100% Sure Topics For Paper Commerce: by Talvir Singh

TARGET JRF WITH AIR
100% Sure Topics

For Paper Commerce
PART 1 BY TALVIR SINGH

TALVIR SINGH
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NTA NET CATEGORY
JRF IN COMMERCE & MANAGEMENT
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Question:1. Jio was the first company that entered the Indian market by offering unlimited
plans to the people at a low price as compared to its competitors. Identify which area of
importance in the business environment has been mentioned here.
Options:
(a) It helps in policy and strategy formulation.
(b) It helps in improving performance.
(c) It helps in coping up with rapid changes.
(d) It provides the first mover’s advantage.
Question:1. Jio was the first company that entered the Indian market by offering unlimited
plans to the people at a low price as compared to its competitors. Identify which area of
importance in the business environment has been mentioned here.
Options:
(a) It helps in policy and strategy formulation.
(b) It helps in improving performance.
(c) It helps in coping up with rapid changes.
(d) It provides the first mover’s advantage.
Question 2: Which among the following is NOT a function of ECGC?
Options:
(a) It provides credit risk insurance.
(b) It enables exporters to be benefitted from better facilities.
(c) It provides overseas investment insurance.
(d) It provides financial and other assistance to importers and exporters.
Question 2: Which among the following is NOT a function of ECGC?
Options:
(a) It provides credit risk insurance.
(b) It enables exporters to be benefitted from better facilities.
(c) It provides overseas investment insurance.
(d) It provides financial and other assistance to importers and exporters.
Question 3: A reserve capital is created out of which of the following shares of capital?
Options:
(a) Uncalled shares of capital
(b) Authorised shares of capital
(c) Subscribed shares of capital
(d) Allotted shares of capital
Question 3: A reserve capital is created out of which of the following shares of capital?
Options:
(a) Uncalled shares of capital
(b) Authorised shares of capital
(c) Subscribed shares of capital
(d) Allotted shares of capital
Question 4:
Assertion (A): According to the Companies Act, 1956, companies were not permitted to issue
shares at a discounted price.
Reasoning (R): The discounted shares are only meant to be issued to the employees and
directors of the company and are known as sweat equity shares.
Options:
(a) (A) is correct but (R) is not the correct explanation of (A).
(b) (A) and (R) are correct and (R) is the correct explanation of (A).
(c) (A) is incorrect but (R) is correct
(d) (A) and (R) both are incorrect
Question 4:
Assertion (A): According to the Companies Act, 1956, companies were not permitted to issue
shares at a discounted price.
Reasoning (R): The discounted shares are only meant to be issued to the employees and
directors of the company and are known as sweat equity shares.
Options:
(a) (A) is correct but (R) is not the correct explanation of (A).
(b) (A) and (R) are correct and (R) is the correct explanation of (A).
(c) (A) is incorrect but (R) is correct
(d) (A) and (R) both are incorrect
Question 5:
Statement I: The Z-test is used by a researcher when the sample size is found to be greater
than 30 and the population’s standard deviation is known.
Statement II: The t-test is performed by a researcher when the sample size is less than 50 and
the population’s standard deviation is unknown.
Options:
(a) Only statement I is correct.
(b) Only Statement II is correct.
(c) Both statements are correct.
(d) Both statements are incorrect.
Question 5:
Statement I: The Z-test is used by a researcher when the sample size is found to be greater
than 30 and the population’s standard deviation is known.
Statement II: The t-test is performed by a researcher when the sample size is less than 50 and
the population’s standard deviation is unknown.
Options:
(b) Only Statement II is correct.
Question 6: Which among the following represents the power of the test in a Z test?
Options:
(a) The null hypothesis is true and rejected.
(b) The null hypothesis is true and not rejected.
(c) The null hypothesis is false and not rejected.
(d) The null hypothesis is false and rejected.
Question 6: Which among the following represents the power of the test in a Z test?
Options:
(a) The null hypothesis is true and rejected.
(b) The null hypothesis is true and not rejected.
(c) The null hypothesis is false and not rejected.
(d) The null hypothesis is false and rejected.
• Explanation: When the null hypothesis is false and it is also rejected, then this situation is
known as the power of the test in a Z-test. It is given in the following figure.
Question 7: Analyse the following statements:
Statement I: Average fixed curve (AFC) is a downward sloping curve; appears as a rectangular
hyperbola.
Statement II: Marginal cost (MC) is a curve that is U-shaped.
Options:
(b) Only statement II is correct.
Statement I: Average fixed curve (AFC) is a downward sloping curve; appears as a rectangular
hyperbola.
Statement II: Marginal cost (MC) is a curve that is U-shaped.
Options:
Statement I: The linear isoquant is a type of isoquant curve used for factors of production that
are perfectly substitutability.
Statement II: The kinked isoquant curve is used when there is a limited substitution among
capital and labour.
Options:
Statement I: The linear isoquant is a type of isoquant curve used for factors of production that
are perfectly substitutability.
Statement II: The kinked isoquant curve is used when there is a limited substitution among
capital and labour.
Options:
Question 9: Which among the following is a recommendation of the Narasimham Committee
for banking sector reforms in India?
Options:
(a) An increase in SLR and CRR.
(b) A decrease in SLR and CRR.
(c) An increase in repo rate.
(d) None of the above
Question 9: Which among the following is a recommendation of the Narasimham Committee
for banking sector reforms in India?
Options:
(a) An increase in SLR and CRR.
(b) A decrease in SLR and CRR.
(c) An increase in repo rate.
(d) None of the above
Q10.Assertion (A): RBI increases the repo rate to increase the money supply in an economy.
Reason (R): A decrease in the repo rate to encourages various banks to take loans from RBI.
Options:
(a) Both (A) and (R) are correct and (R) is the correct explanation of (A).
(b) Both (A) and (R) are incorrect and (R) is the incorrect explanation of (A).
(c) (A) is true and (R) is false.
(d) (A) is false and (R) is true.
Q10.Assertion (A): RBI increases the repo rate to increase the money supply in an economy.
Reason (R): A decrease in the repo rate to encourages various banks to take loans from RBI.
Options:
(a) Both (A) and (R) are correct and (R) is the correct explanation of (A).
(b) Both (A) and (R) are incorrect and (R) is the incorrect explanation of (A).
(c) (A) is true and (R) is false.
(d) (A) is false and (R) is true.
TDS RATES
If the PAN
not
furnished
TDS @ 20%
TDS RATES
Partly Agriculture Income and Partly Business Income
Nature of income Income tax Amount of Amount of non-

