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General Economics Articles
Page 2 of 10
Rules of Debit and Credit
Introduction Debit and credit are indispensable tools in accounting. Without debit and credit, accounting will be a big mess. Every accountant knows this. In keeping the records of business, therefore, debit and credit play a very important role. However, understanding the two terms and how to use them is not quite easy. Non-accounting professionals often get miffed by these two terms and which one to use while expressing a certain activity in accounting. Financial statements are divided into the following accounts − Assets Expenses Liabilities Equity, and Revenue This article discusses how debit and credit is applied to ...
Read MoreRural Credit
Introduction Rural credit is an extremely important step in financing agriculture, which is a major resource for generating food for millions of citizens. Many farmers in rural areas are unable to bear the burden of farming by themselves and they need assistance from either banks or the government. Rural credit, when provided to the right people, makes farming easier for the underprivileged farmers and artisans who reside in rural locations of the country. What is Rural Credit? India’s rural population is mostly engaged in agriculture. The people who are involved in agriculture need financial assistance to harvest crops. The ...
Read MoreSacrificing Ratio
What is Sacrificing Ratio? The term "sacrificing ratio" is used in partnership firms. Sacrificing ratio is the ratio in which the partners decide to share the losses when one of the partners of the firm dies or retires from the business. Sacrificing ratio is used to distribute the losses among the remaining partners when a partner goes out of the partnership firm. Usually, the assets and liabilities of the partnership firms need to be reassessed when one partner leaves the business. This results in either gain or loss. This is where the sacrificing ratio comes into play. The sacrificing ...
Read MoreSales Book and Sales Return Book
Introduction Both sales books and sales return books are crucial for the accounting and financial management of a business. They provide a chronological and systematic record of sales transactions and returns, which help understand the actual sales and how and why purchased goods have been returned. Let us learn what are sales books and sales return books, their content, and their advantages and disadvantages in this article. Sales books and sales return books are special types of registers or records in commerce and accounting that are used to track sales transactions and sales returns. Sales Books and its Contents Sales ...
Read MoreSEBI: Objectives and Functions
Introduction: What is SEBI? The Securities and Exchange Board of India (SEBI) is the regulatory body that manages and oversees the securities market in India. SEBI was established on April 12, 1988, as an autonomous and statutory body, under the Securities and Exchange Board of India Act, 1992. SEBI's primary goal is to keep the securities market fair. So, it primarily protects investors from unfair practices and promotes the development of the securities market in India. SEBI works as a watchdog that formulates rules and regulations and ensures their implementation to keep the securities markets fair and transparent. Structure of ...
Read MoreSecret Reserve
What is a Secret Reserve? A secret reserve is a hidden or undisclosed sum of funds that banks or other financial institutions set aside for unseen future needs. These funds are not publicly reported in their financial statements. These funds are meant for sudden needs; they are kept confidential for strategic reasons. Secret reserves are manually created by the accounting team by deliberately underreporting profits or overstating company liabilities to create a cushion against future losses or risks. The concept of secret reserves has been a story of much controversy and so their use has become less common nowadays due ...
Read MoreShapes of Total Product Marginal Product and Average Product Curves
Total Products, Marginal Products, And Average Products Total product, marginal product, and average product are used to analyze and examine the relationship between outputs and inputs in the production process. It is important to understand how changing inputs change the product output; so, the concepts of total, marginal, and average products are used to understand the relationship between inputs and outputs. Total Product (TP) TP means the total quantity of output generated by a firm or an entity during a given period. TP represents the sum total of all individual output units produced by utilizing various combinations of inputs, such ...
Read MoreReconstitution of A Partnership Firm: Admission of a Partner
Introduction A partnership firm has two or more members who share the profits or losses of the firm according to pre-set limits. These limits and all other rules and regulations that will guide the firm are mentioned in a partnership deed. The partnership deed is the Bible of a partnership firm. However, if no partnership deed is formed among the partners of the firm, the Partnership Act of 1932 is applied to the partnership firms in running the businesses. The partnership ratios mentioned in the partnership deeds may need to be restructured. This restructuring leads to a change in the ...
Read MoreRedemption of Debentures
What is Debenture? Debentures are long-term loans issued by corporate firms and governments to raise capital. For example, governments may, the government may raise money for building roads by issuing debentures. In such a case, those who buy the debentures are creditors, not shareholders. Like bondholders, debenture owners may also get interest on their investments. However, this is only the case with some types of debentures. The interest rate is also known as the coupon rate in the case of debentures and these rates are either fixed or floating in nature depending on the nature of debentures. Debenture holders cannot ...
Read MoreRepo Rate
Introduction The central banks of all countries form monetary policies to control the availability of liquidity in the markets according to the economic situation of the nation. The repo rate is probably the best of these policies that control the money supply to the secondary banks in an economy. The repo rate is the most influential tool in the hand of the authorized banks to maintain the day-to-day liquidity in an economy. It must be noted that commercial banks in which consumers deposit their money are secondary banks that run for profit. These banks borrow money from the central bank, ...
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