• Investment intensive
• Gestation and uncertainties
• Systematic, organized, efficiency oriented
activity
• Objective oriented/ purposeful
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Distinguishing Traits of Business
• Business must lead the world towards
• Egalitarian
• Participative and
• Collective prosperity that is sustainable for
generations.
• Simultaneous pursuit of
• Profitability,
• People well-being and
• Planet sustainability
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Plurality of the objectives of business
• Social and ecological returns are equally
important
• Holistic and more balanced measures of
business performance
• Sustainable
64
65. Points to Note
• Traits: Job creator, momentum to economic
growth, investment intensive, gestation and
uncertainties, systematic, organized,
efficiency oriented activity, objective
oriented/ purposeful.
• Objectives:
• Economic
• Organic
• Social responsibility
• Legal, ethical and environmental
• Sustainability is important
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Forms of Business Organisation
• Forms
• Form (noun) – type
• Swimming is the best form of exercise
• Business Organization
• Person or a group of people working together
in pursuit of the same commercial interest
• Denotes ownership
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Forms of Business Organisation
Few points about business ownership:
• Ownership is a bundle of rights
• Owned singly or jointly
• Proprietary or a corporate concern
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Sole Proprietorship
Prominent features:
• Individual who organizes:
• Production,
• Uses creativity and innovation,
• Bears risks and uncertainty.
• The easiest and the earliest form of business
• Small store
• Economic hero
• One-person band
• Enjoy people’s trust and
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Sole Proprietorship
Prominent features:
• Provide personalized services
• Unorganized or informal sector of the
economy
• Tremendous contribution to the national
economy
• Numerically these enterprises are the
largest
• Contribution to GDP, employment and even
exports is very impactful
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Sole Proprietorship
Flip side:
• Local products
• Poor working conditions
• Hire and fire policy
• Lack employee welfare
• Social and environmental concerns.
• Fate is linked with the owner
• Personal savings and assets
• Profits and risks
72
74. Points to Note
• Individual organizes purchase, production,
and sales, one-person band
• Bears risks and uncertainty
• Easy and earliest form, personalized services
• Contribution to the national economy
• Largest in number
• Contribution to GDP, employment and even
exports is very impactful
Flip side: Local products, poor working
conditions, lack of employee welfare, Profits
and risks
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Hindu Undivided Family (HUF)
Prominent features:
• Three successive generations of an
undivided family are known as HUF
• HUF is an entity formed automatically
• Cannot be formed otherwise
• HUF includes Buddhist, Jain, Parsi and Sikh
families as well
• Hindu succession act, 1956
• Separate entity status under the income tax
act
75
78. Points to Note
• Hindu undivided family are known as HUF
• HUF includes Buddhist, Jain, Parsi and Sikh
• Hindu succession act, 1956
• Separate entity status under the income tax
act
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Partnership
Prominent features:
• Two or more persons
• Agree to share the profits of a business
• Contractual co-ownership
• Business may be carried on by all or by
some of the partners
• Partnership Deed - verbal or written.
• Capital contribution,
• Profit sharing, etc.
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82. Points to Note
• Two or more persons
• Profit sharing of a business run by all or some
of the partners
• Partnership Deed for capital contribution and
profit sharing, etc.
• Unlimited liability
• Mutual agency
• Succession is not easy
• More capital as compare to sole proprietor
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Limited Liability Partnership (LLP)
Prominent features:
• Liability of the partners is limited.
• Registered under the Limited Liability
Partnership Act, 2009
• Separate legal entity
• Designated partners are responsible
• Hybrid form of business organization -
corporate and proprietary
83
86. Points to Note
• Limited liability
• Registered under the Limited Liability
Partnership Act, 2009
• Separate legal entity
• Designated partners are responsible
• Hybrid form of business organization -
corporate and proprietary
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Company
Prominent features:
• Company - two or more persons
• Body corporate
• Independent existence
• Exists in the contemplation of law,
• Has a distinct name, address & number
• Independent legal existence,
• Limited liability
• Separation of ownership from management
• Mobilization of a large amount of capital
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Company
Prominent features:
• Elaborate system of corporate functioning
• Regulation of capital market
• Memorandum of association (MoA) -
objectives of the company and its business
• Article of association (AoA) - internal
regulation
• Prospectus - solicits capital contribution
• Statutory audit
• Quarterly results
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Company
Prominent features:
• One person company (OPC) is also possible
• Recently introduced form of business
organization in India vide the companies
act, 2013.