rule applicable agricultural agricultural income
income
Income form sale of tea Rule 8 60% of such 40% of such income
manufactured or grown in India income
Income from growing and Rule 7A 65% of such 35% of such income
manufacturing of rubber income
Income derived from sale of coffee Rule 7B(1) 75% of such 25% of such income
grown and manufactured in India income
Income derived from sale of coffee Rule 7B(1A) 60% of such 40% of such income
grown, cured, roasted and income
grounded in India
Permanent Account Number shortly known as PAN is a
alphanumeric code, comprising of ten characters. It is
issued by the Income tax department, to those assessees
who make application in the prescribed format. The
account number is distinct for every assessee and has a
lifetime validity, throughout the country.
TAN or otherwise known as Tax deduction and collection

Account Number, is a distinct alphanumeric code
allotted by the Income tax Department to any person
who is liable to deduct or collect tax at source. It is a ten
digit number which must be quoted while filing
TDS/TCS return, or any other interaction with the
income tax department concerning TDS/TCS.
Maximum period of carry forward of losses & Manner of set
off of brought forward losses
Order of set off of losses
Functional Foremanship by Taylor
Taylor proposed having eight foreman in total; four foreman for planning and four for production. The eight
specialized foreman together co-manage all of the factory workers.
Planning Foreman Production Foreman

