Question- Explain various methods of valuation of goodwill

First of all, we have to understand about Goodwill. It is an intangible asset which represents non-
physical of a company. It is of immense value but it is not easy to be identified or valued.
Though it cannot be easily calculated, it’s no doubt that intangible assets significantly contribute
to a company’s success and value.

There are several methods which can be implemented for valuation of goodwill which is as
follows:

1. Average Profit Method

Goodwill’s value in this method is considered by multiplying the Average Future profit by a
certain number of year’s purchase.
Goodwill = Future maintainable profit after tax x No. of years purchase
Steps Involved under Average Profits Method:
• Calculate past profits before tax. 
• Calculate the future profit before tax after making past adjustments.
• Calculate the average past adjusted profits.
• Multiply the future profits to be maintained by the number of years’ purchase.

2. Super Profit Method:

This super profit method is the additional estimated future maintainable profits over the normal
profits. 
Steps Involved in Calculating Goodwill under Super Profit Method:
• Calculate capital employed (always should the aggregate of Shareholders’ equity and long-term
debt or fixed assets and net current assets).
• Calculate the Usual Profits by multiplying employed capital with normal return rate.
• Calculate average maintainable profit.
• Calculate Super Profit as follows:
Super Profit = Maintainable Average profits – Normal Profits.
• Calculate goodwill by multiplying super profit by the number of year’s purchase.

3. Capitalization Method:
Goodwill under this method can be calculated by capitalizing average normal profit or
capitalizing super profits. Following are those:-
(i) Capitalisation of Average Profit Method:
Under this particular system, goodwill can be discovered by deducting actual Capital Employed
(i.e., valuation date of Net Assets) from the capitalised value of the average profits. It should be
on the basis of the normal rate of Return (also known as the value of the firm or capitalised value
of business)
Goodwill = Capitalised Value – Net Assets of Business

Following are the stages involved in calculating goodwill as per capitalisation of Average Profits
Method:
• Calculate Average future maintainable profits
• Calculate the Capitalised value of business on the basis of the Average Profits

    

• Calculate the value of Net Assets on the valuation date

Net Assets means All Assets (other than fictitious assets, goodwill and non-trade investments) at
their current values – Outsider’s Liabilities
• Calculate Goodwill (Goodwill equals to Capitalised Value – Net assets of the business.)
(ii) Capitalisation of Super Profit Method:
The goodwill assertion in this method is done by capitalizing the super profits on the basis of the
normal rate of return. Capital needed for earning the super profit can be calculated by this
method.
The value of goodwill is computed as follows:

  

4. Annuity Method:
In the annuity method, goodwill can be calculated by taking average super profit. This particular
profit is the value of an annuity over a certain number of years. Computation of the present value
of this annuity is done by discounting it at the given rate of interest, i.e. on the normal rate of
return. Valuation of goodwill is this discounted present value of the annuity. 
If the value of the annuity is not given, it can be calculated with the help of following formula:

 
Question- LIFO, FIFO and Cost Sheet
LIFO-

Last in, first out (LIFO) is a method used to account for inventory that records the most recently
produced items as sold first. Under LIFO, the cost of the most recent products purchased (or
produced) are the first to be expensed as cost of goods sold (COGS), which means the lower
cost of older products will be reported as inventory.

Two alternative methods of inventory-costing include first in, first out (FIFO), where the oldest
inventory items are recorded as sold first, and the average cost method, which takes the
weighted average of all units available for sale during the accounting period and then uses that
average cost to determine COGS and ending inventory.

FIFO-

First In, First Out, commonly known as FIFO, is an asset-management and valuation method in
which assets produced or acquired first are sold, used, or disposed of first.

For tax purposes, FIFO assumes that assets with the oldest costs are included in the income
statement's cost of goods sold (COGS). The remaining inventory assets are matched to the
assets that are most recently purchased or produced.

