T.

S INTERMEDIATE Accountancy-1
COMMERCE-1st YEAR (E.M)

100% Syllabus

Academic Year 2022-23

For

Chinthala Shailender Cjl-in-Commerce ఈ pdf ఫైల్ మీ మొబైల్ లో ఓపెన్ చేస్తే పై Accountancy text Book ఫోటో పైన
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 Inter Commerce 1st Year Students Should be
preparing problems for Annual Exam in Accountancy-1
20 – MARKS-PROBLEMS 5- MARKS-PROBLEMS
Problem
11 10 16
Problem No:
3 Ex:23 8 Ledger Problems
No: Page
Final Accounts 66 65 68
No :
Page
329 319 334
No :
Problem
Illustration Illustration 5
Purchase book, No:
10 - MARKS-PROBLEMS Sales book
-12 -13
Page
Problem 99 100 111
Ex: 7 10 No :
19
Three column cash No:
book Page
134 154 160
No :
 2. “Discuss the advantages and disadvantages of Co-operative Societies.
COMMERCE 1st Year: 10 Marks Q & A
1. Write the advantages and disadvantages of Sole Proprietorship? Ans: Advantage OF CO-OPERATIVE SOCIETIES:

Ans: Advantages(Merits) of Sole Proprietorship: (1) Simple Formation: It is easy and simple to form a co-operative society.
There is no need to comply with a number of legal formalities as in the case
of a joint stock company.Any10 adult members can form a society.
1) Easy to form and wind Up: it is very easy and simple to form a sole
proprietorship form of business organization as it require less legal (2) Democratic Management: Every member in the co-operative society
formalities and less time. . has only one vote irrespective of the number of shares held by him/her.
2)Quick decision and prompt action: In this form of business nobody Meetings are well attended and voting by proxy is not allowed. As such the

Commerce Sir
interferes in the affairs of the business. So he/she can take quick decisions management of the society is democratic.
on the various issues relating to business and accordingly prompt action can (3). Service Motive: Co-operative societies are started not for profit but for
be taken. service. The members are provided with goods at cheaper rates. Financial
help is also extended to members at concessional rates.
3) Direct motivation: In this form of business organizations the entire profit
of the business goes to the owner this motivates the proprietor to work hard (4). Low Operating Costs: The administrative expenses of a co-operative
and run the business effectively and efficiently. society are usually low. The management of a co-operative society is in the
hands of persons elected by the shareholders.
4) Flexibility in operation: It is very easy to initiate and implement
changes as per the requirements of the business. I he expansion or (5).Limited Liability: The liability of every member is limited to the extent
curtailment of business activities does not require many formalities as in the of his/her capital contribution. The private assets of members cannot be used
case of other forms of business organization. to pay off the losses of the Co-operative societies. .

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Disadvantages of Co-operative Societies.
5) Maintenance of business secrets: |The business secrets are known only (1) Limited Financial Resources: Restriction on dividend and the principle
to the proprietor. He is not required to disclose any information to others of “one member, one vote” discourage rich people from joining the society.
unless and until he/ himself so decides. Due to shortage of funds, there is a limited scope for expansion and growth.
Disadvantages/Demerits/Limitations: (2) Lack of Unity among Members: The members are drawn from different
sections of the society. There is a lack of harmony among them. The
1) Limited resources :( The resources of a sole proprietor are always members do not understand the working of the society, so that they start
limited .Being the Single owner, it is not always possible to arrange suspecting each other.

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sufficient funds from his own sources.
(3) Lack of Incentive to Workhard: Management committee members do
2.) Unlimited liability: The liability of a sole proprietor is unlimited. not take an active part and interest in the management and the affairs of the
His/Her private properties can also be used for meeting business losses and society, as they are not paid for their service even though the society makes
obligations. huge profits.
3) Limited managerial expertise: A Sole proprietorship form of business (4). Non-transferability of Shares: In co-operative societies, a member
organization always suffers from lack of managerial expertise. A single cannot transfer his shares freely but he may be allowed to withdraw his
person may not be an expert in all fields like purchasing, selling, financing capital.
etc .
4) Lack of continuity: The continuity of business is uncertain because it is (5). Political Interference: Government nominates members to the
linked with the life of the proprietor, Illness, death or insolvency of the managing committees. Every Government tries to send their own party
proprietor can lead to closure of the business. members to these societies.
3. Define Partnership. Discuss its advantages and disadvantages. 4. Discuss different types of Partners?.
Ans: Definition: Section 4, of the Partnership Act, 1932 defines partnership
as “the relation between persons who have agreed to share the profits of a Ans: Types OF PARTNERS
business carried on by all or any one acting for all”.
Advantages / Merits
1. Active Partner' or *Working Partner': The partners who
actively participate in the day-to-day operations of the business
1. Easy to form: A partnership can be formed easily without many legal are known as active partners or working partners.
formalities. Since it is not compulsory to get the firm registered, a simple
agreement, either in oral, writing or implied is sufficient to create a 2. Sleeping Partner: The partner who does not participate in the