 Route Clerk: Lays out the sequence of
operations and determines the route  Speed Boss: Guarantees timely work from the
through which materials should be factory employees and minimizes production
processed. delays.
 Instruction Card Clerk: Drafts instructions  Gang Boss: Arranges materials, machines and
for the workers so they understand their tools so they’re always ready for the workers
individual jobs and tasks. who will be using them.
 Time and Cost Clerk: Sets the schedule for  Repair Boss: Assures proper maintenance of
completion of the project and prepares a machines and tools, and maintains the overall
budget for how much it will cost. work worthless of the factory.
 Disciplinary: Makes rules and regulations  Inspector: overseas the quality of the product
and ensures the orderly performance of made by the workers.
factory jobs.
Contribution
 The important element of the marginal cost equation is the 'contribution' factor which is resulted from the sales value
after deduction of variable costs.
 It has been stated above that 'contribution' is the composition of fixed costs plus profit. Contribution is also known as
gross margin.
 Contribution is the difference between sales and marginal cost. Contribution enables to meet fixed costs and add to
the profit.
Contribution = Sales - Marginal cost OR C=S-MC
Contribution = Sales - Variable cost OR C=S-VC

Contribution = Fixed cost + Profit OR C=FC+P
Profit-Volume Ratio
The profit-volume ratio, popularly known as the P/V ratio, expresses the relation of contribution to sales. This
ratio is also known as contribution to sales or the marginal income ratio.
Formula of Margin of Safety
Accounting Concepts
• Accounting Concepts can be understood as the basic accounting assumption, which acts as a foundation for the
preparation of financial statement of an enterprise. Indeed, these form a basis for formulating the accounting
principles, methods and procedures, to record and present the financial transactions of business.
• These concepts provide an integrated structure and rational approach to the accounting process. Every financial
transaction that occurs is interpreted taking into consideration the accounting concepts, which guides the accounting
methods.
Business Entity Concept: The concept assumes that the business Realization Concept: As per this concept, revenue should be
enterprise is independent of its owners. recorded by the firm only when it is realized.
Money Measurement Concept: As per this concept, only those Accrual Concept: The concept states that revenue is to be
transaction which can be expressed in monetary terms are recognized when they become receivable, while expenses should
recorded in the books of accounts. be recognized when they become due for payment.
Cost concept: This concept holds that all the assets of the Periodicity Concept: The concept says that financial statement
enterprise are recorded in the accounts at their purchase price should be prepared for every period, i.e. at the end of the
Going Concern Concept: The concept assumes that the business financial year.
will have a perpetual succession, i.e. it will continue its Matching Concept: The concept holds that, the revenue for the
operations for an indefinite period. period, should match the expenses.
Dual Aspect Concept: It is the primary rule of accounting, which
states that every transaction effects two accounts.
Accounting Convention
• Accounting Conventions, as the name suggest are the practice adopted by an enterprise over a period of
time, that rely on the general agreement between the accounting bodies and helps in assisting the
accountant at the time of preparation of financial statement of the company.
• For the purpose of improving quality of financial information, the accountancy bodies of the world may
modify or change any accounting convention. Given below are the basic accounting conventions:
Disclosure: This Materiality: This

Consistency: Financial
principle state that the concept is an exception
statements can be Conservatism: This
financial statement to the full disclosure
compared only when the convention states
should be prepared in convention which
accounting policies are that the firm should
such a way that it fairly states that only those
followed consistently by not anticipate
discloses all the items to be disclosed
the firm over the period. incomes and gains,
material information to in the financial
However, changes can be but provide for all
the users, so as to help statement which has a
made only in special expenses and losses.
them in taking a significant economic
circumstances.
rational decision. effect.
In absence of partnership deed
Every partner has a right to take part in the conduct of the business of the firm and also the
right of free access to all records, books and accounts of the firm.
Partners share profits and losses equally. It is so, even when partners contribute capital
unequally.
No interest is to be charged on drawings.
On amounts advanced by a partner to the firm in excess of his agreed share of capital, the
partner is entitled to receive interest on such excess at the rate of 6% per annum. Such interest
is payable even if there is a loss.
Partners are not entitled to any interest on capital contributed by them nor can they claim any
salary. (In case deed provides for payment of interest on capital or salary, it is payable only if
there is a profit.)
In absence of partnership deed
• Sharing profit and losses: equally

