Found 107 Articles for Articles / Tutorial Titles

Introduction There is no limit on probable money deposits made by customers in a bank. However, in India, the Central Bank of India, the Reserve Bank has put a limit to which the banks can deposit the amount of loans in their possession. This is done to make sure that the banks are not over lending. Credit Creation Demand deposits are considered an important part of the money supply. By increasing demand deposits, the money supply can be expanded. The banking system is usually based on credit. Credit means getting the purchasing power now and paying for it in the ... Read More

What are liabilities? Liabilities mean the debt amount owed by a company to pay past transactions. A company may owe this payment to creditors, lenders, banks, or other financial institutions. These payments are recorded as credits in the balance sheet of a company. Usually, short-term liabilities are placed before long-term ones. According to the balance sheet, liabilities are total assets minus shareholders’ equity. Liabilities = Total Assets – Total Shareholders Equity Significance of liabilities section of the balance sheet The liabilities component of the balance sheet helps businesses increase their value creation and organize business operations processes. They also ... Read More

Coefficient of Correlation Coefficients of correlation are generally used in statistics to measure a relationship between two variables. The correlation generally shows a specific value of the degree of a linear relationship between two variables, say X and Y. There are many types of correlation coefficients that are used in statistics. However, Karl Pearson’s correlation (also known as Pearson’s R) is the correlation coefficient that is most frequently used in linear regression. Types of Correlation Coefficient Depending on the direction of the relationship between variables, correlation can be of three types, namely – Positive Correlation (0 to +1) Negative ... Read More

Introduction Joint stock companies are the leaders in their businesses and almost all bigwigs in their respective fields that we see on TV and in magazine advertisements are joint stock companies. Joint stock companies’ prowess is so heavy that sole proprietorships or partnerships cannot challenge them in their businesses. Joint stock companies are usually large-scale enterprises that have numerous shareholders and operate around the world. What is a Joint Stock company? A joint stock company is a commercial firm that has joint owners. Simply put, the organization is owned jointly by its owners. The owners own the company by purchasing ... Read More

What is Disposable Income? Disposable income is the money that is left over from the salary after one has paid central, state, and local taxes. It is also called disposable personal income (DPI). These three categories of taxes consist of income and wealth taxes and salary deductions for provident funds, retirement funds, and other costs. The taxes for permits, licenses and other fixed fees someone pays to a government agency at any level are also deducted from personal income to calculate disposable income. If someone has any funds that are withheld for retirement savings that are, as mentioned above, ... Read More

Introduction Like individuals, businesses also have circumstances that cover them up. It is important to learn about the environment of businesses because it offers the idea to rectify the mistakes and make productive decisions as and when needed. The circumstances around businesses create business environments. Business environments can be classified into five major categories which are the following − Legal Environment Economic environment Political Environment Social Environment Technological Environment Let us see each one in detail. Legal Environment The legal environment is comprised of laws and regulations enacted by governments and other legal authorities. It includes the laws ... Read More

What is Exchange Rate? The exchange rate is the price of a currency in comparison to another currency. It is either fixed by the central bank or determined by the market demand of demand and supply. When the central bank fixes the exchange rate, it is known as the fixed exchange rate. On the other hand, when the rate is fixed by demand and supply, it is known as a floating exchange rate. Characteristics of Exchange Rate An exchange rate is an indispensable tool in facilitating international trade. It also shows the comparative value of the currency. By ... Read More

Income and Employment Theory The determination of income and employment is related to the income and employment theory. The theory is an economic analysis related to the comparative levels of output, employment, and prices in an economy. By establishing the interrelation of these three macroeconomic factors, governments and economies try to create various policies that lead to economic stability. The contemporary interest in the income and employment theory started with the depth of the Great Depression of the 1930s in the US and Europe. At that time, economists failed to explain the persistently high levels of joblessness and the low ... Read More

Introduction Banks not only let us manage our wealth but they also guide us to invest money in various resources. Commercial banks are those banks that interact mainly with the public and so knowing about commercial banks is an important part of everyone’s knowledge. What are Commercial Banks? Commercial banks are financial institutions that deal in deposits and withdrawals of money for the general public. These organizations also provide loans for investment and other such activities. Commercial banks are profit-making institutions and they do business only in order to make a profit. Commercial banks are regulated by the central bank ... Read More

What is a Full Disclosure Principle? The full disclosure principle refers to the situation where a company should provide all necessary information about the company in its financial statements so that its stakeholders can be aware of it from all angles. Full disclosure leads to better transparency and efficiency of the operations of a company in the long run. According to the full disclosure principle, all information should be there in an entity's financial statements so that it affects a reader's understanding of those statements positively. However, the interpretation of the full disclosure principle is highly judgmental. It is ... Read More