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Commercial Arithmetic

Written By satyam coaching centre on Friday, 6 September 2019 | 07:53

Commercial Arithmetic -

1.Shares and Dividends

A company is established with the efforts of a few willing partners to run a large business. Directors are chosen for managing the company. The required capital is divided into small parts. These parts are called shares which are usually of 100 or 10 rupees. Any person can buy and sell shares as per his wish. The person who bought the shares is called a share holder or partner. Dividend or Dividend is divided among the partners in proportion to the capital invested.
Initially, some part is taken from each participant by not taking the entire money of its parts. The remaining portion of the share is demanded from them when required.
No partner can withdraw his parts from the company. He can sell his parts. If the company is in profit, then the market value of the share increases from the real value and the market value of the share decreases on loss. But the market value of the share does not affect the capital of the business. Suppose Sohan has a share of Rs 100 on which the company gives him 6% profit. Sohan will get a benefit of Rs 5 per year. Even if the value of the share in the market rises to Rs 115, the partner will only get Rs 6.
Commercial Arithmetic -

Commercial Arithmetic -

The company gives profit on the actual value of the share and not its market value.
The company pays dividends on the value of the share that has been paid. In the above example, if Sohan has paid only Rs 75, then the company will pay him (75x6) / Rs 100 ie Rs 4.50.

2. Banking -

 Every country in the world has its own currency, with the help of which business runs. The currency of our country is India. The entities that buy and sell currency are called banks. In other words, a bank is an institution where people can deposit their savings and can get a loan from there under certain conditions.

3. Taxation

The government spends a lot of money to carry out some basic activities like maintaining law and order, providing fair justice, protecting the country, maintaining the status of currency, etc. Collective demands are also increasing with time. As a result of this, people are now expecting the government to play an important role in improving people's lives and providing more and more facilities to them. The new definition of public welfare state has now become that the difference between the general public and the upper class persons should be minimized. Today's citizens are demanding the government to implement various social measures like removing unemployment and providing best facilities for education, health etc. All these activities have placed a new responsibility on the government and as a result government expenditure is increasing. To meet this expense, the government has to make arrangements to raise funds from the residents of the country and in some situations (like tourists and travelers) non-residents. The money to be collected is obtained from various sources, of which there is an important source.

3 (1.) Taxation

You must be familiar with the names of income tax, property tax, gift tax, sales tax etc. All these taxes are proposed, increased or reduced each year in the Central Government Budget or the State Governments Budget. The taxes levied by the Central Government include income tax, property tax, gift tax, Central Excise and Customs, Central Sales Tax, etc., while taxes levied by the State Governments, Agricultural State Tax, Entertainment Tax, State Excise and Sales Tax. Etc. come. Local bodies like Municipal Corporation, Municipalities, Cantonment Board, Zilla Parishad etc. are also imposed. Property taxes, professional taxes, octroi, education fees etc. come under the taxes brought by them. In other words, it is quite clear in which areas the central government has to impose taxes. As the central government receives a significant amount of tax as compared to the states and local bodies, the central government provides financial assistance to each state / union territory from its central pool to meet the expenditure on development. . The following are the symptoms of tax -
(1.) It is a mandatory contribution, although it can be paid at will.
(2.) It is a personal obligation.
(3.) It is a contribution towards a common good and there is no cost to get some additional facility.
(4.) It is imposed according to certain statutory requirements.

3 (2.) Income Tax

It is a tax that is levied on the income of an individual or group of people. Every person (or group of people) whose annual income exceeds a specified limit, has to pay a part of their income to the government as income tax. At the beginning of every financial year, the government fixes the income tax rates.

4. Payment under installments -

They often take payment in installments of money that banks give as loan. The insurance amount is also paid in installments.The insurance amount is also paid in installments. Sometimes merchants and shopkeepers also allow their customers to pay in installments. Some people buy houses on installments etc. Savings are also made in installments for the loan redressal fund.
To pay at equal time intervals under certain conditions is called payment in installments. The amount of money that is paid at one time interval is also called the installment amount or the installment in short.

5. Partnership

Doing business with two or more persons is called a partnership and each person is called a partner. The money held by the partners is called capital. Finally, the profit or loss in the business is distributed to the partners in proportion to the amount of capital and the time it is engaged.
Types of Shares - There are two types of shares -
(1.) Simple sharing (2.) Complex sharing
(1.) Ordinary sharing - is one in which the partners invest their capital for the same time. In this, the profit or loss is divided according to the ratio of capital.
(2.) Complex sharing - is one in which partners invest their capital for different times. Therefore, the profit or loss made to each partner at the end of the year depends on both the capital and the time he / she applies.


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