Commerce Sir
partnership firm. . day-to-day activities of the business is known as 'sleeping' or
2. larger resources: Since two or mere partners join hands to start dormant' partner.
partnership firm, it may be possible to pool more resources as compared to
sole proprietorship form of business organization. 3. Nominal Partner: Nominal partner allows the firm to use
3) Better decisions: In partnership firm each partner has a right to take part
in the management of the business. All major decisions are taken with the their name as partner He/she neither invests any capital nor
consent of all partners. Thus, collective wisdom prevails and there is less participates in the day-to-day operations.
scope for reckless and hasty decisions.
4) Flexibility:|The partnership firm is a flexible organization. At any time 4.Partner in Profit: A person who shares the profits of the
the partners can decide to change the size or nature of business or area of its business without being liable for the losses is known as partner in
operation after taking the necessary consent of all the partners. profits.
5 Sharing of risks: The losses of the firm are shared by all the partners

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equally or as per the agreed ratio.
Limitation/ Demerits: 5. Limited Partner: The liability of limited partner is limited to
the extent of his her capital contribution. This type of partner is
1. Unlimited Liability: The most important drawback of partnership firm is found in Limited Partnership firms in some European countries
that the Liability of the partners is unlimited).e. the partners are personally and USA.
liable for the debts and obligations of the firm. In other words, their personal
property can also be utilized for payment of firm's liabilities. 6. General Partner: The partner having unlimited liability is
2.Instability :Every partnership firm has uncertain life. The death,
called as general partner or Partner with unlimited liability.

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insolvency, incapacity or the retirement of any partner brings the firm to an
end. Not only that any dissenting Partner can give notice at any time for 7. Partner by Estoppel: A person, who behaves in the public in
dissolution of partnership. such a way as to give an impression that he/she is a partner of the
firm, is called 'partner by estoppel'.
3.Limited capital: Since the total number of partners cannot exceed 20.the
capacity to raise funds remains limited as compared to a joint stock 8. Partner by Holding out: A partner or partnership firm declares
company. that a particular person is a partner of their firm, and such a
4.Non-transferability of share: The share of partner cannot be transferred
person does not disclaim it, then he/ she is known as 'Partner by
to other Partners or to the outsiders. So it creates inconvenience for the Holding out'.
partner who wants to transfer his share to others fully and partly.
5) Possibility of conflicts :Every partner in the firm has an equal right to
participate in the management. Every partner can place his or her opinion or
viewpoint before the management regarding any matter at any time
5. Define Joint Stock Company. Explain the features of a joint stock 6. Differentiate between a private company and and a public company.
company? .
ANS: L.H. Haney Defined as “A Joint Stock Company is a voluntary
association of individuals for profit, having a capital divided into ANS:
transferable shares, the ownership of which so the condition of membership”
FEATURES OF JOINT STOCK COMPNY
1. An artificial person created by law: A company is an artificial person PRIVATE COMPANY PUBLIC COMPANY
creates by law and existing only in contemplation of law. It is intangible and
invisible legal person having no body and soul. 1. To start a company two (2) To start a company
seven(7)members are required

Commerce Sir
members are required
2. Separate legal entity: A company has an entity (i.e., existence) quite
distinct (i.e., different) and independent of the existence of the members 2. Maximum number of members in Maximum number of of members
who constitute it. In other words a company has a separate legal entity a company cannot exceed 50 is unlimited
entirely different from that of its members.
3. Minimum paid up capital must be Minimum paid up capital must be
3. Formation: Generally a company is formed with the initiative of group Rs.1,00,000 Rs.5,00,000
or members who are also known as promoters and comes into existence after 4. Must suffix Private Limited' to to Must suffix Public Limited to its
preparation of several documents and compliance of several legal name
requirements be-Tore t starts its operation. . its name.
4. Common seal as a substitute for signature: As the company is not a
natural person it cannot sign on its documents. The common seal with the 5. It cannot transfer its shares freely
It can freely transfer or sell their

