What is Concept of Business

What is the Concept of Business The term business is used in different senses? In a functional sense, it is used to refer to the function or activities of an organization or individual. Sometimes it is used to refer to the enterprise or unit rendering the business. The term is also used in a very broad sense to embrace the whole business system.

Traditionally the term business referred to commercial activities aimed at making a profit or to organizations formed to make a profit. Indeed in the past economic theory made a fundamental assumption that profit maximization was the basic objective of every firm. The modern outlook is different. For many organizations profit maximization in the short run, not the primary objective. For them, profit is only secondary. There are many organizations both private and public. Which do not aim at a profit from their business? In short, the definition of a business as a commercial activity to make a profit or an organization formed to make a profit is a narrow one. Yet to a layman business still means industry and commerce.

The old concept of business

The old concept of business, condemning it to commerce and private profit, has undergone a radical change. Today, business is regarded as a social institution forming an integral part of the social system.

   

  The modern concept of business

 The modern concept of business is thus a very broad one. Business is viewed as a subsystem of the total social system. In our modern view of society is an ecological one. Ecology is concerned with the mutual relations of human populations or system with their environment. It is necessary to take this broad view because the influence and involvement of business are extensive. Business cannot isolate itself from the rest of society. Today the whole society is a business’s environment. 

Types of Branches of Accounting

What are the types of branches of Accounting The real record making period of bookkeeping is normally called accounting? Nonetheless, bookkeeping stretches out a long ways past the real making of records. Bookkeeping is worried

about the utilization to which these records are put, their examination and understanding. A bookkeeper ought to be worried about more than the record making stage. Specifically, he ought to be occupied with the connection between the money related outcomes and the occasions which have made them. He ought to be considering the different options open to the firm, and be utilizing his bookkeeping background keeping in mind the end goal to help the administration to choose the best arrangement of activity for the firm. The proprietor and director of a firm will require some bookkeeping learning all together that they may comprehend what the bookkeeper is letting them know. Speculators and others will require bookkeeping learning all together that they may read and comprehend the money related proclamations issued by the firm and change their associations with the firm as needs are. Hence bookkeeping is a more extensive term and incorporates the recording, arranging and compressing of business exchanges in term of cash, the planning of money related reports, the examination, and understanding of these reports for the data and direction of the administration. 

What are the Branches of Accounting 

- Financial Accounting: The primary reason for this branch of bookkeeping is to learn benefit or misfortune amid a particular period, to indicate money related position of the business on a specific date and to have control over the company's property. Such bookkeeping records are utilized to confer helpful data to outcasts and to meet the lawful necessities. 

- Cost Accounting: The primary point of cost bookkeeping is to discover taken a toll identifying with the different exercises of the business and to have fetched control. The cost bookkeeper is required to collect and translate cost information for the utilization of administration in controlling current operations and in getting ready for what's to come. 

- Management Accounting: it supplies the administration noteworthy data to help the administration to release its different capacities, for example, arranging, control, assessment of execution and basic leadership.

Working Capital Loan Source and Forms

What is the Source Working Capital Loan SourceThe bank credit is the primary institutional source for a working capital loan? To obtain short term bank credit, working capital requirements have to be estimated by the borrowers and the banks are approved with the necessary supporting data. The banks determine the maximum credit based on the margin requirements of the security The margin represents a percentage of the value of the asset offered as security by the borrower.

Form of working capital Loan 

After getting the overall credit limit sanctioned by the banker, the borrower draws fund periodically. The following forms of working capital loan are available to him :

Loan Arrangement: under this arrangement, the entire amount of loan is credited by the bank to the borrower’s account. In case the loan is repaid in installments interest payable on actual balances outstanding.

Overdraft Arrangements: under this arrangement, certain facilities are available to the borrowers which are not available under the loan arrangements. With the overdraft arrangements, the borrower is allowed to overdraw on his current account with the bank up to a stipulated limit

Cash credit: This form of credit is operated in the same way as the overdraft arrangement The borrower can draw up to a stipulated limit based on the security margin. He has to pay 1% as commitment charges on the unutilized balance during the period. Cash credit is usually allowed against pledge or hypothecation of goods and the borrower can provide alternative securities from time to time.

What is Company Definition and Legal Meaning

The word company has no strictly technical or legal meaning. In terms of the Companies Act. A company means a company formed and registered under the company act. In common law, a company is a legal person or legal entity separate from and capable of surviving beyond the lives of its members. Like any juristic person, a company is legally an entity apart from its members capable of right and duties of its own and endowed with the potential of perpetual succession

But the company is not merely a legal institution it is rather a legal device for the attainment of any social or economic end and to a large extent publicly and socially responsible it is, therefore, a combined political social economic and legal institution thus the term has been variously described it is a means of co-operation in the conduct of an enterprise Corporate device is one form of associated enterprise. It is an intricate, centralized, economic administrative structure run by professional managers who hire capital from the investors.

The practical way a company means a company of a certain person

In a practical way a company means a company of certain person registered under the company Act Two or more persons who are desirous of carrying on joint business enterprises have the choice of either forming a company or a partnership. Partnership is a suitable device for small scale business which can be financed and managed by a small group of partners who take person interest and there is mutual trust and confidence among them. But  where the enterprise requires a rather greater mobilization of capital which the resources of a few persons cannot provide the formation of a company is the only choice Even for small scale business the choice of a company would be better as this is the only form of business organization which offer the privilege of limiting personal liability for business debts

Final Accounts Prepared to Achieve Goals of Accounting

Why we prepare final accounts. Final accounts are prepared to achieve the goals of accounting. So as to know the profit and loss earned by a firm, Income proclamation or Trading and profit and loss account are readied. Accounting report or position proclamation will depict the monetary state of the firm on a specific date. These two proclamations, for example, Trading and Profit and Loss Account and Balance Sheet are set up to give the last after-effects of the business that is the reason both these are all in all called as final accounts. Along these lines, last records incorporate the arrangement of:

•           Trading and Profit and Loss Account

•           Balance Sheet

Final accounts are the methods for passing on to the executives, proprietors and intrigued untouchables a succinct picture of productivity and monetary position of the business. The arrangement of the last records isn't the initial phase in the bookkeeping procedure yet they are the finished results of the bookkeeping procedure which give brief bookkeeping data of the bookkeeping time frame after the bookkeeping time frame is finished. These records rundowns all the bookkeeping data recorded in the auxiliary books and the record running into hundreds or thousands of pages

Trading and Profit and Loss Accounts:

This record is comprised of two records for example trading and Profit and Loss account. Trading concerns i.e. those concerns which buy products from one market and move these in another market at a Profit, set up this records This record is the plan to realize the Trading results or gross profit on Trading, i.e how much gross profit of the business has earned from purchasing and moving amid a specific period. The distinction between the deals and cost of merchandise sold is gross profit. To calculate the cost of merchandise sold, we think about opening stock, buys, direct costs on buying or assembling the products and shutting stock. The equalization of this record speaks to net benefit or gross shortfall and is exchanged to the benefit and deficit account. Then again Profit and Loss account is set up to figure the net profit of the business. There are sure things about salaries and costs of the business which must be contemplated for ascertaining the net profit of the business. These are circuitous nature, for example concerning the entire business and identifying with different exercises which are finished by the business to make the merchandise accessible to the customers. Backhanded costs might move and conveyance costs, the board costs, money related costs and so on. The idea of this record is ostensible record and equalization of this record is exchanged to the Balance sheet's Capital Account as the entire profit or loss will be that of the proprietor and it will increment or lessening his capital.