BANKING MONEY & FINANCE MONEY PORTION: Barter: Goods were exchange for goods.

Money: Any thing which is widely used as a medium of exchange & standard of value. Paper Money: Note issued by central bank of country. Monetary Policy: Refers to measure taken by central bank of country in controlling the money & credit supply in country with a view to achieve certain economic objective. Inflation: oo much money chasing too few goods. Kind of Inflation: Mild Inflation !Fa"ora#le Inflation$ !nvestment & "evel of National !ncome increase as a result cost of production goes up because of inelastic supply of raw material & increase in wage rate. Co t P% & Inflation: #ost of $roduction increase as a result there is increase in general price level. 'e(and P%ll Inflation: here is an increase in %emand as a result general price level increases. )%ppre ed Inflation: Government &ix price which is below than e'uilibrium price when inflationary pressure exert their full strength there is sharp increase in general price level which is suppressed in past. 'eflation: %ecrease in price level due to decrease in employment. Reflation: Raising "evel of economic activity by government action. !nflation of currency after a period of deflation. 'e"al%ation: %ecrease in the value of home currency in terms of foreign currency. BANKING PORTION: (ank is derived from word )(anco* or )(ancus* which mean bench. As +ews merchant exchange money on benches. Another opinion is that bank is derived from word )(ack* which mean +oint stock fund. 'e"elop(ent of Ban*in+ in Pa*i tan: $akistan work under Reserve bank of !ndia till ,-./eptember.0123. /tate bank of $akistan was established in +uly 0123. Ban*: !nstitution which receive deposit & advances loans. Credit: #redit refers to transaction where cash is not paid instead a document is given as an acknowledgement of debt & that document is called credit instrument. Ne+otia#le In tr%(ent: A legal right passes from one person to another by the delivery of instrument. E,a(ple: #hea'ues4 (ill of exchange4 $romissory Note Non Ne+otia#le In tr%(ent: A legal right does not pass from one person to another by mere delivery of instrument. E,a(ple5 $ostal order4 6oney order etc. C&ea-%e: 7ritten order drawn on specified banker4 signed by maker4 directing bank to pay certain sum of money to him. !Type : Cro . Bearer. Order$ Bill of E,c&an+e: 8nconditional order signed by maker4 directing a certain person to pay certain sum of money. Pro(i ory Note: !nstrument of credit in which debtor himself makes a promise to his creditor to pay amount at promised date. Ban* 'raft: 7ritten order from one branch of bank to another branch to pay certain sum of money to the holder of bank draft. Po tal Order: !ssued by $ost 9ffices for the purpose of transfer money from one place to another. /etter of Credit: "etter from a bank guaranteeing that a buyer:s payment to a seller will be received on time & for the correct amount. Ban* Note: $romissory Note issued by bank & payable to bearer on demand.

Co((ercial Ban*: (ankers borrow to lend. /i-%idity: Ability to meet demand for 6oney. Forei+n E,c&an+e Mar*et: $lace where currencies of different countries are bought & sold. INTRO'0CTION TO B0)INE)) !ITB$ B% ine : All legal activities concerned with production & distribution of goods & services with an aim to earn profit. Ind% try: (usiness concerned with fabrication4 extraction4 production of product. Co((erce: All those activities related to transfer of goods from place of production to ultimate consumer. )ole Proprietor &ip: &orm of business organi;ation in which an individual introduces his own capital4 uses his own skill & intelligence in the management of its affair4 assuming all the risk & profit & solely responsible for the operation of business. Partner &ip: $artnership is a relationship between persons who agrees to carry on a business with a common view of private gain. $artnership includes minimum two & maximum <- $artners by law. =$artnership Act 01,<>. Partner &ip 'eed: $artnership agreement in writing. Type of Partner General $artner5 Acti"e Partner: $artner who take active part in activities of day to day business. )leepin+ Partner: 9ne who contribute capital only. Ot&er Partner: )ecret Partner: 9ne who take active part in business activities but hidden to general public. No(inal Partner: 9ne who lend his name for goodwill & credit worthiness to form. Nominal $artner does not contribute capital or take part in activities of business. 1oint )toc* Co(pany: ?oluntary organi;ation which is an artificial person created by law4 having limited liability4 capital divided in to common shares & has a common seal. $rivate limited company consists of <.@- members. Pro(oter: $romoters are $ersons who form and promote company. %iscover idea of establishing4 make investigation /elect bank4 prepare document4 6emorandum etc. Me(orand%( of A ociation: (asic document also called #harter of company. Article of A ociation: "aw & Regulation which govern internal conduct of company. Pro pect% : %ocument issued by company for raising capital. B% ine Co(#ination: ?oluntary association of firm for achievement of common objectives. Pool: 7ritten agreement made by members producing & dealing in similar product to eliminate competition. A%t&ori2ed 3 Re+i tered Capital: 6aximum amount of capital which a company can issue. I %ed Capital: $art of authori;ed capital which is actually offers to general public. )%# cri#ed Capital: $art of authori;ed capital open for public subscription. )tat%tory Meetin+: Aeld once in the life of public limited company. Cartel 3 )yndicate: ?oluntary agreement of independent enterprise of similar type to secure monopoly. !n cartel a new company came in to existence for selling products of its member.

