Partnership Firms Nature Accounting Help

Partnership Firms Nature

When two or more persons come together to establish legal business and share its profits and losses, they are said to be in partnership. The persons who have entered into partnership with one another are individually called partners and collectively called firm. The name in which the partnership business is carried on is called the firm’s name.

1. Definition of partnership

Section 4 of the Indian partnership act, 1932 defines partnership as “the relation between persons who agreed to share the profits of a business carried on by all or of them acting for all”. The term profits also include the negative profits which mean losses.

2. Essentials or features of partnership

(i) Two or more persons: there must be at least two persons and maximum persons should not exceed 10 if the firm is carrying on banking business and 20 if it is engaged in any other business.

(ii) Agreement between the partners: partnership is created by an agreement which forms the basis of mutual relationship amongst the partners. This agreement may be either oral or in writing.

(iii) Business: the partnership should be for carrying on some legal business. Mere co-ownership of a property does not amount to partnership.

(iv) Sharing of profits: profits earned should be divided amongst partners in the agreed profit sharing ratio. The term profits also include the negative profits which mean losses. Thus, sharing of loss is implied. If some persons join hands for the purpose of some charitable activity, it will be termed as partnership.

(v) Management: the management of partnership must be carried on by all the partners or by one or more than one behalf of all others. It means every partner is entitled to participate in the conduct of the affairs of its business and each partner carrying on the business is the principal as well as the agent for all the other partners.

3. Meaning of partnership deed

A partnership is formed by an agreement. This agreement may be written or oral. Though the laws does not expressly require that there should be an agreement in writing but the absence of a written agreement may be a source of problem/crisis in managing the affairs of the partnership firm. The agreement between the partners, when written, duly stamped and registered is known as partnership deed. It is also known as articles of partnership.

4. Contents of partnership deed

Partnership deed lays down the terms and conditions of partnership, the rights, duties and obligations of partners. The following principal contents are generally covered in the deed:

(i) Amount of capital contributed or to be contributed by each partner.

(ii) Ratio in which profits or losses are to be shared.

(iii) Rate of interest on partner’s capital and drawings.

(iv) Rate of interest on loan by a partner to the firms

(v) Remuneration of partners such as salary, commission etc.

(vi) Rules to be followed in case of admission, retirement and death of a partner.

(vii) Methods of settings dispute amongst partners.

5. In the absence of partnership deed

In the absence of partnership deed, the relevant provisions of the Indian Partnership Act, 1932 shall become applicable which are as follows:

(i) The partners shall share firm’s profit or losses equally.

(ii) If any partner has given some loan to the firm, he is entitled to take interest on such loan @ 6% p.a.

(iii) No interest is allowed to partners on the capital invested by them.

(iv) No interest will be charged on drawings made by the partners.

(v) No partner is entitled to get any renumeration such as salary, commission etc. for participating in the business of the firm.

 

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Polar Curve Tracing Math Help

The following steps are helpful in tracing a polar curve r = ƒ(θ).

1. Symmetry

(i) The curve is symmetrical about the initial line if its equation remains unchanged when θ is replaced by – θ.

(ii) The curve is symmetrical about the line through the pole perpendicular to the initial line if its equation remains unchanged when θ is replaced by π – θ.

(iii) The curve is symmetrical about the pole if its equation remains unchanged when θ is replaced by π + θ.

2. Pole

The curves passes through the pole if r = 0 for a value of θ.

3. Solving the equation

Solve the equation of in terms of θ and see how r varies as θ varies. Make a table of corresponding values of θ and r. Many polar equations involve periodic functions such as sin θcos θ etc. In such cases we consider values of θ from 0 to  alone.

4. Asymptotes

Find out the asymptotes of the curve, if any.

5. Region

Find out the region on the plane in which no part of the curve lies.

Remark: Sometimes a polar curve easily traced by converting it into a Cartesian curve by means of the transformation x = r cos θ and y = r sin θ.

For example: Consider a polar curve r cos θ = a cos 2θ.

On multiplying both sides by r2, we get

r cos θ. r2 = ar2 (cos2 θ – sin2 θ)

 x (x2 + y2) = a (x2 – y2).

which can be easily traced.

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What is Decision Making Process

Decision Making Process

The decision making process of this model is concerned with how consumers make decisions. The process consists of three states: need recognition, repurchases search and evaluation of alternatives.