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name of the company engraved on it is, therefore, used in place of signature. shares to others
5. Perpetual existence: A company has perpetual existence unlike a sole 6. It cannot secure capital from the It cannot secure capital from the
trading or a partnership concern. Once a company is formed, it continues for public.
an unlit- tied period until it is legally dissolved. In other words, a company public
has a per- petal life and the death, lunacy, retirement or insolvency of its
members (Shareholders) does not affect its existence. . 7. It can start its business
6. Limited Liability of members: The liability of a member of a company It cannot start it’s of business
immediately upon its incorporation immediately after its
is limited to the extent of the amount of shares he holds. Their liability is incorporation. It has to obtain a
limited by guarantee or shares held by them. certificate for starting

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7. Transferability of shares: The members of the company (Public 8. Board of Directors: Minimum: Minimum: Three (3)Maximum:
Company) are free to transfer or dispose the shares held by them to any 20 directors
persons as and when they like. But in case of private company, some Two(2) Maximum: No limit
restrictions are imposed for transferring shares.
9. Single resolution is enough to Separate resolution in a meeting
8.Membership: To form a joint stock company, a minimum of two(2) should be passed for appointment
members are required in case of private limited company and seven(7) appoint or retire the directors
members in case of public limited company. The maximum limit is fifty or removal of a Director.
(50) in case of private limited company. There is no maximum limit on the
number of members in case of a public limited company. 10. There are no restrictions on the There are restrictions on
remuneration of Directors and remuneration to be paid to
9. Women Director: As per the companies Act, 2013 implies that the board Managing Directors Directors.
of specific companies should consist of at least one women director in a
public company.
7. What are the various factors that determine the selection of 8. What is business finance? Explain its need and significance
sources of finance? .
in the business Organization.
Ans: Factors DETERMINING THE CHOICE OF Sources OF FINANCE:
Financial needs of a business are of different types; long term, short term, “Business finance involves a set of administrative functions in an
fixed and fluctuating. Therefore, business firms resort to different types of organization which relate with the arrangement of cash and credit so that the
sources tor raising funds. organization may have the means to carry out its objectives as satisfactorily
as possible.”
1. Cost: There are two types of cost viz., the cost of procurement or funds
and Cost of utilizing the funds. Both these costs should be taken into Need of Business Finance:

Commerce Sir
account while deciding about the source of funds that will be used by an
organization. 1.Fixed capital requirements: In order to start business, funds are required
to Purchase fixed assets like Land and buildings, Plant and machinery, and
2. Financial strength and stability of operations: The financial strength of furniture and fixtures. This is known as fixed capital requirements of the
a Business is also a key determinant. In the choice of source of funds for business enterprise.
business should be in a sound financial position so as to be able to repay the
principal amount and interest on the borrowed amount. 2. Working capital requirements: The financial requirements of a business
enterprise do not end with procurement of fixed assets. No matter how small
3. Form of organization and legal status: The form of business or large business is, it needs funds for its day-to-day operations.
organization and status influences the choice of a source for raising money.
Significance of Business Finance:
4. Purpose and time period: Business should plan according to the time

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period for which the funds are required. A short-term need for example can 1.To meet fixed capital requirement of Business: To Purchase fixed assets
be met through borrowing funds at low rate of interest, through trade credit, like Land and buildings, Plant and machinery, and furniture and fixtures
commercial paper, etc. For long term finance, sources such as issue of etc.business requires finance.
shares and debentures are more appropriate.
2. To meet working capital requirements: Working Capital is used for
5. Risk profile: Business should evaluate each of the sources of finance in holding current assets such as stock of material, payment of wages,
terms of the risk involved. For example, there is a least risk in equity as the transportation expenses etc.
share capital has to be repaid only at the time of winding up and dividends
need not be paid if no profits are available. 3. For growth and expansion: For growth and expansion activates, a

