Tag: Cost Control and Management Accounting Osmania University b.com Notes

Secondary market is also called as after market. Stock exchange is the secondary market. The stock exchange is the medium through which the exchange of shares, Equities takes place between the seller and the buyer. Secondary market is the place where most of the trading takes place. The trading of shares and capital in secondary market takes place between the buyer and the seller, company is not involved in transactions. The price of share is decided by demand and supply of the shares and price keeps on fluctuating. In secondary market no new stocks are issued, only trading of stocks is there.

Benefits

Secondary markets are have benefits because they provide liquidity to investors. Buying and selling securities quickly often reduces the amount of value lost on a trade. These markets also allow smaller investors to get involved with trading securities. Many investors don’t initially have access to initial public offerings (IPOs), so secondary markets provide resources for smaller investors. Here’s a list of other ways that illustrate the importance of secondary markets:

• They provide adequate resources for a company’s fair valuation.
• They help indicate the economic health of a country by revealing booms and recessions.
• They drive security prices toward their genuine market value through supply and demand.

Limitations of Secondary Market

• Buying and selling in a secondary market can be time consuming. Investors have to deal with the tedious paperwork involved before completing final transactions.
• The prices of securities in a secondary market are subject to high volatility. Price fluctuations may lead to sudden or unpredictable losses for investors.
• Investors must be careful with their brokerage commissions because they are taxed every time the trade is made. Commissions can have a huge impact on investors and may even dent your profit margin if you’re not paying attention.
• Multiple external factors influence the investments in a secondary capital market thereby subjecting them to high risk. These may lead investors’ existing valuations to change rapidly within seconds.

When a company publicly sells new stocks and bonds for the first time, it does so in the primary capital market. This market is also called the new issues market. In many cases, the new issue takes the form of an initial public offering (IPO). When investors purchase securities on the primary capital market, the company that offers the securities hires an underwriting firm to review it and create a prospectus outlining the price and other details of the securities to be issued.

All issues on the primary market are subject to strict regulation. Companies must file statements with the Securities and Exchange Commission (SEC) and other securities agencies and must wait before their filings are approved before they can go public.

Companies that issue securities through the primary capital market may hire investment bankers to obtain commitments from large institutional investors to purchase the securities when first offered. Small investors are often unable to purchase securities at this point because the company and its investment bankers want to sell all of the available securities in a short period of time to meet the required volume, and they must focus on marketing the sale to large investors who can buy more securities at once. Marketing the sale to investors can often include a road show or dog and pony show, in which investment bankers and the company’s leadership travel to meet with potential investors and convince them of the value of the security being issued.

Prices are often volatile in the primary market because demand is often hard to predict when a security is first issued. That’s why a lot of IPOs are set at low prices.

A company can raise more equity in the primary market after entering the secondary market through a rights offering. The company will offer prorated rights based on share investors already own. Another option is a private placement, where a company may sell directly to a large investor such as a hedge fund or a bank. In this case, the shares are not made public.

Benefits / Advantages of Primary Market

1. Mobilization of Saving: Primary market helps in mobilising surplus savings of individuals and others to investment.
2. Channelizing Savings for Productive Use: The funds raised in the primary market are mainly used for expansion, diversification and modernisation purposes of the corporate.
3. Source of Large Supply of Funds: The new issue market is a market for raising long term capital funds from investors who are spread across the country. Thus, large amount of funds can be raised for a longer period.
4. Rapid Industrial Growth: Investment of the surplus saving by the corporate in industrial sector led to increase in production and productivity in the economy.

Disadvantages of Primary Market

Primary market operating in the country is not free from any defects and some of the important defects of the primary market in India are given below.

1. Possibility of Deceiving Investors: The corporate raising money through public issue may not disclose detailed information in the prospectus, in order to deceive investors.
2. No Fixed Norms for Project Appraisal: The projects for which money is raised are to be evaluated in terms of financial, economic, profitability and market feasibility by the project manager. As there are no fixed norms for the appraisal of a project, the evaluation is subject to the personal capability and judgement of the project.
3. Ineffective Role of Merchant Bankers: The merchant bankers perform most of the pre-issue and post issue obligations with regarded to the new issue. But it has

Electronic procurement, also known as e-procurement or supplier exchange, is the process of requisitioning, ordering and purchasing goods and services online. It is a business-to-business process.

Unlike e-commerce, e-procurement utilizes a supplier’s closed system and is only available to registered users. E-procurement facilitates interactions between preferred suppliers and customers through bids, purchase orders and invoices.

E-procurement started in the 1980s, following the development of Electronic Data Interchange (EDI). A decade later, improvements in EDI allowed organizations to develop online catalogs for vendors. Today, e-procurement involves everything from supplier evaluation and selection to contract management, electronic orders and payments.

Implementation Steps

Assess Your Current Process

Before you can introduce a new procurement solution, it’s important to have a clear understanding of the current process. Analyse every step of the procurement process, including how long each task takes, the suppliers involved, controlled commodities, payment methods, and compliance checks.

