Month: September 2022

Online shopping is being popular among all age groups. There is exponential growth in this kind of market. More online stores are opening, and competition is also becoming higher to sell products. But online marketplaces are building trust and giving convenient opportunities to their buyers. Shopaholics are smarter; they search and compare products before making the final payment. Some people still have fear and don’t like to buy products online, but others are frequent buyers. Over many disadvantages, people are becoming aware of the importance of online shopping, primarily due to the Covid-19 emergency we are facing. Here we are discussing the reasons why online shopping is better.

A recent study of users who have bought products on the Web has three important findings with implications for Web design:

• Convenience and ease of use are the main reasons people buy at websites
• Shoppers only buy 5% of the time they visit e-commerce sites: facilitate product research, cross-shopping, and other non-buying tasks that account for 95% of visits if you want to turn people into loyal users
• E-commerce is going international, with many users buying from foreign sites (this latter conclusion is less true for American customers who mainly buy from domestic sites, but it has profound implications for American vendors who can sell a lot overseas if they bother to serve international customers).

Huge Selection and Variety of Products

Physical stores have limited stock. They only keep those things which are common and most selling. There are many different reasons which affect the availability of other products. The local retailer also tries to sell their limited stock. While online shopping showcase variety from their stock and various stores. 63% of shoppers shop online because you can browse and select products as per your choice and latest trend. You can even buy used products online. Another reason why online shopping is trending is that you will easily find various products on a single platform.

Ease of Buying Attracts Customers

Respondents were asked to list the five most important reasons to shop on the Web. Even though low prices definitely do attract customers, pricing was only the third-most important issue for respondents. Most of the answers were related to making it easy, pleasant, and efficient to buy.

Better Prices with Coupons/Discounts

The purpose of online shopping is not only the availability of a wide range of different products. But they offer a lower price as well. That’s the one reason why do people shop online. There are several options available to compare prices from different stores. Believe nothing problematic at lower prices. E-Retailers only reduce their profit margin to attract customers. They understand the weakness of buyers. Occasionally e-retailers offer discounts on different products and best deals to increase their sale among competitors.

Apart from a retailer’s direct discount, you may use exclusive coupon codes and deals available on coupon sites. For example, Amazon are giants in e-retailing, and most of us buy from this site due to trust and secure transactions. Around 41% of shoppers shop online because of this advantage they get.

Less Stressful

Shopping online significantly saves one of a lot of stress. When you are online, there is no fear of bumping into a crowd or having to join a long queue before you purchase whatever you want to buy. This is so different from going to the supermarket to buy things, most times, you have to get on a queue just to make payment and this can be stressful.

Some locations of some supermarkets are also in top cities where there are many people and each time someone goes out to get things to buy, the road can be very crowded and sometimes one can even be robbed if one is not careful.

No Sales Pressure in Online Shopping

When you visit physical stores, the floor assistants try to lure you into buying more items. Sometimes we go inside the store to buy one thing but return home with additional three or four items, which we later realize are of no use. If the product is not available in your favorite color, then the floor assistant may also convince you for a different color to increase store sales. The purpose of online shopping is to remove this pressure from the customer and make shopping easy. Sometimes when you enter a store, you don’t want to leave it without buying anything. It happens to most of us due to different psychological reasons. These activities and behaviors feel like a pressure to buy unwanted items, and shoppers must not feel so while visiting or leaving a shop. It is why online shopping is preferred by around 39% of shoppers.

Easier to Return Goods and Cancel Orders

Before making your purchase there is the option where you can read up the reviews given by other buyers that have used the product. Reviews go a long way in dictating the way a particular product works, and it can help you select which one fits best for the purpose you desire it to be used for.

Marketer’s, marketing plan is driven by their perception of why and how do consumers behave as they do and how they are likely to respond to the various marketing mix elements. But in reality, in most of the markets, buyers differ enormously in terms of their buying dynamics. So the marketer has got a mammoth task of identifying these complex differences. For, if one were to consider the consumer markets, buyers typically will differ in terms of their age, income, educational levels and geographical locations.

