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Ca foundation business and commercial knowledge chapter 1
The document provides an overview of business and commerce as a domain of knowledge. It discusses key concepts such as: - The domains of business and commercial knowledge are vast, eclectic, and ever-evolving areas that include activities from various disciplines like marketing, finance, operations, and law. - Human activities can be categorized as economic or non-economic, with economic activities oriented towards earning and non-economic activities including social, cultural, and personal pursuits. - There are various forms of business organizations including sole proprietorships, partnerships, limited liability partnerships, and companies, each with different ownership structures and liabilities.
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Ca foundation business and commercial knowledge chapter 1
- 1. 1 CHAPTER 1 BCK –Introduction to Business and BCK
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- 3. 3 BCK Domain ofBCK Human Activities Forms of Business Organisations
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- 5. www.scannerclasses.com Introduction • Engagement betweenwork and life • Focus is on • Human activities focusing on business • Domains of business and commercial knowledge • Earning and spending is based on business 5
- 6. www.scannerclasses.com Introduction • Business andcommerce 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 6
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- 8. www.scannerclasses.com Format Observation Card 8 Pointof 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
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- 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 ofBusiness and Commercial Knowledge (BCK) 11
- 12. www.scannerclasses.com Domains of BCK •Domain - a specified sphere (area) of knowledge • Sphere is: • Vast, • Eclectic and • Ever evolving and expanding 12
- 13. www.scannerclasses.com 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
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- 15. www.scannerclasses.com Domains of BCK •Ever evolving and expanding - changes in: • Technology, • Society, • Economy 15
- 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
- 17. 1.3 Importance ofBCK for Chartered Accountants 17
- 18. www.scannerclasses.com Importance of BCKfor 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
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- 21. www.scannerclasses.com Business Magazines &Channels 21
- 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
- 23. 1.4 Human Activities: Economicsand Non- economic 23
- 24. 24 BCK Domain ofBCK Human Activities Forms of Business Organisations
- 25. www.scannerclasses.com Human Activities • Lifeis all about activities • Activities are: • Economic • Non-economic • Economic activities are: • Oriented towards earning • What am I going to get from it • Rationality 25
- 26. www.scannerclasses.com Human Activities • Non-economicactivities are: • Social, • Religious, • Cultural, • Personal, • Recreational, • Charity and • Patriotic activities 26
- 27. www.scannerclasses.com Roving Eye: Activities- Eco & Non-eco 27
- 28. www.scannerclasses.com Human Activities • Everyactivity has economic dimension in terms of: • Time, • Money and • Material • Non-economic activity for one person may be economic activity for other person 28
- 29. www.scannerclasses.com Human Activities • Weneed 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
- 30. www.scannerclasses.com Characteristics of EconomicActivities • Income generating • Productive • Consumption is an economic activity • Savings, Investment and Wealth 30
- 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
- 32. www.scannerclasses.com Business as anEconomic 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 32
- 33. www.scannerclasses.com Business as anEconomic 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 33
- 34. www.scannerclasses.com Business as anEconomic 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.” 34
- 35. www.scannerclasses.com Business as anEconomic 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
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- 37. Points to Note •Three definitions • Broader – all encompassing • Medium – particular type of activity or industry • Narrow – one’s usual occupation
- 38. www.scannerclasses.com Business and OtherOccupations 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 38
- 39. www.scannerclasses.com Business and OtherOccupations Business – Employment – Profession • Employment: • Terms of employment • Performance targets • Minimum assured income, • Tenure certainty • Career progression via promotions. 39
- 40. www.scannerclasses.com Business and OtherOccupations 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 40
- 41. www.scannerclasses.com Business and OtherOccupations 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
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- 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
- 54. www.scannerclasses.com Distinguishing Traits ofBusiness • Job creator, not job seeker • Provides momentum to economic growth • Investment intensive • Gestation and uncertainties • Systematic, organized, efficiency oriented activity • Objective oriented/ purposeful 54
- 55. www.scannerclasses.com Distinguishing Traits ofBusiness • 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 55
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- 57. www.scannerclasses.com Concept Elaboration #1 Objectivesof Business: Considerations 1. Interdependence 2. Multiple stakeholders 3. Amount of profit 4. Primacy of Customer 5. Performance is the precursor to profits 57
- 58. www.scannerclasses.com Concept Elaboration #1 Objectivesof Business: 58
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- 63. www.scannerclasses.com Concept Elaboration #1 Objectivesof Business: 63
- 64. www.scannerclasses.com Plurality of theobjectives 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
- 66. 1.5 Forms ofBusiness Organisation 66
- 67. www.scannerclasses.com Forms of BusinessOrganisation • 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 67
- 68. www.scannerclasses.com Forms of BusinessOrganisation Few points about business ownership: • Ownership is a bundle of rights • Owned singly or jointly • Proprietary or a corporate concern 68
- 69. www.scannerclasses.com FormsofBusiness Organisation Sole Proprietorship Hindu Undivided Family (HUF) Partnership LimitedLiability Partnership (LLP) Company 69
- 70. www.scannerclasses.com 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 70
- 71. www.scannerclasses.com 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 71
- 72. www.scannerclasses.com 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
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- 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
- 75. www.scannerclasses.com 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
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- 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
- 79. www.scannerclasses.com Partnership Prominent features: • Twoor 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. 79
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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
- 83. www.scannerclasses.com 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
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- 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
- 87. www.scannerclasses.com 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 87
- 88. www.scannerclasses.com Company Prominent features: • Elaboratesystem 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 88
- 89. www.scannerclasses.com Company Prominent features: • Oneperson 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
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- 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
- 93. www.scannerclasses.com 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
- #11 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.
- #17 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.
- #23 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.
- #29 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.
- #30 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.
- #32 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.
- #38 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.
- #54 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.
- #66 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.
- #71 ‘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
- #72 ‘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
- #75 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.
- #76 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.
- #77 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.
- #79 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.
- #83 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.
- #87 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.
- #93 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.