In %rance: 7ritten agreement between two parties in which one of them agree to indemnify other against loss which may occur to other on happening of certain event. )toc* E,c&an+e: 6arket where share are bought & sold by memberBbrokers on behalf of their customer. Type of )pec%lation: B%ll : $erson who take an optimistic view =Rise> of business trend. Bear : $erson who take pessimistic view of business trend & expect fall in the price of securities. )ta+: /peculator who purchase share of newly created company with objective of selling them through stock exchange at premium. /a(e '%c*: (ear find it difficult to meet its commitment named as lame duck. ECONOMIC) Cla ical 'efinition of Econo(ic : Adam /mith in his book )7ealth of Nation* =0CCD> defines economics as )Economics is science of wealth*. Critici (: oo 6uch importance to wealth4 Narrow meaning of wealth =/ervices nor included>4 No mention of human welfare4 !t does not include means =earning of wealth>. Neo Cla ical 'efinition of Econo(ic : $rof Alfred 6arshall in his book )$rinciple of Economics* written in 0313 define economics as )Economics is the study of mankind in ordinary business of life4 it examine that part of individual & social action which are closely connected with attainment & use of materialistic re'uisites of well being. Merit : Give secondary importance to wealth4 /tudy of ordinary man. Critici (: Narrow down the scope of economics4 &actor decreasing welfare =Alcohol>4 !mpractical Ro#in 'efinition of Econo(ic : "ionel Robins in his book )Nature & /ignificance of Economics* written in 01,0 define economics as5 )Economics is science of unlimited wants & limited means which have alternative uses* Merit: 8niversal %efinition4 6ore /cientific4 'e(erit: No touch of human welfare4 8nlimited "abor. Micro Econo(ic : 6icro is a Greek word which mean small4 6icro Economics is the study of specific individual unit4 household. Con %(er Be&a"ior: (ehavior of people with regard to selection4 purchase & consumption of goods & services for satisfaction of their wants is known as consumerFs behavior. 0tility: $ower of a commodity to satisfy a human want. Mar+inal 0tility: 8tility which we get from each next or successive unit of consumption of any commodity is called marginal utility. Total 0tility: 8tility which is obtained from consumption of all unit of commodity. Cardinal Approac&: According to cardinal school of thought utility is measurable in 'uantitative term i.e. 0-unit4 <-mints. Ordinal Approac&: According to ordinal school of thought utility is subjective or immeasurable. /a4 of 'i(ini &in+ Mar+inal 0tility: 9ther thing remaining same as consumer continuously consumed more & more units of commodity the utility from each next & successive unit of consumption goes on diminishing4 this decrease in 6arginal 8tility is called "aw of %iminishing 6arginal 8tility. /a4 of E-%i5Mar+inal 0tility: #onsumer in order to get maximum satisfaction from his limited income will so allocate his income on purchase of two or more than two commodities that utility from last rupee become e'ual to each other.

Indifference C%r"e: Represent various combinations of two goods & each combination give e'ual satisfaction to consumer & he is indifference to choose any combination. 'e(and: he desire of a commodity for which person has willingness & ability to pay at some given price over some given period of time. /a4 of 'e(and: 9ther thing remaining same when price of commodity decrease demand increase4 on the other hand when price increases demand decreases. )%pply: /upply is amount of commodity for which buyer willing to buyer & seller willing to sell at some ruling price in the market per unit of time. Econo(ic Gro4t&: mean increase in output per unit of input. !f output is higher than input we can say that our production or economic growth is increasing. E,plicit Co t: #ost which a business manager must take in to account because they must be paid by firm. I(plicit Co t: #ost which are not paid to outsider. No(inal Co t: 6oney cost of production. Real Co t: #ost which are not taken into costing of firm. Fi,ed Co t: 7hich do not change with change in output 6aria#le Co t: 7hich varies with volume of production A"era+e Co t: 9btaining by divided total cost by total number of unit produce. Total Re"en%e: otal amount of money which is derived by multiplying the number of units sold by price per unit. Mar+inal Re"en%e: Revenue earned by selling last unit of production. Ela ticity of 'e(and: he change in 'uantity demanded due to change in price. Rent: $rice of land which is paid to landlord by use of land. 7a+e : 6oney paid to worker for the service rendered by him during a certain period of time. Intere t: $rice paid for the use of money. Oli+opoly: A market in which few sellers dominate the sale of product & new entry is difficult or even impossible. '%opoly: 6arket where two monopolists instead of one share the monopoly power. B0)INE)) COMM0NICATION )e"en C8 : #ompleteness4 #onciseness4 #onsideration4 #oncreteness4 #larity4 #ourtesy4 #orrectness. Fi"e Plannin+ )tep : !dentify your purpose4 Analy;e your audience4 #hoose your idea4 #ollect your data4 9rgani;e your %ata. )tandard Part of /etter: Aeading4 %ate4 !nside Address4 /alutation4 (ody4 #omplimentary #lose4 /ignature Area4 Reference /ection. A0'ITING A%ditin+: /ystematic examination of books & record of business in order to verify facts regarding financial operation. Internal Control: All measures taken to provide management with assurance that every thing is functioning as it should be. 6o%c&in+: Act of comparing entries in books of accounts with documentary evidence in support. In"e ti+ation: Examination of accounting records for some special purpose.