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business requires finance.It may be required to increase production, to install
6. Control: A particular source or fund may affect the control and power of more machines, to set up a R & D centre, etc.
the owners on the management of a firm. Issue of equity shares may mean
dilution of the control. . 4. For diversification: Business finance is needed to start any new activity in
7. Effect on credit worthiness: The dependence of business on certain business. For example: ITC dealing with tobacco started ITC
sources may affect its credit worthiness in the market. Kakatiya(hotels),Vivel( shampoos, and cosmetics) Classmate (note books
and stationery) etc.
8. Flexibility and ease: Another aspect affecting the choice of a source of
finance is the flexibility and ease of obtaining funds. Restrictive provisions, 5. For survival: To carry out the various business operations in continuity,
detailed investigation and documentation in case of borrowings from banks business finance is needed. Without the required finance, organizations
and financial, institution cannot survive for long.
9. Tax benefits: Various sources may also be weighed in terms of their tax
benefits.
COMMERCE 1st Year,, 5 Marks Q & A: 2. What is meant by industry? Explain various types of
industries with suitable examples.
1.Define Business ? Explain its characteristic features? Ans: Industry is the production side of business activity, it creates
Ans: “Business is a sum of all activities involved in the production and form utility. It involves greater risk. It is the back bone of commerce
and trade. .
distribution of goods and services for private profit Definition:-The place of production of goods or services is called as
1. Economic Activity: Business is an economic activity. It is performed industry
with the main motive of earning money or profit.
Types of Industry:
2.Deals with goods and services:-Business must consists in dealings with

Commerce Sir
goods and services for profit Goods may be consumer goods or producer 1.Primary Industry:-This industry is concerned with production of
goods. goods with the Help of nature. It is a nature-oriented industry and less
human effort. .
3.Continuity in dealings: Dealings in goods and services become business Ex:-Agriculture, Forestry, Fishing. Horticulture, Farming etc.
only when it is under taken on a regular basis .A single isolated transaction
will not be treated as business 2.Genetic Industry:-This industry is engaged in re-production and
4. Sale, transfer or exchange: - All the business activities are directly or
multiplication of plants and animals with the aim of earning profit
through sale. .
indirectly involve transfer or exchange of goods or services for price or Ex:-Plant nurseries. Poultry forms, cattle breeding etc.
value to satisfy the human wants.
5. Profit motive: - The primary objective of business is to earn profit. 3.Extractive Industry: This industry is concerned with extraction or
drawing out goods from the soil, air or water. .

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Profits are essential for the survival as well as growth of business. It is the Ex:-Mining Industry, coal, mineral, oil Industry, Rubber from forests
back bone of the business etc.,
6.Risk and uncertainty:-Risk implies uncertainty of profit or the possibility
4. Construction Industry:-This industry is engaged in the
of loss. It is an integral part and parcel of business. construction of buildings, bridges, roads, dams, canals etc. Under this
industry goods are produced and sold erected at one place.
2. What are the economic activities?. Ex:-GMR Constructions, L&T Constructions Pvt. Ltd.,
Ans: 5) Service Industry:-These industries are concerned with rendering

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1.Business: The economic activity of continuous and regular production, the services to the people. It plays an important role in the
development of the nation.
manufacturing and distribution of goods and service for satisfying human
wants and desires with an objective of earning profit is known as business. Ex:-Banking, Railways, TSRIC, BSNL, Hotel, Industry, Tourism
industry, Entertainment industry etc.
2. Profession: A profession is an occupation or vocation intended to render
6)Manufacturing Industry:-This industry is engaged in transforming
personal service of a specialized and expert nature. It is part of economic raw materials in finished product with the help of machines and
activities undertaken by the human being. Always profession is based on manpower
educational qualification, knowledge and competencies.
Ex:-Textiles Industry, Chemical Industry, Sugar Industry, Paper
3. Employment; Employment is the relationship between two parties. One Industry etc.
party render his service on contractual basis for the remuneration wage or
salary. Hence, the relationship between these two parties will be employer-
Employee.
4. State the types of foreign trade? 6. What is Memorandum of Association? Explain its clauses?
Ans: It refers to Buying and selling of goods and services between two or Ans: Definition
more countries through international air ports and sea ports (foreign trade is As per Section 2(56) of the Companies Act, 2013 "Memorandum of
also known as ‘external trade’ or international trade’. Foreign trade is again Association is one of the documents which has to be filed with the
may be classified into 3 categories.
registrar of companies at the time of incorporation of the company”.
1.Export trade: It means the sale of goods to foreign countries.
Clauses of Memorandum of Association
For example, India exports tea to the United Kingdom.
1. Name Clause Section 4 (1) (a): A company being a separate legal