• Interest on capital: no interest on
capital is to be paid
• Interest on drawings: no interest on
drawings is to be charged
• Interest on advances or loans by
partner: 6% per annum, search
interest is payable even if there are
losses
• Salary or commission to partner: no
remuneration is to be paid to any
partner for taking part in conduct of
business
Fiscal Policy Monetary Policy
If the revenue exceeds expenditure, then The primary purposes of the monetary policy
this situation is known as fiscal surplus, include bringing price stability, controlling
whereas if the expenditure is greater than inflation, strengthening the banking system,
the revenue, it is known as the fiscal deficit. economic growth, etc. The measures
The main objective of the fiscal policy is to adopted by the apex bank to control credit in
bring stability, reduce unemployment and the economy are broadly classified into two
growth of the economy. categories:
The instruments used in the Fiscal Policy General Measures (Quantitative Measures):
are the level of taxation & its composition Bank Rate
and expenditure on various projects. There Reserve Requirements i.e. CRR, SLR,
are two types of fiscal policy, they are: etc.
Expansionary Fiscal Policy: The policy in Repo Rate Reverse Repo Rate
which the government minimizes taxes and Open market operations
increase public spending. Selective Measures (Qualitative Measures):
Contractionary Fiscal Policy: The policy in Credit Regulation
which the government increases taxes and Moral persuasion
reduce public expenditure. Direct Action
Issue of directives
HORIZONTAL VERTICAL CONGLOMERATE
DIVERSIFICATION DIVERSIFICATION DIVERSIFICATION
This strategy of This form of CONCENTRIC In this form of
diversification diversification DIVERSIFICATION diversification, an
refers to an entity takes place when a In this form of a entity launches new
offering new company goes diversification products or services
services or back to a previous strategy, the entity that have no
developing new or next stage of its introduces new relation to the
products that production cycle. products with an current products or
appeal to the For example, a aim to fully utilize distribution
firm’s current company involved the potential of the channels. A firm
customer base. in the prevailing may adopt this
For example, a reconstruction of technologies and strategy to appeal
dairy company houses starts marketing system. to an all-new group
producing cheese selling For example, a of customers. The
adds a new construction bakery making high growth scope
variety of cheese materials and bread starts and return on
to its product paints. It may be producing biscuits. investment in a new
line. forward market segment
integration or may prompt a
backward company to take
integration. this option.
Liberalized Remittance Scheme
Liberalized Remittance Scheme
•This is the scheme of the Reserve Bank of India, introduced
in the year 2004.
•Its regulations are provided under Foreign Exchange
Management Act(FEMA),1999.
•Under the scheme, all resident individuals, including minors,
are allowed to freely remit up to USD 2,50,000 per financial
year (April – March) for any permissible current or capital
account transaction or a combination of both.
•Under LRS, individuals can make remittances for overseas
education, n travel, medical treatment, maintenance to
relatives living abroad, gifting and donations.
•Not Eligible: The Scheme is not available to corporations,
partnership firms, Hindu Undivided Family (HUF), Trusts etc.
•Though there are no restrictions on the frequency of
remittances under LRS, once a remittance is made for an
amount up to USD 2,50,000 during the financial year, a
resident individual would not be eligible to make any further
remittances under this scheme.
What will the CCPA do if any goods or services are found not meeting
these standards?
• For manufacture, selling, storage, distribution, or

import of adulterated products, the penalties are:
• If injury is not caused to a consumer, fine up to Rs 1
lakh with imprisonment up to six months;
• If injury is caused, fine up to Rs 3 lakh with
Penalties imprisonment up to one year;
• If grievous hurt is caused, fine up to Rs 5 lakh with
imprisonment up to 7 years;
• In case of death, fine of Rs 10 lakh or more with a
minimum imprisonment of 7 years, extendable to
imprisonment for life.
How will it deal with false or misleading advertisements?
• The authority may also impose a penalty up to Rs 10 lakh,