Cost Sheet-

A cost sheet is a statement that shows the various components of total cost for a product

and shows previous data for comparison. You can deduce the ideal selling price of a product
based on the cost sheet.

A cost sheet document can be prepared either by using historical cost or by referring to estimated
costs. A historical cost sheet is prepared based on the actual cost incurred for a product. An
estimated cost sheet, on the other hand, is prepared based on estimated cost just before the
production begins.

Question- Explain Principles of management.

Management is essential to any organization that wishes to be efficient and achieve its aims.
Without someone in a position of authority there would be organizational anarchy with no
structure and very little, if any focus. It has been said that management has four basic functions –
planning, organizing, leading and controlling. Common sense dictates that without these
principles of management being in place an organization would have trouble achieving its aims,
or even coming up with aims in the first place! A classic theory on the principles of management
was written by Henri Fayol. It seeks to divide management into 14 principles. We’ll take a look
at these basic principles of management and explain them in easy to understand terminology.

Principles of Management – Fayol’s 14 Principles

 Division of Work – This principle of management is based on the theory that if workers
are given a specialized task to do, they will become skillful and more efficient in it than if
they had a broader range of tasks. Therefore, a process where everyone has a specialized
role will be an efficient one.
 Authority – This principle looks at the concept of managerial authority. It looks at how
authority is necessary in order to ensure that managerial commands are carried out. If
managers did not have authority then they would lack the ability to get work carried out.
Managers should use their authority responsibly and ethically.
 Discipline – This principle relates to the fact that discipline is needed within an
organization for it to run effectively. Organizational rules, philosophies, and structures
need to be met. In order to have disciplined workers, managers must build a culture of
mutual respect and motivation.
 Unity of command – There should be a clear chain of command in place within an
organization. An employee should know exactly whose instructions to follow.
 Unity of direction – Work should be organized in a way that means employees are
working in harmony toward a shared objective or goal using a shared method or
procedure.
 Subordination individual interests to the collective interests – The interests of the
organization as a whole should take precedence over the interests of any individual
employee or group of employees. This encourages a team spirit and collective mentality
of all for one and one for all.
 Remuneration – In order to motivate and be fair to employees, they should be paid a
reasonable rate for the work they carry out. An organization that underpays will struggle
to attract quality workers who are motivated.
 Centralization – This principle relates to whether decisions should be made centrally, as
in from the top down, or in a more democratic way, from the bottom up. Different
decision making processes are appropriate for different types of decisions.
 Scalar chain – This relates to the principle of a clear chain of communication existing
between employees and superiors. The chain should be respected, unless speedy
communication is vital, in which case the chain may be bypassed if all parties consent.
 Order – This relates to the proper use of resources and their effective deployment in a
structured fashion.
  Equity – Managers should behave ethically towards those they manage. Almost every
organization in the modern world will have a written set of policies and procedures which
will outline exactly what is expected from staff at all levels.
 Stability of tenure of personnel – It is seen as desirable within an organization to have a
low staff turnover rate. This is due to the benefits that come with having experienced staff
and the time and expense needed to train new ones. There should be a clear and efficient
method of filling any staff vacancies that arise.
 Initiative – Employees that have an input as to how to best do their job are likely to feel
more motivated and respected. Many organizations place a great deal of emphasis on
listening to the concerns of staff.
 Morale – Keeping a high level of morale and team spirit is an essential part of having the
most productive organization possible. Happy and motivated employees are far more
likely to be productive and less absent.

Question- Explain the meaning, importance and limitations of

statistics.
Meaning of Statistics:
The subject Statistics, as it seems, is not a new discipline but it is as old as the human society,
itself. It has been used right from the existence of life on this earth, although the sphere of its
utility was very much restricted.

In the olden days Statistics was regarded as the ‘Science Statecraft’ and was the by-product of
the administrative activity of the state. The word Statistics seems to have been derived from the
Latin word ‘status’ or the Italian word ‘statista’ or the German word ‘statistik’ or the French
word ‘statistique’ each of which means a political state.