Apart from this, the more fundamental differences will be in terms of their personality, lifestyles and their expectations. Despite these complexities, it is imperative that the marketing manager understands the dynamics of the consumers buying process; otherwise the costs and competitive implications of failing to do so would be very high. Under the marketing approach, organisations were engaged in carrying out market researches to identify the consumer’s underlying needs and develop product or service offerings to match those needs. Apart from a wider product range, the advertising and media managers were required to work on diverse campaigns and be more creative in communicating the product benefits.

Now since the entire marketing efforts are focused on the ‘consumer’, the talking also involves using behavioural terms. In this context, the product or service is positioned to deliver a set of benefits to a specific (defined) segment of consumers. The advertising manager aims at communicating symbols and images to indicate how the brand delivers these benefits and create a favourable attitude towards the brand and thereby induce trial among the customers. It is also possible, through advertising to influence consumers to go for repurchase of products or services.

Implications of Managerial Approach

Managerial perspective on consumer behaviour tends to be more micro and cognitive in nature. The term micro is used because the manager is focusing on the individual consumer his or her attitudes, perceptions and lifestyle and demographic features.

Further, the external factors influence in terms of the reference groups, the family, social class and culture are studied in order to know how they influence the individual consumer. The cognitive nature emphasises on the thought processes of individual consumers and the factors which influence their decision-making processes.

From the marketing manager’s perspective, it is necessary to satisfy the needs of the individual consumer through suitable product or service offerings. Hence, the necessity to gather information on the consumer’s needs, thought processes characteristic features. Such information will be useful in segmenting the target market on the basis of various parameters.

However, the manager has to be vary of a few risks associated with the managerial approach:

• It would not be correct to go by a strictly cognitive approach. This is because, the consumers may not always adopt a systematic decision-making process, especially when purchasing products on impulse or habitual basis (buy toothpaste, tooth brush etc.) Such products have symbolic value and do not require the consumer to be involved in a systematic information processing.
• It would be incorrect to overlook the dynamics of environmental factors influencing the consumers decision-making process. For instance, gifts purchased for ritual purposes would have to be culturally derived. This reason may be overlooked if only a micro view is taken, where the focus is exclusively on the individual consumer.
• Another risk could arise if the managers were to focus more on the purchase aspect rather than on consumption. While trying to work on the consumer satisfaction level managers have realised that this can be understood by looking at the post purchase behaviour or the consumption front and not merely the purchase experience. It is for this reason that marketing managers are entering into relationship based marketing with their consumers. Moreover, to a great extent this relationship marketing will depend on the consumption experience.

Thus, it will be more helpful if the marketers were to adopt a ‘holistic approach’ to the study of consumer behaviour. For this, marketing managers will have to make efforts to understand the environmental context of the consumer’s actions, the cognitive processes involved in their decision-making process and then work out suitable marketing strategies accordingly.

Consumers Perspective on Consumer Behaviour

Above, we have discussed the manager’s perspective on consumer behaviour, now we will try to view it from the consumer’s eye. Both, the managerial and consumer perspectives differ on three accounts.

(a) Managers seek product information so as to come out with product offerings, which will work as vehicles of influences. Whereas, consumers tend to evaluate information for the purpose of making better decisions on purchase choices.

(b) Marketing manager’s workout strategies which are product or brand specific. While the consumers have the tendency to evaluate various brands before actually purchasing products. Further, the consumer’s choice, although may not appear to be related but in reality could be a reflection of their desires and lifestyle. Such behaviour could be visible in their buying food items (eating Pizza, Burgers), wearing Ruf-n-Tuf jeans and Reebok shoes and owning a Blackberry cellular phone could be a reflection of the individual consumer’s lifestyle and desires.

(c) Managers may view competition as a threat. Whereas, for the consumer, availability of more brands (i.e., more competition) will work as an opportunity to compare, have more choices and get a few products at lower prices too.