with imprisonment up to two years, on the manufacturer
or endorser of false and misleading advertisements.
• The penalty may go up to Rs 50 lakh, with imprisonment
up to five years, for every subsequent offence committed
Penalties by the same manufacturer or endorser.
• CCPA may ban the endorser of a false or misleading
advertisement from making endorsement of any products
or services in the future, for a period that may extend to
one year.
• The ban may extend up to three years in every subsequent
violation of the Act.
The District CDRC
Appeal
within 45
days
The State CDRC
Appeal
within 30
days National CDRC. Appeal to
Supreme court
within 30 days
CSR & Companies Act, 2013
• Companies Act,2013 is a landmark legislation that made India the first country to mandate and quantify
CSR expenditure.
• CSR - Section 135 of the Companies Act, 2013.
 Every company, private limited or public limited, which either has a net worth of Rs 500 crore
or a turnover of Rs. 1,000 crore or net profit of Rs. 5 crore, needs to spend at least 2% of its
average net profit for the immediately preceding three financial years on CSR activities.
 List of eligible CSR activities is contained in Schedule VII of the act. They include eradicating
extreme hunger and poverty, promotion of education etc.
 The corporations are required to setup a CSR committee which designs a CSR policy which is
approved by the board.
 The act also has penal provisions for failure to abide by the norms.
Ethical Model
(1930-1950)
Statist Model
(1950-1970)
Liberal Model
(1970-1990)
Stakeholder Model
(1990-Present)
Evolution of Models of CSR
Ethical Model Gandhi Trusteeship Theory-Under this notion the businesses were Ethical Model motivated to
(1930-1950) manage their business entity as a trust held in the interest of the community.1930-1950) Ex-efforts
of Tata group directed towards the well being of the society
Statist Model Jawahar Lal Nehru-Post Independence, India adopts mixed and socialist kind Statist Model of
(1950-1970) economy. The important feature was that the state ownership and legal requirements（1950-
1970s)decided the corporate responsibilities.
Liberal Model Milton Friedman- The model largely surges that corporate responsibility is Liberal Model not the
(1970-1990) primary responsibility of the businesses, it recommends instead corporate be（1970s-1990s)
confined to its economic bottom line.
Stakeholder Model R. Edward Freeman- The model expects companies to perform according Model (1990-to"triple
(1990-Present) bottom line“ approach: People, Planet & Profits.
Pyramid Model of CSR by Archie Carroll
It a simple framework of how and why organizations should meet social
responsibilities.
Key Features of Caroll's Pyramid

• CSR is built on the foundation of profit-
profit must come first.
• Then comes the need for a business to
ensure it complies with all laws &
regulations.
• Before a business considers its
philanthropic options, it also needs to meet
its ethical duties.
EPRG FRAMEWORK
• EPRG model, sometimes called also as EPG model, is used
in the International Business.
• Introduced by Perl mutter in 1969.
• The strategy of the organization is characterized by three
factors: Ethnocentrism, Polycentrism and Geocentrism.
• Hence, the original name - EPG.
• Wind, Douglas and Perl mutter in 1973 extended this
model by another factor - Regiocentrism.
• This model aims to identify the orientation of the
organization. The strategy can be differently oriented,
indeed. As a result, costs and profits are generated in
slightly different ways, depending on the mentioned kind
of orientation
• It is important that different activities of the organization
are consistent with each other at various stages
• For an organization to operate efficiently in the market is
important that the culture of organization, its marketing
strategy, etc. are consistent Introduction To EPRG Model
Trade Related Modes
Exporting-Exporting is the most desirable entry mode for a new entrant in the
international business. If selling in an overseas market proves successful, gradually
other modes of entry can be tried.
International Sub-contracting-It is possible when a firm in a host country has surplus manufacturing
capacity. They supply materials, semi-finished products etc., to the host company for producing final
goods that will be bought back by the foreign company
Countertrade-This is a form of trade in which a seller and a buyer from different countries
exchange goods for goods with little or no case changing hands.
Management Contract-Management contracts are agreements where MNCs, for a fee, train local
employees and manage foreign based facilities for a prescribed time period.
Transfer Related Modes
International Licensing-Under a licence agreement, one firm permits another to use its
intellectual property for a compensation called royalty
International Leasing-In International Licensing, an MNC (lessor) out its new or used
equipment to the local company (lessee).
International Franchising- This involves granting of right by a company (franchisor) to another (franchisee)
to do business in a specified manner. The franchisor receives royalty calculated at a given percentage on
sales.
Build-Operate-Transfer (BOT) or turnkey operations-In BOT, a foreign investor assumes responsibility for
the design and the construction of an entire operation and upon completion of the project, turns the
project over to the purchaser and hands over management to local personnel whom it has trained.
FDI Related Modes
Branch Office- An MNC opens a branch office in a host country. The branch may be
required to engage in production and operating activities, but fully monitored by the
parent company.
Co-operative Joint venture/Strategic Alliance/ Non-equity Alliance- It can involve joint