1. Importance of Statistic in Economics:

The contribution of statistics to the field of economics is commendable. Nowadays, solving any
financial problem is not possible without the use of statistical methods. The importance of stats
in economics can be studied on the basis of the following points:-

(i) Importance in different divisions of Economics:

 Importance in consumption area.
 Importance in the field of production.
 Importance in the field of exchange.
 Importance in the field of distribution.
 Importance in the field of revenue.
(ii) Importance in monetary policy:
The success of the monetary policy is based on a few statistical facts. The reason is that all
instruments adopted in monetary policy, such as bank rate, reserve rate, etc are based on all
statistical rules.

(iii)  Quantitative expression of economic problems:

The numerical expression of various problems, whether it is of population or unemployment or
other economic problem, is necessary so that the economist is aware of the depth of that
problem. For Example, by this statement, the population of India is growing rapidly, it is not
possible to experience the problem of expanding the population completely.
But if it is said in the form of statistics, that the population of India increases by 1 crore 40 lakhs
per annum and the total population of Australia is 1 crore 40 lakhs. Thus, if our population is
increasing at par with the population of Australia every year, then we can easily experience the
expansion of the population correctly.

2. Importance of Statistic in Trade, Industry, and Commerce (Business):

Nowadays industry and business have become so complex that many new problems have to be
solved in order to achieve success in business. Use of statistical tools and methods to solve these
problems has become extremely important.
Today’s business and workers and producers need to have a general knowledge of statistical
methods and their use, only then can they solve problems based on facts and figures with skill
and ability.

3. Importance of Statistic in the Field of Economics:

Statistics are of great importance in the field of economic planning. All the countries of the
world are developing they’re economic by organizing economic activities.
4. Importance of Government Administration:
A few centuries ago, statistics was the science of rulers, because in the early period only kings
(the rulers) had to collect data of government income and land system and the population more.
Statistics are extremely important in governance management because

(i) The base of the budget is statistics.

(ii) To make laws and amend the old laws, it is necessary to get the help of material of the
necessary statistical information.
(iii) Determination of various policies of the country and their success is evaluated on the basis
of data.

5. Other Importance:
(i) Useful for agriculture and research.

(ii) Social importance.

(iii) Protection of past life and experience.

Limitations of Statistics
The limitation of statistical analysis can be described in various points:-

1. Study of Numerical Elements:

In statistics, only numerical elements are studied like- character, honesty, friendship, etc are not
studied. These facts can also be placed under 3 topics:-

First, The facts that can be directly divided into numbers like the age of human beings, weight,
income, and so on.

Second, are those quantitative facts that can be expressed indirectly by the digits like the
intellectual level of the students can be estimated based on the score of the examination.

Third, those facts which cannot be expressed directly or indirectly by numbers like character,
culture, etc.

2. Study of Statistical Groups: 

Statistics studies the nature of groups. It does not take into consideration any individual’s
properties and its individual properties.

For Example- while studying in relation to students, problems related to a particular student will
not be studied but those problems will be studied which are collectively in front of the student
society.
 3. Full Knowledge of the rules of Statistics:
For statistical research it is necessary to have full knowledge of the rules of statistics, otherwise,
no conclusion can be drawn from the given data.

4. Statistical rules are true in the long run:

For pure science, it is necessary that its rules are true and pure at all times. But the rules of
statistics are true in the average form and they are also in the long run.

5. Uniformity of Digits:
The facts of statistics are essential to be simple and harmonious because the data of a different
class cannot be compared. ForExample- Statistics of the height of trees cannot be compared to
the data between the height of humans.

6. Average Truth:
The rules of statistics prove true in the long run and in the average form, are not completely true
like the laws of physics. For Example- If it is said that Indians are poor, then this statement
points to a trend. This does not mean that there is no rich in India.