For managers, study of consumer behaviour will help to offer good quality products and acquire the necessary accurate information to ensure the building up of a loyal customer base in the long-run.

As consumers, the study of consumer behaviour will provide them insights into their own consumption-related decisions and thereby enable them to become better and wiser consumers.

Current trends have indicated that marketers need to be sensitive to the changes in consumer needs, demographic characteristics and lifestyles and develop effective marketing strategies. Evaluation of marketing strategies is more valid because of the greater value orientation on the part of the consumers’ today. They desire for more customised products because of their accessibility to better and more information on products and services.

In order to survive in the highly competitive market, marketers are working towards building customer relationship. The three drivers of successful relationships between marketers and customers are customer value, high levels of customer satisfaction and building a structure of customer retention.

Increased Demand for Transparency

There is an increasing customer demand around transparency. Big corporations have abused the trust of the customer for a long time. We’ve seen many scandals within various industries from food to automotive. That’s the reason why the customers of today require transparency on the supply chain, ingredients, and processes and so on.

Health conscious

Perhaps unsurprisingly, consumers are far more health conscious than before. According to Accenture, health ranked as consumers’ top priority right now. With 80% of surveyed people reporting that the health of their friends and family is at the top of their minds, followed by 78% who were most concerned with their personal health.

After months of increased hand washing, wearing protective masks and isolating indoors, hygiene will remain at the forefront of everyone’s minds. Research from Shekel shows that 87% of US shoppers would now rather shop in stores with touchless self-checkout capabilities.

But it’s not just about the short-term impact of contracting Covid-19. According to Forbes, the global pandemic has caused people to think about ageing. In particular, how they can lead a healthy lifestyle into their old age.

Accelerated Online Buying

Customers will accelerate buying online and using home delivery. This was already happening, but the pandemic revealed to skeptics that it’s easy, it works and it makes their life easier. All businesses will need to have an online strategy or they’re going to get beaten by their competitors that embrace and execute an online sale and marketing strategy.

Community driven

Although the coronavirus crisis has been a time of extreme isolation, it has actually brought communities around the globe together. Just think back to those videos of Italians singing to their neighbours in the height of lockdown, or the weekly applause for carers adopted by countries worldwide.

Nationwide lockdowns have taught people to appreciate the value of those around them, leading to a more selfless way of thinking. Across the world, online community groups have sprung up offering support to neighbours, whether it be through food and medicine delivery services or through online social interaction. These groups are likely to stick around for some time, according to Forbes.

B2B Customers Gaining More Leverage

Business-to-business customers will continue to have more and more leverage with tech vendors from checking authentic reviews to managing the sales cycle on their timeline and even benefiting from group buying pricing. Buying is changing for B2B and it’s a blessing. I encourage customers to have more leverage and power as it will result in a better relationship, less buyer remorse and higher retention.

Flexible first

Of course, while online shopping is set to boom, there’s still the issue of consumers feeling confident in their purchases. After months of living through an ever-changing and, dare we say it, ‘uncertain’ situation, the way consumers make purchasing decisions has changed.

With talk of global recession and further lockdowns, consumers feel nervous about the future and their finances. As a result, they’re struggling to commit to their purchases, especially if there’s an element of risk involved. Research by Global Web Index reveals that 1 in 5 internet users across 20 markets will be looking for more flexible payments options in the coming months.

Increased Demand for Anonymity

Customers will demand more anonymity. Given continued data breaches combined with recent politicization of electronic and social media footprints of private citizens, a new trend will emerge where assurances of security will no longer suffice. Companies will need to accommodate customers who will simply refuse to provide any information beyond what is needed for a particular transaction.

The Base for Carrying Financial Transactions

A savings account can be used to send and receive payments and it serves as a base for all transactions. Every transaction in a saving account can be done either by net banking, debit card, cheque or withdrawal slip. Financial transactions can also be carried out swiftly by using NEFT/RTGS/IMPS facilities.