research efforts, technology sharing, joint use of production facilities, marketing one
another’s products, or joining forces to manufacture components.
Equity Joint-Venture- Equity joint venture is a shared ownership in a foreign business.

Generally, the venture is 50-50 ownership firm in which there are two (or more) parties,
each holding a 50 percent ownership stake.
Wholly-owned subsidiary-It involves 100 percent ownership by an MNC in a venture located

in a host country. It may involve setting up a totally new project or acquisition of an exiting
company.
Evolution of Marketing
Product Emphasis On
Producing
Concept
Goods
Product Producing Do Everything

Concept Quality Goods Possible
Aggressive Holistic
Selling
Selling & Concept
Concept Promotion
Marketing Satisfying
needs and
Concept wants
Emphasis Customer
Social Relationship
Social Relationship
Concept Concept
Consciousness management
Needs, Wants &Demands
Needs are the essential things to fulfil the states of deprivation for our survival.
“Maslow’s Hierarchy of Needs” or so called “Five-tier Modal of Human Needs” has specified human Needs into five levels
as in the following:
The “Five Types of Needs” that marketers should know in order to distinguish the type of customer’s needs are as
following:
1) Negative Demand –
 Dental work where people don’t want problems with their teeth and use preventive measures to avoid the same.
 Forms of demand in Insurance, which people should have but they delay buying an insurance policy.
2) Unwholesome demand (Another type of negative Demand) -Best example of unwholesome demand are cigarettes,
alcohol, pirated movies, guns etc.
3) No demands - The best example for the same can be education courses where there is very low demand or no demand
at all. Such cases are very hard to counter.
4) Latent Demand - The best example of latent demand are normal phones vs smart phones.
5) Declining demand - For example, when CD players were introduced and IPOD came in the market, the demand for
Walkman went down.
6) Irregular demand - The best example of irregular demand is seasonal products like umbrellas, air conditioners or resorts.
7) Full market demand - The best examples for this type of demand are the demand for smartphones like MI, OnePlus, etc.
The products of these brands get sold out whenever they launch a new model.
8) Overfull demand -This type of demand can usually be seen in occasional products like the cement industry where the
demand is occasional but very high.
Alternative Patterns to Select the Target Market
SINGLE-SEGMENT SELECTIVE PRODUCT
Philip Kotler describes five CONCENTRATION SPECIALIZATION SPECIALIZATION
alternative pattern to select the
M1 M2 M3 M1 M2 M3 M1 M2 M3
target market, selection of a
suitable option depends on P1 P1 P1
situations prevailing inside and
outside the company. P2 P2 P2
P3 P3 P3
WOODLAND SHOES MCDONALDS BAJAJ
Five basic strategies for target
market selection: MARKET FULL MARKET
1. Single Segment Targeting SPECIALIZTION COVERAGE
2. Selective Targeting M1 M2 M3 M1 M2 M3
3. Mass Market Targeting P1 P1
4. Product Specialization P= Product
5. Market Specialization P2 P2
M= Market
P3 P3
HIMALAYAN PUBLICATION COKE AND PEPSI
Target Market Approaches/Coverage Strategies
Same product to all consumers (no