ACCO0NTING Acco%ntin+: Art of recording4 classifying4 summari;ing financial transaction and interpreting result thereof. Acco%nt: A record used to classify & summari;e transaction. Acco%nt Recei"a#le: 7hom goods are sold on account. Acco%nt Paya#le: 7hen goods are purchase on account such payable is called account payable. Accr%ed E,pen e : Expense incurred but yet not paid. Acid te t Ratio: #.A G !nventories B #." A+ent: !ndividual authori;ed by another person to act on his behalf. Ann%ity: A series of e'ual payments or receipts occurring over a specified number of periods. Ordinary Ann%ity: A series of e'ual payments or receipts occur at end of each period. Ann%ity '%e: A series of e'ual payments or receipts occur at the end of each period. Balance )&eet: A summary of a firmFs financial position on a given date. Bill of /adin+: /hipping document indicating the details of the shipment & delivery of goods & their ownership. Bond: "ong term debt instrument issued by corporation or govt. Ca & 'i co%nt: $ercentage reduction in sale or purchase price allowed for early payment of invoices. Co(po%nd Intere t: !nterest paid on any previous interest earned as well as on the principal amount borrowed. Con ol: (ond that never mature4 perpetuity inform of bond. Co%pon Rate: /tated rate of interest on a bond. C%rrent Ratio: #.A B #." 'e#ent%re: "ong term unsecured debt instrument. 'e#t Ratio: Ratio that show the extent to which firm is financed by debt. 'efa%lt: &ailure to meet the term of contract. 'epreciation: Reduction in the value of fixed asset by wear or tear or with passage of time. =%epletion5 7asting4 Amorti;ation5 !ntang> Type of 'epreciation: )trai+&t line Met&od: #ost of Asset G /crap value B Estimated life 'i(ini &in+ or Red%cin+ Balance Met&od: &irst Hear /econd Hear Rate <@--<---<-I $er Anum .@--.2--J<---J0D--Revaluation 6ethod4 /inking &und 6ethod4 %ouble %ecline 6ethod wice /traight "ine 6ethod4 %epletion 6ethod4 (ook 8se 6ethod. 'raft: A signed written order by which the first party instructs a second party to pay a specified amount of money to a third party. Face 6al%e: he stated value of an asset. Financial /e"era+e: 8se of fixed financing costs by the firm. Financial Ratio: An index that relates two accounting numbers & is obtained by dividing one number by another. Gro 7or*in+ Capital: !nvestment in current asset. Inco(e )tate(ent: A summary of firm revenue and expenses over a period. Intere t: 6oney paid for the use of money. In"oice: (ill prepared by a seller of goods or service & submitted to the purchaser. /ea e: #ontract under which one party agree to grant the use of an asset to another party in exchange of periodic rental payment. /i(ited Partner: 6ember of a limited partnership not personally liable for the debt of partnership. /i-%idation: /ale of asset of firm either voluntary or in bankruptcy.