Individual/Firm/Company

A bank may be a person, firm, or company. A banking company means a company that is in the business of banking.

Dealing in Money

The bank is a financial institution which deals with other people’s money, i.e., the money given by depositors.

Acceptance of Deposit

A bank accepts money from people in deposits that are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian of funds of its customers.

Giving Advances

A bank lends out the money in loans to those who require it for different purposes.

Agency and Utility Services

A bank provides various banking facilities to its customers. They include general utility services and agency services.

Payment and Withdrawal

A bank provides an easy payment and withdrawal facility to its customers in checks and drafts. It also brings bank money into circulation. This money is in the form of checks, drafts, etc.

Profit and Service Orientation

A bank is a profit-seeking institution with having service-oriented approach.

Ever-increasing

Functions Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services, and activities of a bank.

Connecting Link

A bank acts as a connecting link between borrowers and lenders of money. Banks collect money from those who have surplus money and give the same to those who require money.

Banking Business

A bank’s main activity should be to do banking business that should not be subsidiary to any other business.

Name Identity

A bank should always add the word “bank” to its name to enable people to know that it is a bank and deals in money.

Investment Transactions

We normally have the following two types of investments transactions:

• Cum Dividend or Cum Interest Quotations and
• Ex-Dividend or Ex-Interest Quotations

Cum Dividend or Cum Interest Quotations

Interest and dividend on the fixed investments accrued on regular interval, but payment of those are made only on fixed dates. Dividends are always paid to the persons, who are shareholder at the time of payouts. Suppose a shareholder sold his shares after keeping those shares in his hand up to ten months, then dividends on those shares will be paid to the buyer or we can say, to new shareholder.

So, a seller at the time of selling shares normally charge value of the accrued dividends up to the date of sale, and this is called ‘CUM DIVIDEND” or “CUM INTEREST”. Since, the sale price is inclusive of the value of a share and interest or dividend, therefore at the time of entry in the books of accounts, normal price of share should be booked in the investment account and the value of dividend or interest should be debited to dividend or interest account.

At the time of receiving dividend or interest, dividend or interests account will be credited, debiting cash or bank account. On the other hand, in the books of seller, normal price of the share should be credited to Investment account and the price of accrued dividend or interest should be credited to the dividend or interest account as the case may be.

Accounting Entries: It can be understand through the following table.

In the Books of Seller

x-Dividend or Ex-Interest Quotations

The buyer of shares when he is quoted ex-dividend is not entitled to receive the payment. It is the interval between the record date and the payment date during which the stock trades without its dividend. Therefore, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock.

Difference between Cum-dividend and Ex-Dividend

Major differences between them are given as:

• Cum interest or dividend prices are inclusive of the interest or dividend accrued at the date of purchase, whereas in case of the ex-dividend, prices are excluding value of the dividend or interest.
• The purchase price is higher than normal purchase price in case of Cum-dividend, whereas purchase price is the real price in case of ex-dividend.
• Nothing is payable additional in case of Cum-Interest, whereas separate amount of the dividend or interest has to be paid in case of the ex-dividend or ex-interest.

Balancing the Investment Account

Difference of debit and credit side of the investment account is Profit or Loss in case where all the investments are sold.

In case where part of the investments are sold and the balance investments stand unsold, it should be carried forward to the next accounting period and remaining balance of the two sides (debit and credit) will represent profit or loss on the sale of investment.

In case where investments are the fixed assets, then the profit or loss will be of capital revenue or capital loss and should be treated accordingly.

Equity Share Accounts

• Bonus Shares: Bonus shares are issued by the profitable companies to the existing shareholders of the company without any additional amount. Purpose of the bonus share is to capitalize reserves of the company. Only number of the shares will be added in face value column, and principle or capital column will remain unchanged.
• Right Shares: Right shares are first offered to the existing shareholders of the company as a matter of the right, hence called as right shares. As per Companies Act, right shares can be issued after two years of the establishment of a company or after one year of first issue.