Mass marketing
segmentation)
Segment Different products to one or more
Marketing segments(some segmentation)
Different products to subgroups within
Niche marketing segments (more segmentation)
Products to suit the tastes of individual
Micromarketing and locations(complete segmentation)
Tailoring brands/promotions to local
Local marketing customer groups
Individual Tailoring products/programs to
marketing individual customers
BRAND DEVELOPMENT STRATGIES
BRAND DEVELOPMENT STRATGIES
Four views of Consumer Decision Making
Tax incidence vis- a - vis Residential status
Resident or Resident but not Ordinarily Non-
Where tax incidence arises in case of resident & Resident (only individual or Resident
ordinarily Resident HUF)
Income received in India (whether accrued in or TAXABLE TAXABLE TAXABLE
outside India)
Income deemed to be received in India (whether TAXABLE TAXABLE TAXABLE
accrued in or outside India)
Income accruing or arising in India (whether received TAXABLE TAXABLE TAXABLE
in India or outside India)
Income deemed to accrue or arise in India (whether TAXABLE TAXABLE TAXABLE
received in India or outside India)
Income received and accrued outside India from a TAXABLE TAXABLE NOT
business controlled or a profession set up in India TAXABLE
Income received and accrued outside India from a TAXABLE NOT TAXABLE NOT
business controlled from outside India or a profession TAXABLE
set up outside India
Income earned and received outside India but later on NOT TAXABLE NOT TAXABLE NOT
remitted to India (whether tax incidence arises at the TAXABLE
time of remittance)
1. Authorized Share Capital
Authorized Share Capital is the total Capital that a company accepts from its investors by issuing shares
which are mentioned in the official document of the company. The MOA (Memorandum of Association) of
every company = specifies the amount of Authorized Share Capital.
It is also called as Registered Capital or Nominal Capital because with this Capital a company is registered.
2. Issued Share Capital
Issued Share Capital is the part of Authorized Share Capital issued to the public for subscription. And this Act
of issuing Share is called Issuance, allocation or allotment. In a simple way, you can say that Issued Share
Capital is the subset of the Authorized Share Capital. After the allotment of shares, a subscriber becomes
the shareholder.
Authorized Share = Issued Share + Unissued Share.
3. Subscribed Capital
Subscribed Capital is the part of issued Capital which has been taken off by the public. It is not mandatory
that the issued Capital is fully subscribed to by the public. It is that part of the issued Capital for which the
application has been received by the company.
Issued Capital = Subscribed + Unsubscribed Capital
Example – If a company offers 16000 shares of Rs. One hundred each and the public applies only for 12000
shares, then the issued Capital would be Rs 16 lakh, and Subscribed Capital would be Rs 12 lakh. Issued
Share is equal to the sum total of share outstanding and treasury shares.
4. Called-Up Capital
Called up Capital is the part of the Subscribed Capital, which includes the amount paid by the shareholder.
The company does not receive the entire amount of Capital at once. It calls upon the part of subscribed
Capital when needed in installments.
The remaining part of the Subscribed Capital is called Uncalled Capital.
5. Paid-Up Capital
The part of Called-up Capital which is paid by the shareholder is called Paid-up Capital. It is not mandatory
that the amount called by the company is paid by the shareholder. The shareholder may pay half the amount
of the called up Capital, which is called as Reserved Capital.
As the name reserve means to keep some amount in the treasury of the company. This is quite useful in case
of winding- up of the company.
Bonus Issue
• Companies issue bonus shares to encourage retail participation and increase their equity base.
• When price per share of a company is high, it becomes difficult for new investors to buy shares of that
particular company. Increase in the number of shares reduces the price per share. But the overall capital
remains the same even if bonus shares are declared.
• Companies Act, 1956, does not prescribe any specific procedure or conditions for issue of bonus
shares except that Table A contains provision relating to capitalization of profits.
• Companies Act, 2013 on the other hand has detailed the conditions for issue of bonus shares and also
the sources from which bonus issue can be made.
• Issue of bonus shares is covered under Section 63 of the Companies Act, 2013 read with relevant