1. Need recognition

The recognition occurs when a customer is faced with a ‘problem’. There are two different need recognition styles:

An actual state, when the consumer perceives a problem either because he is out of stock of a product (daily necessities) or because a product has failed or not performed satisfactorily. A desired state, when the desire for something triggers a latent need and an aspiration to acquire the product. Self expressive or image products like personal accessories, clothing, high end cell phones and other such gadget trigger the desired state of need recognition.

Not all problems are clearly defined or even understood in the consumers mind. Marketers must take considerable efforts in educating the consumer. When Nike first introduced their range of fitness shoes, they had to exhort potential customers to adopt a lifestyle that focused on staying fit and healthy. For years, nike communication educated the customers about the dangers of obesity and a sedentary lifestyle. Once the fitness culture had gained ground, market grew rapidly. But these initial market development efforts took time.

The marketing tasks related to the need recognition stage vary from market development and customer education to providing stimuli to trigger the need. Advertising, product displays, product design, packaging, store locations and attractive store windows all marketers controlled sources of stimuli that trigger a need recognition in the consumer.

2. Repurchase search

The repurchase search begins when the consumer perceives a need that might be satisfied by the purchase and consumption of a product. When the consumer has some experience with the product, he searches his memory (psychological field of the diagram), before seeking any external sources of information. On the other hand, if he has no past experience with the product, he has to engage in extensive external search for information. Past experience is considered as an internal source of information; the greater the past experience is considered as an internal source of information; the greater the post experience with the product, the less is the external search. Most decisions are combinations of internal and external search. High involvement decisions will involve a combination arch due to high perceived risks. In low involvement decisions consumers may rely much more on the internal sources of information.

Shopping around is an important way of collecting external information. According to several studies the amount of the time spent on shopping depends on the customer knowledge and the more importance of the product purchase. The less the knowledge and the more important the product purchase, the more time will be invested in shopping. Several consumer studies also reveal major differences between genders in their attitudes towards shopping. Most men do not like to shop; whereas for women shopping is a relaxing, enjoyable leisure time activity. There are differences even in the way men and women shop and collect information.

The internet has had a great impact on repurchase search for information. Web sites provide a wealth of easily accessible information about brands, product categories; some sites even assist you with evaluation and decision making criteria.

The duration of repurchase search is dependent primarily on he perceived risk, differences between brands and the consumers past experience with the product category. There are also certain other factors which increase the time and effort spent on searching. Consider the factors below:

(i) Frequent changes in product styling

(ii) Frequent price changes

(iii) Long interval between purchases

(iv) Major technological changes

(v) Purchase a gift

(vi) Product is self expressive, image product

(vii) Major sources of conflicting information

(viii) Family members disagree on the evaluation of alternatives

(ix) Unsatisfactory past experience

Sources of information for repurchase search are internal and external. Internal sources are, as we have seen earlier, stored information in the psychological field. External sources of information can be personal or impersonal. Personal sources would include friends, colleagues, neighbors, relatives, co-workers, dealers and company sales people.

3. Evaluation of alternatives

When evaluating alternatives, consumers also help customers in their two types of information:

(i) Potential list of brands being considered

(ii) The criteria to be used for evaluation

The Evoked Set or Consideration Set consists of those brands that the customer now considers for further evaluation. Consumer’s narrow down to a list of brands to be considered from a larger list of brands that they are aware brands they consider inferior or about which they may have heard a negative report about.

There could which they may have a negative report about.

There could be other brands that consumer may be neutral or indifferent towards, simply because he has not enough information about these brands to form an image. Such brands also do not make it to the consideration set.

Marketing tasks at this stage are about helping customers make the evaluation by communicating the prodcut attributes in terms of benefits and by clearly and credibly stating their brand’s point of differentiation. This helps not only customers make a choice, but even acts as reassurance to the customer.

At times customers find it difficult to take a decision on evaluation criteria and what they really want from their products. This is fairly common with technology products, as consumers may not understand the benefits that result from the technology. This can be a daunting task for the consumer, and very often consumers develop a techno phobia. Apple computers demystified computers with simple, straight forward marketing communications, when they first launched the Macintosh. The language is the advertising copy was not computer speak, but the kind of language that consumers would use.

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What is Gold Standard Game Rules

Gold Standard Game Rules

The successful working of the automatic international gold standard presupposes that there is no conscious management of the standard but that participating countries adhere to what is called the rules of the gold standard game. These rules are as follows:

1. There must be free import and export of gold between the participating counties.

2. The governments concerned must observe this golden rule of gold standard, viz. expand credit when gold is coming in, and contract credit when gold is going out. Thus, the gold receiving country must make arrangements for currency and credit expansion and the gold losing country for currency and credit contraction.