Commerce Sir
2.Import trade: it refers to the purchase of goods from foreign countries. entity must have a name. A company may select any name which does
For example: instance India buys petrol from Iran not resemble the name of any other company. The word "Limited
3.Entrepot trade: Importing(buying) goods from one country for the “must be used at the end of the name of a public company, and
purpose of exporting(selling) them to another country is called entrepot trde. "Private Limited “is used by a private company.
This type of trade is also known as re-export trade. 2. Registered Office or Situation Clause Section 4(1) (6): This
clause states the place and address of the registered office of the
company. This helps to have Correspondence with the company.
5. What are the Functions of a Promoter ? 3.Objects Clause Section 4(1)(C): This Clause defines the sphere of

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activities of the company. It also determines the powers of the
company. This clause may be considered as the core of Memorandum
Ans: Promoter performs the following functions. of Association.
1. A Promoter conceives an idea for the setting up of a business. 4.Liability Clause section 4(1)(d) : This Clause contains the nature of
2. He/she makes preliminary investigation and ensures the future liability of its members. It states that the liability of the members is
Prospects of business. limited to the value of shares held by them. It means that the members

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3. He/she brings together various individuals who agree to are liable to pay only the unpaid balance of their shares and not further
associate with him/her and share the business responsibilities. else.
4. He/she prepared various documents and gets the company 5. Capital Clause section 4 (1) (e): This Clause contains the capital
incorporated. structure (total capital) of the company. The division of capital into
5. Promotor raises the required finances and gets the company equity shares, Preference shares and the number of shares in each
going. category, and their value should be given.
6. He gets into an agreement to acquire and obtain assets for the
company. 6. Association Clause or Subscription clause section 13(4) (c): This
clause contains the names of the signatories to the Memorandum of
Association. The full addresses and occupations of subscribers and
witnesses are also given.
7.Discuss the differences between Memorandum of Association and 9. Differentiate between the equity shares and Preference shares?
Articles of Association ?
Ans :

Commerce Sir
Memorandum, of Articles of Association (AOA)
Association(MOA) Equity Shares Preference shares
1. It is a constitution of the company. The articles contain bye-laws for the 1. Issues to these shares are 1. Issues to these shares are not
The company works in the framework day-to-day working of the company as compulsory. compulsory.
given in the memorandum set out in the MOA
2 MOA must be prepared by all the 2. Dividend is paid after 2. Dividend is paid before paying
Public companies may not have their paying dividends on preference dividends on equity shares
companies and filed with the registrar. own articles. They can adopt Table A shares.
of Schedule as its articles.
3. It defines the relationship between 3. Rate of dividend is not 3. Rate of dividend is prefixed and

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It defines the relation between the
the company and outside world.
company and the members among fixed and it is pre communicated.
themselves. recommended by the board
4. It cannot be changed easily.
It can be altered easily by the Special of directors of the
resolution to shareholders. company.
5. It is sub-ordinate only to the act.
The company works within the legal Is subordinate to the memorandum
provisions of MOA and companies act. and cannot contain 4. In case of winding up, 4. In case of winding up, capital is

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anything contrary to both capital is refunded after the repaid before the payment of equity
payment of preference share capital.
8. Differentiate between a share and a debenture? share capital
Shares Debentures
1. A share is a part of owned capital. 1 A debenture is an acknowledge of a 5. Do not have any voting rights
debt. 5. Equity shareholders are the
2. Shareholders are paid dividend on 2. Debenture holders are paid interest real owners of the
the shares held by them. on debentures. company who have the
3. The rate of dividend depends upon 3. A fixed rate of interest is paid on
the amount divisible profits and the debentures irrespective of profits or voting rights
policy of the Board of Directors. loss

4. Shareholders have voting rights. 4. Debenture holders are only

They have control over the creditors of company.
management of the company
5. Shares are not redeemable (with 5. Debentures are redeemed after
certain period.
the exception of redeemable
preference shares) during the life of
the company
10. Briefly explain the registration process of MSMEs? 12.What are the benefits of e-business to Consumers?
Ans: Ans: Benefits to Consumers.
Registration Process: 1.Convnient Shopping: e-business enables customers to shop or do any
1. Complete the MSME form: Applicants are required to fill in all the transactions 24 hours a day, round the year from almost any location as per
details and submit the requested documents. their convenience.