(draft) rules issued there under.
• However, no issue of bonus shares shall be made by capitalizing reserves created by the revaluation of
assets. The bonus shares shall not be issued in lieu of dividend.
Conditions
• Only fully paid up bonus shares can be issued to the members of the company.
• Articles must contain provision for issue of bonus shares
• Bonus issue must be authorised by the members of the company on recommendation of Board.
• Company should not have defaulted in payment of interest or principal in respect of fixed deposits or
debt securities issued by it.
• Company should not have defaulted in respect of the payment of statutory dues of the employees, such
as, contribution to provident fund, gratuity and bonus.
• Partly paid-up shares, if any outstanding on the date of allotment, should be made fully paid-up.
• The bonus shares shall not be issued in lieu of dividend.
• Sources for issue of bonus shares
• Free reserves
• Securities Premium Account
• Capital Redemption Reserve Account
• No issue of bonus shares shall be made capitalizing reserves created by the revaluation of assets.
Forfeiture of Shares
• Although forfeiture usually occurs due to non payment of calls, it can also be made for any other
reason specified in the company’s articles.
• A company can forfeit shares according to the provisions given in its articles. If the articles do not
contain such provisions, then regulations 29-35 of Table A of the Companies Act, apply. The
provisions regarding calls and forfeiture are discussed in the following sub-sections.
• As explained above, the company may call up the unpaid amount from the shareholders from
time to time. The board is required to pass a resolution for making a call. The articles of the
company have provisions regarding calls. If nothing is mentioned in the articles, then the
provisions laid down in Articles 13-18 of Table A are applicable while making calls. These are
listed below:
• The amount called must not be more than one-fourth of the face value.
• The dates of two consecutive calls must differ by at least a month.
• A minimum of 14 days’ notice must be given to the members.
• The notice must mention the time, place of payment and the amount called.
Conditions for Forfeiture of Shares
• A company can forfeit its shares only when the following conditions are satisfied:
• 1. Authority to Forfeit: The power to forfeit must be expressly given in the Articles. Accordingly, if no
power is given in the Articles, no forfeiture can be made.
• 2. Default in Payment of Calls: The shares can be forfeited only for the non-payment of calls and not for
the default in payment of any other debts.
• 3. In Accordance with the Articles: Forfeiture shall be valid only when the provisions of the Articles are
strictly complied with. Even a slight deviation from the provisions shall render the forfeiture invalid.
• 4. Bonafide and for the Benefit of the Company: The right to forfeit shares is in the nature of trust and
so it can be exercised bonafide and only for the benefit of the company. The power cannot be exercised
hastly or for private ends.
• 5. Board Resolutions: Forfeiture will be effected only by means of a Board resolution.
• 6. Notice to Defaulting Shareholder: Notice precedent to forfeiture must be given to the defaulting
shareholder. In the matter of forfeiture of shares, technicalities must be strictly observed.

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TARGET JRF WITH AIR

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PART 1 BY TALVIR SINGH

REFFERAL CODE – TALVIRS FOR EXTRA DISCOUNT

REFFERAL CODE – TALVIRS FOR EXTRA DISCOUNT

Nature of income Income tax Amount of Amount of non-

TAN or otherwise known as Tax deduction and collection

Planning Foreman Production Foreman

Contribution = Sales - Marginal cost OR C=S-MC

Contribution = Sales - Variable cost OR C=S-VC

Disclosure: This Materiality: This

No interest is to be charged on drawings.

• Sharing profit and losses: equally

• For manufacture, selling, storage, distribution, or

• The authority may also impose a penalty up to Rs 10 lakh,

The State CDRC

Key Features of Caroll's Pyramid

Co-operative Joint venture/Strategic Alliance/ Non-equity Alliance- It can involve joint

Equity Joint-Venture- Equity joint venture is a shared ownership in a foreign business.

Wholly-owned subsidiary-It involves 100 percent ownership by an MNC in a venture located

Product Producing Do Everything

Same product to all consumers (no

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