• Dormant company that may be created for a
future project or to hold an asset or
intellectual property and has no significant
accounting transaction.
• Private and Public company
89
92. Points to Note
• Body corporate
• Independent legal existence
• Limited liability
• Separation of ownership from management
• Mobilization of a large amount of capital
• Memorandum of association (MoA)
• Article of association (AoA)
• One person company
• Dormant company
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Thank You & Best of Luck!
• Please solve questions at the end of SM.
• Please solve questions from Scanner.
• In case of any difficulty, please visit and ask
at
www.scannerclasses.com
93
Editor's Notes
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
resources are needed to make these happen- both in terms of large initial expenditure as well as their day-to-day operations and management. However, neither the investors nor those who volunteer to work in these activities seek any material gain or regular income from these activities. In fact, the motive or the intent behind any activities is such a singularly strong determinant of the economic and non- economic dichotomy that, say, if I engage in home making (cooking, housekeeping, etc.) for my family it would be deemed as a non-economic activity. If I do so for others for an income, the same activity would be deemed as an economic activity. However, the world needs to understand that if we wish the best minds, hearts and souls to work for the solution of the problems facing the humanity, we must find ways of offering them the best rewards and compensations.
resources are needed to make these happen- both in terms of large initial expenditure as well as their day-to-day operations and management. However, neither the investors nor those who volunteer to work in these activities seek any material gain or regular income from these activities. In fact, the motive or the intent behind any activities is such a singularly strong determinant of the economic and non- economic dichotomy that, say, if I engage in home making (cooking, housekeeping, etc.) for my family it would be deemed as a non-economic activity. If I do so for others for an income, the same activity would be deemed as an economic activity. However, the world needs to understand that if we wish the best minds, hearts and souls to work for the solution of the problems facing the humanity, we must find ways of offering them the best rewards and compensations.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
‘small is beautiful.’
individual starts a business
the easiest and the earliest form of business
Small store
economic hero,
individual who organises production, uses creativity and ingenuity in innovation, bears risks and uncertainty.
one-person band.
these enjoy people’s trust and
provide personalised services.
unorganised or informal sector of the economy.
tremendous contribution to the national economy.
numerically these enterprises are the largest.
contribution to GDP, Employment and even exports is very impactful.
flip side,
Local products
Poor working conditions
hire and fire policy,
lack employee welfare
social and environmental concerns.
Fate is linked with the personal well being of the owner.
personal savings and assets
profits and risks
‘small is beautiful.’
individual starts a business
the easiest and the earliest form of business
Small store
economic hero,
individual who organises production, uses creativity and ingenuity in innovation, bears risks and uncertainty.
one-person band.
these enjoy people’s trust and
provide personalised services.
unorganised or informal sector of the economy.
tremendous contribution to the national economy.
numerically these enterprises are the largest.
contribution to GDP, Employment and even exports is very impactful.
flip side,
Local products
Poor working conditions
hire and fire policy,
lack employee welfare
social and environmental concerns.
Fate is linked with the personal well being of the owner.
personal savings and assets
profits and risks
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
HUF is an entity formed automatically
Cannot be formed otherwise
separate entity status under the Income Tax Act
Joint Family System in India.
three successive generations of an undivided family are known as HUF
HUF includes Buddhist, Jain, Parsi and Sikh families as well
Hindu Succession Act, 1956.
HUF is an entity formed automatically
Cannot be formed otherwise
separate entity status under the Income Tax Act
Joint Family System in India.
three successive generations of an undivided family are known as HUF
HUF includes Buddhist, Jain, Parsi and Sikh families as well
Hindu Succession Act, 1956.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.
These timers appear initially as a cream, coloured circle. The timer is initiated by clicking on, at which point the circle will fill up in a clockwise direction with the colour you see above.
At the end of the time, a bell will sound.
It is possible to change the timings of the timers by entering the animation settings and changing the timings of the relevant ‘Oval’. Note the timings have to be entered in seconds.
It is possible to have multiple timers on the same slide as these work independently of each other.