2. Preparation of Documents: Their experts will help in drafting the 2. Wider choices: e-business enables the customers to have more choice or

Commerce Sir
application and prepare documents for registering MSME as per the request more alternative products and services online.
details.The process requires 1-2 working days to proceed to next level. 3. Price advantage: e-business provides customers with less expensive
3. Filling MSME Application:Post the documents are prepared and products and services by allowing them to shop in many places and conduct
submitted to MSME registrar, their experts will verify the submitted quick comparisons.
documents. This procedure requires another 2 working days . 4. Exchange of information: e-business allows the customers to interact
4. Application Approval and Registration:Once MSME application is with other customers and exchange business ideas, opinions and experiences
approved, company gets registered and related documents shall be sent to about the products/services which are available at different online portals.
the company.
5. Registration Criteria: Enterprises in manufacturing or services sector 13.Define MNCs and explain its features?
need to have less than Rs. 50 crore of investment in plant and machinery.

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Ans:
11.Define MSMEs and explain their significance in Indian
economy? 1. Large in Size: A multinational company is generally big in size.
Ans: Any industrial undertaking or a business concern or any other Some of the Multinational companies own and control assets worth
establishment, by whatever name called, engaged in the manufacture or billions of dollars.
production of goods. 2. International Operations: A multinational corporation carries on
The significance of MSMEs can be understood with the help of the business in more than one country. Multinational corporations such
following: as Wipro, Colgate-Palmolive, Coco cola, have branches in as many
*. MSME contributes 45% of India's produced output. as seventy countries around the world.
*. MSME contributes approximately 40% of India's exports.
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companies is international in character. It operates on the basis of
*.MSME are employing around 73 million people in more than 31 million best possible alternative available anywhere in the world.
units spread across the nation (40% of employment opportunity in India is
provided by MSME sector) 4. Mobility of resources: The operation of multinational company
involves the mobility of capital, technology, entrepreneurship and
*. 90% of MSMEs in India are unregistered (out of which nearly 80%are
sole proprietor Firm) other factors of production across the territories.
5. Centralized Control: The branches of multinational companies
*. MSMEs provide opportunities to the budding entrepreneurs by providing
various channels of Investment opportunity according to their class of spread in different countries are controlled and managed from the
Investment headquarters situated in the home country. All branches operate
*. MSMEs manufacture more than 6,000 products arraying from hi-tech to within the policy framework formed by headquarters.
traditional, industries
 13. Government Company: Any company in which not less than 51% of the
COMMERCE 1st Year,, 2 Marks Q & A: paid up share capital is held by the central movement or by the state
government or partly by central or state governments together.
1. Business:-Regular buying and selling of goods or services with an
objective of earning profit is known as Business. It is an economic activity. 14. Minimum Subscription : The minimum amount of capital to be collected
by a public company before its allotment of shares is known as "minimum
2. Profession:-profession is an occupation, which renders various services to subscription"
his clients with specialized and expert nature. Eg: Chartered Accountant,

Commerce Sir
Lawyer, Doctor etc.,
3. Employment: - The contract of service between the employer and the 15. Capital Subscription : A public company is allowed to raise
employee for Salary is known as Employment. A person who has given the their funds from the publicby issuing shares and debentures.
job is called as Employer. A person who works under the employer for 16. Service Enterprise: The enterprises which are involved in providing or
salary is called as an employee. rendering services are called as service enterprises.
4. Commerce : the organized system of distribution of goods and services
among people is called commerce .it creates utility to goods and services 17. Fixed capital: funds are required to purchase fixed assets like land and
5. Genetic Industry:-This industry is engaged in re-production and building, plant and machinery, and furniture and pictures; this is known as
multiplication of plants and animals with the aim of earning profit through fixed capital.
sale. .
18. Working capital: The funds required for operating its day to day