3. There should be a high degree of flexibility in the price systems of the participating countries, so that, when the monetary pressure of gold movement is exerted, price levels rise or fall, accompanied by smooth adjustments of costs.

4. There should be absence of distributing capital movements. The automatic operation of the gold standard can be ensured only when, among other things the investment policy of the lending counties remains uniform. Flights of capital are independent of the variations in the respective rates of interest and are capable of destroying the whole gold standard mechanism.

5. Although free trade is not an essential condition of a successful functioning of the gold standard, the game requires that there should be no severe restrictions on international trade. Particularly, import quotas hinder the automatic adjustment of gold standard mechanism.

6. The monetary authorities of the gold standard countries should maintain their gold parties by buying and selling gold in unlimited quantities at fixed rates. Moreover, the gold value of the domestic currency must neither be overvalued nor undervalued. It should also be stable.

7. Finally, the monetary authorities must be willing to conform to the rule of the game, even at the cost of sacrificing the conflicting aims of domestic monetary policy. The various independent objectives of monetary policy must be wholly subordinated to the international monetary motives. In Keynes’ words, the mechanism requires that “the main criterion of the banking policy of each country should be the average behaviour of all the other members it own voluntary and independent contribution being modest one”.

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Assumptions of the Marginal Utility Theory

Assumptions of the Marginal Utility Theory

The marginal utility analysis was developed by Marshall on the basis of certain assumptions.

(1)     Utility is a cardinal concept – This implies that utility is measurable and quantifiable. Money is regarded by Marshall as the measuring rod of utility. the price which each consumer is willing. to pay for each unit of a good rather than go without it is the measure of utility it derives from that good.

(2)     Rationality – A consumer is rational as he tries to maximise his satisfaction subject to the constraint posed by his budget or limited income.

(3)     Constancy of marginal utility of money – The marginal utility of money remains constant throughout when the individual is spending money on a good,

(4)     Utility is additive – The utility derived from the consumption of good X, Y and Z depends on their consumption i.e., Ux,=f (Qx), Uy = f (Qy) and Uz, = f (Qz). The total utility function now is: U = Ux, + Uy + Uz. Thus, total utility is the sum of independent utilities derived by an individual from the consumption of different goods.

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Revenue Recognition Accounting Standards

Revenue Recognition

Introduction & Objective

AS-9 is mandatory in nature. It deals with the bases for recognition of revenue in the statement of P&L.

Scope:

The statement is concerned with the recognition of revenue arising in the course of the ordinary activities of the enterprise from:

(i)      Sale of Goods and receipts from rendering of services.

(ii)     The use by the others of enterprise resources yielding interest, royalties and dividends.

(iii)    It does not deals with:

v  Revenue from construction Contracts

v  Revenue from hire purchase, lease agreements.

v  Government grants & subsidies

v  Revenue of insurance companies arising from insurance contracts.

v  Realized or Unrealized gain from disposal or holding of non-current assets

v  Unrealized gains from the holding of current assets & the natural increase in agriculture or forest produce.

v  Realized or Unrealized foreign exchange gains

v  Realized gains or unrealized gains from the discharge/restatement of an obligation.

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Limitations of Statistics

Limitations of Statistics
The field of Statistics,’ though widely used in all areas of human knowledge and widely applied in a variety of disciplines, it has its limitations. It cannot be applied to all situations. Some of the limitations are

(i) Statistics deals only with aggregates and no importance is given to individual items.
(ii) Statistics studies only quantitative characteristics and does not study qualitative characteristics.
(iii) Laws of Statistics, are true on an average
(iv) Statistical results are only approximately correct.
(v) Statistics does not reveal the entire story rather it is a helping hand.
(vi) Statistics can be misused and hence should be applied only by experts.

STATISTICAL POPULATION AND SAMPLE
By Population we generally mean human population but in Statistics population is the aggregate of some individuals or objects, under study. It is also called Universe. A population may be finite or infinite depending upon the number of elements in it. For example, population of students in a class is finite whereas the population of sand particles in a river beach is infinite. Again a population may be real or hypothetical. For example, population of books in bookstall is real whereas the population of outcomes of a die throwing many a number of times is hypothetical.
The number of units in a population is called population size.
A Sample is a small representative part taken from the population to know the characteristic of the population under study. The number of units in a sample is called its sample size. For example to know the average height of 100 students, if we select 5 students and by measuring them infer about the average height of 100 students, then 5 students constitute a sample.

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