Found 104 Articles for General Economics

What is Reverse Repo Rate? The Reverse Repo Rate is the interest rate at which the Central Bank of India, the Reserve Bank of India (RBI), borrows money from commercial banks for a short term. The reverse repo rate and repo rate form a pair of important monetary tools for controlling market inflation and liquidity. It must be noted that the repo rate, which is opposite to the reverse repo rate, is the interest the commercial banks pay to RBI when they borrow money from the latter for a short term. Banks also voluntarily park their excess money at ... Read More

What are Retained Earnings? Retained earnings or earnings surplus are part of the profit of an organization that is not distributed among shareholders as dividends. These are used for working capital requirements and can also be used to pay off any debt the company may have. Retained earnings can be found on the balance sheet under the item called shareholder’s equity. Usually, companies retain the profits if there is an opportunity to earn more profits by reinvesting the profits in some other initiatives. In such cases, the companies keep the profits for investment in more profitable projects so that they ... Read More

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, ... Read More

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 More

Introduction Rectification of errors is a term that is mostly associated with accounting. It refers to revising a mistake and making amendments to rectify the mistake. These errors can creep in while classifying these accounts, posting the journal entries to the ledger accounts, carrying the balance forward, etc. It must be noted that the accounts team of an organization usually works diligently to avoid any factual mistake. However, in many cases, they are unable to avoid the mistakes which seem correct at first sight. Therefore, the accounts team must carry on checking data even after these are accounted for. Many ... Read More

Introduction A partnership business consists of many individual partners who share the profit and losses of the firm according to the profit-sharing ratio mentioned in the partnership deed. The partnership deed is a legal document that contains all legal procedures that may be needed to follow while operating the partnership firm. However, when a partner retires or dies, a new partnership deed has to be created for the remaining partners. There are legal bindings as to how to proceed with the new deed in place after paying the due amount to the representative of the deceased or retired partner. A ... Read More

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 More

Introduction: What is GDP? Gross Domestic Product or GDP is the monetary value of all goods and services produced in a nation within a specified period of time, typically one year. Calculation of GDP is prepared on all final and finished goods. This is done to avoid double entry. That is why the value of final goods contributes to the measurement of GDP. The value of GDP is usually measured yearly but in some instances, the value may be calculated quarterly as well. GDP is a comprehensive parameter to check the economic health of an economy. The value of GDP ... Read More

Introduction: What is GDP? Gross Domestic Product or GDP is the economic value of all goods and services produced in a country within a specified period of time. Calculation of GDP is done on all final goods. This is so because if the value of intermediaries is taken, it may lead to double entry. That is why the value of final goods is taken to measure the value of GDP. The value of GDP is usually measured yearly; but in some instances, the value may be calculated quarterly as well. GDP is a comprehensive parameter to check the economic health ... Read More

Introduction: What is the Profit-Sharing Ratio? The term profit-sharing ratio is an essential factor in partnership firms. Profit-sharing is the ratio in which the firm's partners divide the profit from the business operation. The profit-sharing ratio is usually mentioned in the partnership deed of a business. As is evident, it is an important factor for every partnership firm. It is also notable that there must be a profit-sharing ratio which is followed by partners when a partnership firm earns profits. A partnership firm cannot exist without a profit- sharing ratio because in that case, the business’s profit cannot be ... Read More