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Ex:-Plant nurseries. Poultry forms, cattle breeding etc.
6. Extractive Industry: This industry is concerned with extraction or requirements is called "working capital"
drawing out goods from the soil, air or water. .
Ex:-Mining Industry, coal, mineral, oil Industry, Rubber from forests etc., 19. Retained earnings: - the portion of the profits which is not distributed to
the among the shareholders in the business is called retained earnings.
7. Transportation : It is one of the aids to trade, which facilitates the
distribution of goods and service smoothly and timely. Transportation 20. Micro Enterprise: it is an enterprise where investment in plant and
creates place utility to goods and services. machinery does not exceed Rs 25 lack.
8. What is the Trade: Buying and selling of goods and services is called 21. Commercial Banks : Commercial banks occupy a vital position as they

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trade. provide funds for different purposes as well as for different time periods.
9. Entrepot trade: importing goods from one country with the intention of
exporting them to another country is called entrepot trade. 22. MSME (Small Scale Manufacturing Enterprises): A small enterprise
is an enterprise where the investment in plant and machinery is more than
10. Sole proprietorship: Is a form of business organization in which a single Rs. 25 Lack but does not exceed Rs.5 Core.
individual introduces his own capital, skill and intelligence in the 23. e- business( e-trading): performance of business activities, such as
management of its affairs and is solely responsible for the results of its designing products ,managing supply chain, operations marketing and
operation. offering services, to various stockholders using electronic Technologies.
24. What is E-Banking : Performing all banking operations by using their
11. Karta: - He senior male member of joint Hindu family is called as Karta. mobile phones is known as E-Banking.

12. Active Partner' or *Working Partner': The partners who actively 25. E-commerce: buying and selling of goods or services through computer
participate in the day-to-day operations of the business are known as active mediated networks.
partners or working partners.
ACCOUNTANCY 1st Year, 2 Marks Q & A: 13. Pass Book: - The Pass book is prepared by the banker on the name
of the customer who is having an account with the bank. Passbook is
1. What is a voucher? :-It is a written document in support of a
merely a copy of the customer’s account in the books of a bank.
transaction. It is a proof that a particular transactionhas taken
14. Debit Note : It is a document sent to the supplier while returning
place for the value stated in the voucher cash receipt invoice etc. the goods purchased on credit from him intimating that his account is
2. Account: - an account is summary of relevant transactions at one
debited to the extent of goods returned.
place relating to a particular head. It has three parts A) Title of the
15. Credit note: - it is a note prepared and sent the customer to inform

Commerce Sir
account. B) Left side of the Debit. C) Right side of the Credit. that his account is credited with the account of goods returned by
3. Book-keeping: - The trader records all these transactions in set of
him. It is a common practice to make it in Red ink.
books. The recording of transaction in set of books is called Book-
keeping. It is a permanent record of all business transactions. 16. Revenue expenditure: Revenue expenditure is recurring in nature
4. Accounting: AICPA Has defined the Accounting as "the art of and curd in the normal course of business activities this expenditure
recording classifying and summarizing in a significant manner in is spent for smooth running of daily operational transactions
terms of money transactions and events which in part, at least of a 17. Invoice: An invoice is a document issued by a seller to the buyer
financial character and interpreting the results thereof that indicates the quantities and costs of the products or services
5. Accounting cycle (equation): - An accounting cycle is a complete provider by the seller. ... Therefore, from a seller's point of view, an
sequence of accounting process that begins with the recording of invoice for the sale of goods and/or service is called a sales invoice...

Shailender :
business transactions, Journal, ledger, trial balance and financial 18. Drawings:- Cash, goods or services withdrawn by owner for self-
statement such as, Trading account, Profit &Loss account and consumption are called “Drawings”
Balance Sheet.
6. Double entry system: - the procedure of recording both the 19. Bank Reconciliation Statement (BRS):- it is a statement prepared
receiving and giving aspects related to the business transactions is to reconcile the difference between the balance as per cash book and
called as “Double Entry system”. pass book on any given dates.
7. Capital: - The amount invested by the owner for running of the 20. What is an overdraft? When a businessman withdraws excess
business is called Capital. amount from the bank account under this situation,the pass book