Question- define company explain types of company.

Definition: A company is that form of business organization, which is created by law. It refers to
an association of persons, created to undertake business activities, having a separate legal
existence, perpetual succession and a common seal.

It is a legal entity incorporated under the Companies Act, 2013 or any other previous acts,
prevalent in the country.

Types of Company

1. On the basis of members

1. One person Company: OPC or one person company is a new category of company
introduced to encourage startups and young entrepreneurs wherein a single person can
incorporate the entity. It also promotes the concept of corporatization of the business. It should
be noted that it is not the same as a sole proprietorship firm, in a way that OPC has separate legal
existence with limited liability.
2. Private Company: A private company is one in which two or more persons get the company
registered under the Companies Act. The securities of such a company are not listed on a
recognised stock exchange, and they cannot invite the public to subscribe for the
 shares/debentures. The members of a private company are restricted from transferring the shares.
The maximum number of members in a private company is 200.
3. Public Company: A company which is formed by a minimum number of seven members with
a lawful object is termed as a public company. Its securities are listed on a recognized stock
exchange, and its shares are freely transferable. Further, there is no limit on the maximum
number of members in such a company. The subsidiary of the public company is also considered
as a public company.
2. On the basis of liability
1. Company limited by shares: Company limited by shares is one in which memorandum of
association of the company specifies that the liabilities of the shareholders are limited to the
amount unpaid on shares which they own. Hence, the shareholders are liable only to the extent
of the amount that is not paid on their holdings.
2. Company limited by guarantee: A company in which the liability of members is limited to a
definite sum stated in the memorandum of association of the company. Meaning that the liability
of the members is confined by the MoA to a stipulated sum, as they have guaranteed to
contribute to the company’s assets, in the event of winding up of the company.
3. Unlimited Company: An unlimited company is a company whose liability does not have any
limit. In this type of company, the liability of the member ends when he/she ceases to be a
member of that company.
3. Special companies
1. Government Company: The company whose at least 51% paid up share capital is owned by
Central Government/State Government, or partly by central and partly by the state government.
Further, it also covers a company whose holding company is a government company.
2. Foreign Company: Any company registered outside the country that has a business place in
India or by way of an agent traditionally or electronically and undertakes business operations in
the country in any manner.
3. Section 8 Company: A company formed for a charitable object, i.e. to encourage commerce,
science, sports, art, research, education, social welfare, environment protection religion,
etc. comes under the category of Section 8 company. These companies are given special license
by the Central Government. Further, they use the money earned as profit for the promotion of
the object and thus, dividend to members is not paid.
4. Public Financial Institution: The companies, which are engaged in financial and investment
business and whose 51% or more paid up share capital is held by Central Government and are
established under any act are termed as public financial institutions. It includes LIC, ICICI,
IDFC, IDBI, UTI etc.
4. On the basis of the control
1. Holding Company: A parent company that owns and controls the management and composition
of the Board of Directors of another company (i.e. subsidiary company) is termed as a holding
company.
2. Subsidiary Company: A company whose more than 51% of its total share capital is owned
by another company, i.e. a holding company either itself or together with its subsidiaries, as well
as the holding company also governs the composition of Board of Directors is called the
subsidiary company.
3. Associate Company: A company in which another company possess a considerable
influence over the company, then the latter is called as an associate company. The term
considerable influence implies controls a minimum 20% of total share capital, or business
decisions, as per an agreement.
Apart from the list given above, there are many other companies such as listed company,
unlisted company, dormant company and Nidhi company.

Question- Explain functions of Reserve bank of India.

The central bank of India, RBI is also regarded as a bank of banks owing to the
functions of RBI. It was established on April 1, 1935, under the Reserve Bank of India
Act, 1934. In the beginning, the headquarters of RBI was established in Calcutta.
However, soon after, in 1937, it was permanently shifted to Mumbai.  
As of October 2021, the Governor of the Reserve Bank of India is Mr Shaktikanta
Das. He is the 25 th  RBI Governor and all the RBI functions are supervised by him.