Investment accounting is the management and analysis of accounts actively involved in investments. Working in this profession allows you to make business investment decisions and choose stocks, bonds and debts that are stable and profitable. Thoroughly exploring the answer to, ‘What is investment accounting?’ can help you learn more about the profession and help you determine whether it is the right career choice. In this article, we discuss what investment accounting is, explore what an investment accountant does, understand their average salary and skills and discover steps to become an investment accountant.

When researching various accounting careers, you might wonder, ‘What is investment accounting?’. Investment accounting is a specialization in the accounting field that analyses and manages investments accounts. While some manage their investments, people with large investment portfolios hire certified investment accountants. Investment accounting involves managing bonds, stocks and other investments for brokerage firms and portfolio managers. Professionals working in investment accounting field are investment accountants who monitor clients’ investments, manage debt investments and keep track of any third-party investment activities.

Common job duties for an investment accountant:

• Monitor client investments: These professionals monitor and maintain the investment of clients and businesses. They understand various rules about managing investments in a particular region.
• Manage debt investment: Debt investment is another key responsibility of investment accountants. When companies or individual wants to invest in stable and predictable options, these professionals prefer debt investments over stocks.
• Track third-party activities: A part of an investment accountant’s job role involves tracking their clients’ investments. Tracking these activities is essential because it affects a client’s financial standing.
• Prepare tax reports: Another critical job duty of an investment accountant is creating tax reports that give details about the company’s investment accounts. So, it is essential to maintain accurate records.
• Analyze investment activities: Employers expect these professionals to analyse the company’s investment activities and make proper recommendations to management personnel.
• Coordinate with others: Investment accountants coordinate and manage every aspect of the general ledger accounting. These professionals interact with other accountants and portfolio managers to manage ledger accounting.
• Ensure compliance: Many organisations rely on these accountants to process taxes and reports that comply with relevant regulations.

Employers expect these professionals who are knowledgeable in bonds, stocks and precious metals like shares and gold, among other forms of investment. It is essential to keep track of the constantly changing investment field to perform their job duties.

If the investor intends to hold an investment to its maturity date (which effectively limits this accounting method to debt instruments) and has the ability to do so, the investment is classified as held to maturity. This investment is initially recorded at cost, with amortization adjustments thereafter to reflect any premium or discount at which it was purchased. The investment may also be written down to reflect any permanent impairments. There is no ongoing adjustment to market value for this type of investment. This approach cannot be applied to equity instruments, since they have no maturity date.

Trading Security

If the investor intends to sell its investment in the short-term for a profit, the investment is classified as a trading security. This investment is initially recorded at cost. At the end of each subsequent accounting period, adjust the recorded investment to its fair value as of the end of the period. Any unrealized holding gains and losses are to be recorded in operating income. This investment can be either a debt or equity instrument.

Available for Sale

An available for sale investment cannot be categorized as a held to maturity or trading security. This investment is initially recorded at cost. At the end of each subsequent accounting period, adjust the recorded investment to its fair value as of the end of the period. Any unrealized holding gains and losses are to be recorded in other comprehensive income until they have been sold.

Equity Method

If the investor has significant operating or financial control over the investee (generally considered being at least a 20% interest), the equity method should be used. This investment is initially recorded at cost. In subsequent periods, the investor recognizes its share of the profits and losses of the investee, after intra-entity profits and losses have been deducted. Also, if the investee issues dividends to the investor, the dividends are deducted from the investor’s investment in the investee.

Realized Gains and Losses

An important concept in the accounting for investments is whether a gain or loss has been realized. A realized gain is achieved by the sale of an investment, as is a realized loss. Conversely, an unrealized gain or loss is associated with a change in the fair value of an investment that is still owned by the investor.

There are other circumstances than the outright sale of an investment that are considered realized losses. When this happens, a realized loss is recognized in the income statement and the carrying amount of the investment is written down by a corresponding amount. For example, when there is a permanent loss on a held security, the entire amount of the loss is considered a realized loss, and is written off. A permanent loss is typically related to the bankruptcy or liquidity problems of an investee.