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8. Ledger: Ledger is a book in which all the accounts Viz, Personal shows a debit balance. This balance is called “Overdraft Balance” as
accounts, Real accounts and Nominal accounts, are maintained. per pass book
Ledger is also called book of secondary entry. 21. Trial Balance : Trial balance is a statement, prepared with the debit
9. Business entity concept: - As per this concept business and credit balances ofledger accounts to test the arithmetical
organizations are treated as separate entity which can be accuracy of the books.
distinguished from the owner. It helps to keep private affairs of the 22. Suspense Account : Difference in the trial balance may be temporarily
owners separate from the business affairs. posted to a specialaccount known as suspense account
10. Money measure concepts:- this concept suggest that accountancy 23. Bad debts : When goods are sold on credit basis, some of the
should record only the transactions which can be measured in terms customers may not be pay the amount. The debts which are not
of money collected and irrecoverable are known as Bad debts.
11. Trade discount: The discount / rebate offered by the supplier on the 24. Errors of Omission – When a transaction is completely or partly
catalogue price is know as trade discount. omitted from the books of accounts such error is known as Error of
12. Contra entry: - an entry which appears on both the sides of the Omission
three column cash book (Debit & Credit side) is called contra entry.
For contra entries letter `C` is written in L.F column.
ACCOUNTANCY 1st Year, 5 Marks Q & A: (3). What are the various types of errors? Explain with suitable examples.

(1).State the rules of debit and credit with examples. Ans: 1. Errors not disclosed by Trial Balance
. 2. Errors disclosed by Trial Balance
Ans: Rules of Debit and Credit
1. Personal Account 2. Real Account 1. Errors not disclosed by Trial Balance.
Debit the Receiver Debit what Comes i n
Credit the Giver Credit what goes out . a). Error of Principle: Transactions are recorded as per generally accepted
accounting principles. If any of these principles are violated or ignored, errors
3. Nominal Account

Commerce Sir
resulting from such violation are known as errors of principle.
Debit all expenses and losses
Credit all incomes and gains b). Error of Omission: When a transaction is completely or partly omitted from
(2). Breifly explain any 5 Concepts of accounting? the books of accounts such error is known as Error of Omission.

Ans: 1. Business Entity Concept: As per this concept, Business c). Error of Commission: This error arises due to wrong recording, wrong
organizations are treated as a separate entity which can be distinguished posting, wrong casting wrong balancing, wrong carrying forward .
from the "owners" or stakeholders who provide capital to the business.
d). Compensating Errors: The errors arising from excess debits or under debits
2.Dual Aspect Concept: Dual aspect concept is the basis for Double Entry of accounts being neutralized by the excess credits or under credits to the same

Shailender :
System of book keeping. All business transactions recorded n accounts have extent of some other account is compensating error .
two aspects: receiving benefit and giving benefit. .
II. Errors disclosed by Trial Balance
3. Going Concern Concept: As per this concept it is assumed that the
organizations will continue for a long time, unless it is closed as per the law a. Posting of transaction to wrong side of an account
to which it is subject. The financial statements are prepared at the end of
each financial year. . b. Posting of wrong amount to an account
4. Money Measurement Concept: In accounting, all the transactions are C. Errors in totaling

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recorded in terms of money. .
5. Cost Concept: As per this concept, an asset is ordinarily recorded at the d. Errors of Carrying Forward
price actually paid or incurred to acquire it, i.e., at its cost and this cost c. Posting of only one aspect of journal entry in to Ledger
becomes the basis for all subsequent accounting treatment for the asset.
f. Recording one aspect twice
6. Accounting Period Concept: An accounting period is the interval of
time, at the end of which the financial statements are prepared to ascertain
the financial performance of the business. As per the Income Tax Act every
business unit should prepare financial statements and pay tax on profits
every year.
వ్యాపార గణకశాస్రం( CEC- 1ST YEAR : Accountancy) లోని Unit Wise Ledger Accounts:
లెకకల వీడియోలు మీ మొబైల్ లోచూడాలనుకంటే , ఈ క్రంది బ్లూ కలర్ లింక్ పై క్లూక్ చేస్తే వీడియోస్
ఓపెన్ అవుతాయి , .(Mobile లో ఇంటర్నెట్ ఆన్ చేసి ఉండాలి ) చూడండి, Episode:1
IPE,MARCH ,2023 ( లేదా ) ప్రతి యూనిట్ లోని క్రంద ఉనె text Youtube లో గాని
‘Google’ లో గాని టైపు చేసి సెర్ు చేసిన చూడవచ్చు .
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Episode:2
About C.E.C Group and Commerce.
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Acconting Concepts:

https://youtu.be/lthzeSI9Waw
Trial Balance
Journal Entries.
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Episode:1
https://youtu.be/1QT31EyXbb0
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💐💐💐All the best Commerce Students💐💐💐

Episode:2

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Episode:3

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