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Post a LessonAnswered on 02/02/2018 Learn Entrepreneurship
Sujoy D.
Tutor
Value Added Tax (VAT) is indirect tax. VAT is called as a destination based tax (Consumption Based Tax). VAT is levied on value addition at each stage of production of goods and services which involves sale or purchase. The term 'value addition' implies the increase in value of goods and services at each stage of production or transfer of goods and services. VAT is a tax ultimately borne by the consumer or end user who purchases the goods / services.
For example: A farmer grows a wheat and sell it to a flour manufacturer at Rs.50, who convert the wheat into wheat flour and sell it the consumer or end user at Rs.120. Here the value added is Rs.70 (Sales price (Rs.120) Minus Purchase Price (Rs.50). In this case, the tax will be levied on Value addition i.e. Rs.70.
read lessAnswered on 18/04/2018 Learn Entrepreneurship
Anil Ghai
Teacher with 15 years + experience
A cash budget is an estimation of the cashinflows and outflows for a business over a specific period of time, and this budget is used to assess whether the entity has sufficient cash to operate.
Capital budgeting, and investment appraisal, is the planning process used to determine whether an organization's long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure
read lessAnswered on 11/03/2018 Learn Entrepreneurship
Apex Academy
The chartered accountant would have advised them to prepare a partnership agreement. The partnership agreement may have following four inportant items besides name, nature and place of business.
1) Contribution made by each partner as a part of initial capital.
2) Profit / loss sharing details for each partner.
3) Partner's authority.
4) Decision making process with reference to partnership firm.
5) Process to be following in case of withdrawal / death of the partner.
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Answered on 11/03/2018 Learn Entrepreneurship
Apex Academy
Gross working capital is sum of all current assets of the firm so we need to add all current assets to calculate gross working capital as follows.
Gross working capital
= Cash + Debtors + Short Term Inv + Stocks
= Rs (20000+50000+30000+70000)
= Rs 170000.
Net working capital
= Current Assets - Current Liabilities
= Rs 170000 - (5000 + 15000 + 4000)
= Rs 146000.
read lessAnswered on 11/03/2018 Learn Entrepreneurship
Apex Academy
Answered on 11/03/2018 Learn Entrepreneurship
Apex Academy
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Answered on 11/03/2018 Learn Entrepreneurship
Apex Academy
The idea here is innovative and it requires considerably huge amount of investment as well inherent risk is also prevailing. The kind of investors which invest in such kind of ideas / industry are known as venture capitalist / angel investors. Further the kind of finance which Bhusan and Vinay are getting is a convertible debt. The features of this kind of debt are as follows:
1) They bear fix amount of interest on debt and have typical debtor creditor relationship.
2) They can be converted into equity at the mutually agreed terms and conditions initially, so in case the business picks up and start generating huge profit the debtors convert the debt into equity and start enjoying the profit sharing.
read lessAnswered on 11/03/2018 Learn Entrepreneurship
Apex Academy
Answered on 07/03/2018 Learn Entrepreneurship
Ramya
Primary Teacher
On the basis of definitions studied above, the following are the characteristics of a company:
A company is a creation of law, and is, sometimes called an artificial person. It does not take birth like natural person but comes into existence through law. But a company enjoys all the rights of a natural person. It has right to enter into contracts and own property. It can sue other and can be sued. But it is an artificial person, so it cannot take oath, cannot be presented in court and it cannot be divorced or married.
A company is an artificial person and has a legal entity quite distinct from its members. Being separate legal entity, it bears its own name and acts under a corporate name; it has a seal of its own; its assets are separate and distinct from those of its members.
Its members are its owners but they can be its creditors simultaneously as it has separate legal entity. A shareholder cannot be held liable for the acts of the company even if he holds virtually the entire share capital. The shareholders are not agents of the company and so they cannot bind it by their acts.
The life of company is not related with the life of members. Law creates the company and dissolve it. The death, insolvency or transfer of shares of members does not, in any way, affect the existence of a company.
According to Tennyson-
“For men may come, men may go,
But I go on forever.”
In the case of company it may be said that members may come and members may go but the company goes on. It is a legal person having come into being by law and only law can bring its end and none else.
On incorporation a company becomes legal entity with perpetual succession and a common seal. The common seal of the company is of great importance. It acts as the official signature of the company. As the company has no physical form, it cannot sign its name on a contract. The name of the company must be engraved on the common seal. A document not bearing the common seal of the company is not authentic and has no legal importance.
The limited liability is another important feature of the company. If anything goes wrong with the company his risk is only to the extent of the amount of his shares and nothing more. If some amount is uncalled upon a share, he is liable to pay it and not beyond that.
The creditors of a company cannot get their claims satisfied beyond the assets of the company. The liability of members of a company ‘limited by guarantee’ is limited to the amount of guarantee.
A shareholder can transfer his shares to any person without the consent of other members. Under Articles of Association, a company can put certain restriction on the transfer of shares but it cannot altogether stop it. Private company can put more restrictions on the transferability of shares.
The field of work of a company is fixed by its charter. The Memorandum of Association. A company cannot do anything beyond the powers defined in it. Its action is, therefore, limited. In order to do the work beyond the memorandum of association, there is a need for its alteration.
A company is a voluntary association of persons to earn profits. It is formed for the accomplishment of some public good and whatsoever profit is divided among its shareholders. A company cannot be formed to carry on an activity against the public policy and having no profit motive.
The shareholders of company are widely scattered. It is not possible for all the shareholders to take part in the management. They leave their task to the representatives the Board of Directors and the company is managed by Board of Directors.
A company is created by law, carries on its affairs according to law and ultimately is affected by law. Generally, the existence of a company is terminated by means of winding up.
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Answered on 11/03/2018 Learn Entrepreneurship
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