An unrealized gain or loss is not subject to immediate taxation. This gain or loss is only recognized for tax purposes when it is realized through the sale of the underlying security. This means that there may be a difference between the tax basis of securities and their carrying amount in the accounting records of the investor, which is considered a temporary difference.

Farm final accounts can be prepared according to any of the following two methods:

1. Single Entry Method.
2. Double Entry Method.

Single Entry Method:

This method does not require maintenance of an elaborate system of accounting to ascertain the profit or loss and financial position of the business. The method requires the preparation of two statements of affairs one at the beginning of the accounting period and the other at the end of the accounting period.

The excess of assets over liabilities is the net-worth of the business. The profit or loss made by the business during a period can be ascertained by comparing the net-worth of the business on two dates, after making suitable adjustments for drawings, introduction of additional capital etc. (For more details, refer Single Entry System of Accounting).

Double Entry Method:

Accounting information contained in the accounting records may be presented in the form of an account for each type of product, for example, Wheat Account, Rice Account etc. Each Account is to be debited with opening stock, and the relevant expenses incurred, and the relevant expenses in­curred, and credited with the sale proceeds and the closing stock.

The difference between the two sides of each account shows profit or loss. The profit or loss of each such account is transferred to General Profit and Loss Account, to which common expenses of all the activities of the farm are charged so as to arrive at net profit or loss, to be transferred to Capital Account. Finally, Balance Sheet is prepared.

Farm accounting or accounting for agricultural farms is the application of accounting practices to agricultural operations. In recent years, commercial fanning has been engaging the attention of many and as a result a number of farmers are coming up. Corporate entities are entering into the farming business in a big way.

Therefore, the Institute of Cost and Works Accountant of India issued a book­let, explaining how the farm books should be kept and how the profit or loss arising from the farming operations should be ascertained. The farm accounting is a technique of using accounting data for cost and profit ascertainment of each farming activity and decision making with regard to the most profitable line of activity.

Accounting for Farms:

Transactions, relating to farming activities may be categorized into four-Cash, credit, and exchange and notional. The cash and credit transactions are recorded in normal manner as any other business transaction.

The exchange transactions, in the nature of barter, for example, exchange of animal labour for human labour, exchange of seeds for output, etc. are normally recorded at opportunity cost the price in the open market.

Notional transactions are those that take place between the members of the owner’s family and the farm, viewing the farm as an independent entity notionally. Some examples of such transactions are: use of household capital, use of land owned by the farm household, labour provided by members of the family, consumption of output by the family etc.

Profitability of Crops:

The performance of each crop shall be found out separately. The direct cost clearly identifiable with a crop shall be charged accordingly. The common cost should be suitably allocated on some accepted basis, For instance, depreciation or repairs can be divided on the basis of estimation of usage by different crops. Interest on fixed loan can be divided on the basis of length of crop season etc.

Books of Accounts:

The basic document needed is farm diary, where transactions are recorded in chronological or­der:

(1) Cash book:

As the business is carried on by families, it may not have time and resources for an elaborate system. The business is mostly carried on cash basis and therefore, by provid­ing analytical columns in the cash book, both on receipts and payments side, the accounting can be made very simple.

Analytical column cash book will help the farmer to do away with other subsidiary books and also the ledger and yet, he will obtain all the information, he needs to prepare the final accounts.

(2) Debtors and Creditors Register, to keep credit transactions.

(3) Stock Register, which shows input and output of goods, sale, wastage and balance of stock.

(4) Fixed Assets Register contains details of cost of assets, depreciation and balance of assets.

(5) Loan Register, contains record of loans, details of interest etc.

(6) Register for Notional Transactions for making a record of transactions between farm and farm household.

(7) Cost Analysis register, for keeping records of each farming activity, in order to know the profit of each activity.