/i-%idity: Ability of an asset to be converted in to cash without significant price concession. Mar*et 6al%e: 6arket price at which an asset trades Mer+er: he combination of two or more companies in which only one firm survives as a legal entity. Net 7or*in+ Capital: #.A . #." Opport%nity Co t: 7hat is lost by not taking the next best investment alternative. Par 6al%e: he face value of bond or stock. Per(anent 7or*in+ Capital: he amount of current asset re'uired to meet a firms long term minimum needs. Perpet%ity: 9rdinary annuity whose payments or receipt continue forever. Portfolio: A combination of two or more securities or asset. Pri(ary Mar*et: 6arket where new securities are bought & sold for first time. Pri(e Rate: /hort term interest rate charged by bank to large creditworthy customer. Pro,y: "egal document giving one person the authority to act for another. )tate(ent of Ca & Flo4: A summary of firmFs cash receipts & cash payments during a period of time. )toc* O%t: Not having enough inventories to fill an order. )%# idiary: A company that has mote than half of its voting shares owned by another company. Te(porary 7or*in+ Capital: he amount of current assets that varies with seasonal re'uirement. Trade Credit: #redit granted from one business to another. Trade /ia#ilitie : 6oney owed to supplier. Trea %ry Bill !T5Bill $: /hort term non interest bearing obligation. Accr%al Ba i : Revenue is recogni;ed when reali;ed & expenses are recogni;ed when incurred. A et: $robable future economic benefits obtained or controlled by a particular entity as a result of past transaction or event. 9r5 hings or property possessed by business. Ad9% tin+ Entrie : Entries made at the end of each accounting period to update the accounts. Ca & Ba i : A system of accounting which records revenue when received & expenses when paid. C&art of Acco%nt : "ists of all accounts used by company. Conti+ent A et: Assets that may arise in the future if certain event occur. Conti+ent /ia#ilitie : "iabilities whose payment is dependent on a particular occurrence such as settlement o f litigation. 'epletion: Recognition of the wearing away or using up natural resources. 'i"idend: $ayment from income of firm to shareholder. E,pen e : 8se of an asset for the generation of revenue. General /ed+er: Record of all accounts used by company. In ol"ent: A condition in which a company is unable to pay its debts. /ed+er: /ummari;e effects of transactions upon individual account. Net A et: otal Asset G otal liabilities Note Paya#le: $ayable in the form of a written promissory note. Patent: Exclusive legal rights granted to an inventor for the period of 0C year.

Pre(i%(: An amount paid in excess of the face value of security. Royaltie : $ayment of right over some natural resource4 or payment to an author or composer. )tate(ent of O4ner E-%ity: An accounting statement describing transaction affecting the owner e'uity. )tate(ent of Retained Earnin+: A summary of the changes to retained earnings for an accounting period. Acco%ntin+ Cycle: ransaction4 +ournal4 "edger4 rial (alance4 &inal Account. Accr%ed Inco(e: !ncome earned but not received. Boo* Keepin+: Art of recording transaction in books of accounts. Co((i ion: he remuneration paid for the services of the person Ca & 'i co%nt: Amount reduced at the time of receiving cash. /ome time as a trade policy <B0-4 nB,-. Ca & Boo*: (ook in which transaction relating only to cash receipt & payment. Capital E,pendit%re: "ong term expenditure =6ore than one year> O%t tandin+ E,pen e : Expenses incurred but not paid. /ia#ilitie : %ebt due by business. Prepaid E,pen e : $aid in advance but yet not expire. Re"en%e E,pendit%re: /hort term expenditure =less than one Hear> Trade 'i co%nt: #oncession allowed by seller or buyer at time of selling or buying. 0nearned Inco(e: !ncome received in advance. 6o%c&er: 7ritten evidence of business transaction.

CO)T ACCO0NTING Co t Acco%ntin+: $rocess of recording4 allocating & reporting various costs incurred in the operation of an enterprise. FO:: #ost other than direct material & direct labor of producing of a product. FIFO: 9ldest material issued first. Co t of Good Man%fact%red: %irect 6aterial 8sed K %irect "abor K &9A K 9pening 7!$ G Ending 7!$ CG)5 #ost of Goods 6anufactured K 9pening &inished Goods G Ending &inished Goods. No of 0nit Man%fact%red: 8nit /old G 9pening &inished Goods K Ending &inished Goods )ale J #ost K $rofit Ma,i(%( /e"el J 9rder level G =6inimum %aily Re'uirement x "ead ime> K E#L Mini(%( /e"el: 9rder level G =Average %aily Re'uirement x "ead ime> Order /e"el: 6aximum consumption x 6aximum Reorder $eriod. EO;: <= , ' , Co 3 Cc Pri(e Co t: %irect 6aterial K %irect "abor Con"er ion Co t: %irect "abor K &9A I)/AMIC FINANCE Finance: Act of providing funds for business activities4 making purchases or investing etc. I9ara&: !jarah mean to give something on rent. 8sed in two situation5 Employed the services of person4 Give some asset on rent. M%dara#a&: Mind of $artnership in which one partner gives money to another for investment4 6anagement & work is the responsibility of another. M% &ara*a&: 6ean sharing business & trade where all partner share profit & loss of business.