Important Functions of RBI (Reserve Bank of India)

Being a central bank of India, RBI serves a critical role in regulating the financial
transactions in the country. Some of the important functions of RBI are listed below:
 Issue of Bank Notes
 Banker to the Government
 Custodian of the Cash Reserves of Commercial Banks
 Custodian of country’s forex reserves
 Lender of last resort
 Controller of credit
Now let us discuss these RBI functions in detail:

The Issuer of Bank Notes

The most important function of RBI is the issuance of currency notes and coins,
except the one rupee note and coin which are issued by the Ministry of Finance. All
other notes bear the signature of the RBI Governor. However, the agency of
distribution of all notes and coins issued by the Government of India is the Reserve
Bank of India.

Banker to the Government

Another chief function of RBI is that it takes care of the banking needs of the
government, which includes maintaining & operating the deposit accounts of the
government, collecting the receipts of funds, and making payments on behalf of the
Government of India. It also represents the Indian Government, as a member of the
International Monetary Fund and the World Bank.

Custodian of Cash Reserves of Commercial Banks

Commercial banks are required to maintain the cash reserves at a rate decided by the
RBI in its monetary policy.

Custodian of Foreign Exchange Reserve

Another of the important functions of RBI is maintaining a reserve of foreign
currencies that enables the RBI to deal with any crisis situation.

Lender of the Last Resort

Often regarded as the banker of banks, the RBI acts as a parent to all commercial
banks in India. Thus, it becomes the lender of the last resort for all banks when they
are in a crisis situation. RBI helps them by lending money, although at higher RoI, to
sail through the tide of financial difficulties.

Controller of Credit
RBI controls the credit created by the commercial banks in India, in accordance with
the economic priorities of the government of India. RBI uses quantitative and
qualitative methods to control and regulate the flow of money in the market. These are
implemented by announcing monetary policies at regular intervals. The monetary
policy involves the management of interest rates and money supply. The central bank
of India tweaks the money supply to achieve objectives such as liquidity, inflation,
and consumption.
Question- Give meaning of proxy server?

A proxy server acts as a gateway between you and the internet. It’s an intermediary server
separating end users from the websites they browse. Proxy servers provide varying levels of
functionality, security, and privacy depending on your use case, needs, or company policy.
If you’re using a proxy server, internet traffic flows through the proxy server on its way to the
address you requested. The request then comes back through that same proxy server (there are
exceptions to this rule), and then the proxy server forwards the data received from the website to
you.

If that’s all it does, why bother with a proxy server? Why not just go straight from to the website
and back?

Modern proxy servers do much more than forwarding web requests, all in the name of data
security and network performance. Proxy servers act as a firewall and web filter, provide shared
network connections, and cache data to speed up common requests. A good proxy server keeps
users and the internal network protected from the bad stuff that lives out in the wild internet.
Lastly, proxy servers can provide a high level of privacy.

Question- Give concept of relational data model?

A relational data model involves the use of data tables that collect groups of elements into
relations. These models work based on the idea that each table setup will include a primary key
or identifier. Other tables use that identifier to provide "relational" data links and results.
Database administrators use something called Structured Query Language (SQL) to retrieve data
elements from a relational database.
Other aspects of relational database design correspond to specific parts of a data table. For
example, a conventional database row would represent a tuple, which is a set of data that
revolves around a particular instance or virtual object so that the primary key is its unique
identifier. A column name in a data table is associated with an attribute, an identifier or feature
that all parts of a data set have. These and other strict conventions help to provide database
administrators and designers with standards for crafting relational database setups.

As mentioned, the primary key is a fundamental tool in creating and using relational data
models. It must be unique for each member of a data set. It must be populated for all members.
Inconsistencies can cause problems in how developers retrieve data. Other issues with relational
database designs include excessive duplication of data, faulty or partial data, or improper links or
associations between tables. A large part of routine database administration involves evaluating
all of the data sets in a database to make sure that they are consistently populated and will
respond well to SQL or any other data retrieval method.

Question- what is an ecosystem? What are the component of

Ecosystem? Difference between food chain and food web.
Ecosystem-
Living organisms seem to interact amongst themselves and with the physical environment. This, in
short, can be called an ecosystem. There can be different types of ecosystems. The biosphere, for
example, can be a global ecosystem. It all depends on the different components and the extent to
which you want to define the space, to consider it as an ecosystem. And hence to be able to learn
more about them, ecosystems are generally divided into smaller forms.

Ecology or environmental biology is the field that studies this complex set of relationships between
the living organisms and their surrounding environment. The scope of this field is very large and
covers things like global warming, environmental pollution, plant and animal extinctions etc.

Components of Ecosystem

There are two main components of an ecosystem which are in constant communication with each
other.  They are the biotic components and the abiotic components.

Biotic Components of Ecosystem

The living components of an ecosystem are called the biotic components. Some of these factors
include plants, animals, as well as fungi and bacteria. These biotic components can be further
classified, based on the energy requirement source. Producers, consumers, and decomposers are the
three broad categories of biotic components.

 Producers are the plants in the ecosystem, which can generate their own energy requirement
through photosynthesis, in the presence of sunlight and chlorophyll. All other living beings
are dependent on plants for their energy requirement of food as well as oxygen.

 Consumers include herbivores, carnivores, and omnivores. The herbivores are the living

organisms that feed on plants. Carnivores eat other living organisms. Omnivores are animals
that can eat both plant and animal tissue.

 Decomposers are the fungi and bacteria, which are the saprophytes. They feed on the
decaying organic matter and convert this matter into nitrogen and carbon dioxide. The
saprophytes play a vital role in recycling the nutrients so that the producers i.e. plants can use
them once again.
Abiotic Components of Ecosystem
Abiotic components are the physical and/or the chemical factors that act on the living organisms at
any part of their life. These are also called as the ecological factors. The physical and chemical
factors are characteristic of the environment.  Light, air, soil, and nutrients, etc. form the abiotic
components of an ecosystem.
The abiotic factors vary from ecosystem to ecosystem. In an aquatic ecosystem, the abiotic factors
may include water pH, sunlight, turbidity, water depth, salinity, available nutrients and
dissolved oxygen. Similarly, abiotic factors in terrestrial ecosystems can include soil, soil
types, temperature, rain, altitude, wind, nutrients, sunlight etc.

Here, the sun is the energy source. Producers/plants use this energy to synthesize food in the
presence of carbon dioxide and chlorophyll. The energy from the sun, through several chemical
reactions, turns into chemical energy.

Key Differences Between Food Chain and Food Web

Given below are the important point which differentiates the Food Chain and Food Web:

1. The Food Chain can be said as the single straight pathway, through which there is a flow
of energy from the lower trophic level to the higher trophic level. Food Web can be
defined as the complex interconnection of numerous food chains through which the energy
flow in the ecosystem.
2. Food Chain consists of only one straight chain, while food web has numbers of
interconnected food chains.
3. In comparison to the food web, there is a lot of instability in the food chain, and this is
due to increasing number of separate and confined food chains. Whereas in food web there
is stability and it increases due to the presence of the complex food chains.
4. As in food chain, there are 4-6 trophic levels only of different species, and any
disturbance at any level may disturb the whole chain. On the other hand in food web there
in the involvement of numerous trophic level of the different population of a species and
so it does not affect the food web if there is a removal of any group of organisms at any
trophic level.
5. In the food chain usually, member of higher trophic level depends or feed upon the single
type of organisms of the lower trophic level.
On the contrary, in the food web, the members of higher trophic level depends or feed
upon many different types of the organism of the lower trophic level.