A typical master dataset consists of the following:

• Product and services master catalog: Unique numbering and naming of all routinely procured goods and services. The product naming and nomenclature is made consistent across your entire organization and your business units so that the same item is recorded with the same code and name across every transaction.
• Supplier master directory: Consolidated directory of suppliers across your entire organization. All goods and services in the master catalog should be mapped to the suppliers in a many-to-many relational structure.
• Master category list: List of all categories against which goods and services are classified for reporting and analytics purposes and to support strategic planning and budgeting. All items in the master catalog should be mapped to these categories.
• Organizational structure: A chart representing the breakdown of your organizational structure, specifically aligned to the way your procurement process flows. This helps create a structure against which users can be assigned relevant user roles and permissions, and approval workflows can be created. The organizational structure may include your head office, branch offices and regional locations, business units and departments, discrete functional units and teams, and any other independent procuring unit within your overall procurement organization.
• User directory and permissions: All levels of users of the system such as executives, managers, audit, finance, procurement agents, purchasers, storekeeper, and end-users. Once defined, you can also assign broad permissions and roles and responsibilities for these users. These users should be defined for each organizational entity that you have defined and mapped accordingly.
• Procurement approval workflow and hierarchy definition: For the users defined, approval hierarchies should be defined for use in procurement workflows along with any conditional flows and alternate workflows.
• Historical transactions: Uploading a year of historical data comprising transactions conducted, items procured, and supplier engaged enables you to set a baseline for your future procurement. This ensures that on future purchases of similar items, you have some price history and intelligence to guide your purchase decisions.

Identify any Potential Gaps

Once the assessment is completed, you will have a better understanding of where there’s wasted time, duplicated efforts, lack of visibility, non-compliance or supplier issues and other factors that the new e-procurement system will need to solve.

Think About the Benefits

When a business truly adopts an e-procurement solution and gains 100% user adoption, purchasing compliance increases ten-fold, more spend is brought under management, and goods and services can be negotiated at better prices from strategic suppliers. In addition, e-procurement can:

• Optimise spend by reducing maverick purchases
• Seize discounts by combining orders and purchasing in volume
• Increase overall transaction speed
• Standardise the purchasing experience
• Provide more spend visibility
• Negotiate more favorable contracts with strategic suppliers
• Strengthen supplier relationships
• Safeguard against risk and supply chain disruption
• Alleviates routine tasks so procurement teams can focus on strategic initiatives
• Minimise fraudulent purchases

Choose A Provider

There are many e-procurement providers on the market and initial research may make it feel a little overwhelming. When you begin your search for the perfect e-procurement solution, it’s important to take into consideration all relevant stakeholders’ needs. Make sure you lead with your requirements and understand your budget to ensure both are met. Refer to the procurement section of this source-to-pay checklist for some suggested functionality to review in your demo(s) with each provider and clearly communicate what you’d like to see, so you can fairly evaluate each.

Create An Implementation Plan

Once a solution provider is awarded, you need to develop a plan for the implementation of your e-procurement strategy. Before kicking off the implementation project, it’s important to ensure you have the proper time and resources allocated. To minimise disruption, we suggest establishing key points of contact for each team affected and frequently communicate progress throughout the process.

Analyse

Once the e-procurement solution is in place, you’ll need to monitor performance and analyse results. When doing this, keep in mind the KPIs set out earlier or refer to this eBook for key metrics to watch.

The term “Startup” has gained a lot of popularity these days. More and more individuals are interested in becoming entrepreneurs and therefore open their own business. Therefore, there are also more entities interested in helping new businesses.

A startup is a company established by one or more entrepreneurs to create unique and irreplaceable products or services. It aims at bringing innovation and building ideas quickly.

Nature:

Growth

An startup is company whose goal is grow and expand rapidly, taking up to sometimes drastic proportions. This is one of the points that distinguished startup a Small business.

Age

An startup is new company which is still in early stages brand management, sales and hiring employees. Too often the allocation of this concept to Business who have been on the market for less than 3 years, however, this is not true. That is, one company You can have 7 years and is still a startup.

Innovation

A business this type need to have a differentiator competition in order to gain competitive advantage in the market. It is innovation may be present in their products or in the business model associated with company.

Risk

Once a startup It has shed innovative strongly present, there are always several associated uncertainties about ensuring the success of the business. For this reason, these Business are considered risk investments with a high failure rate.

Solving a problem

Associated with your shed innovative, this Type of company focuses on solving any existing problem in the market. So they focus on making a difference not only in the marketplace but also in people’s lives through your product or service.

Flexibility

A startup is very dynamic and ready to adapt to the adversities that may arise. Due to the need for validation of your business idea, these Business need to be ready to tailor their product to meet customer requirements.

Types:

Small business startups. These businesses are created by regular people and are self-funded. They grow at their own pace and usually have a good site but don’t have an app. Grocery stores, hairdressers, bakers, and travel agents are the perfect examples.

Scalable startups. Companies in a tech niche often belong to this group. Since technology companies often have great potential, they can easily access the global market. Tech businesses can receive financial support from investors and grow into international companies. Examples of such startups include Google, Uber, Facebook, and Twitter. These startups hire the best workers and search for investors to boost the development of their ideas and scale.

Lifestyle startups. People who have hobbies and are eager to work on their passion can create a lifestyle startup. They can make a living by doing what they love. We can see a lot of examples of lifestyle startups. Let’s take dancers, for instance. They actively open online dance schools to teach children and adults to dance and earn money this way.

Big business startups. Large companies have a finite lifespan since customers’ preferences, technologies, and competitors change over time. That’s why businesses should be ready to adapt to new conditions. As a result, they design innovative products that can satisfy the needs of modern customers.

Buyable startups. In the technology and software industry, some people design a startup from scratch to sell it to a bigger company later. Giants like Amazon and Uber buy small startups to develop them over time and receive benefits.

Social startups. These startups exist despite the general belief that the main aim of all startups is to earn money. There are still companies designed to do good for other people, and they are called social startups. Examples include charities and non-profit organizations that exist thanks to donations. For instance, Code.org, a non-profit organization, encourages school students in the US to learn computer science.

Sniffing is the process of monitoring and capturing all the packets passing through a given network using sniffing tools. It is a form of “tapping phone wires” and get to know about the conversation. It is also called wiretapping applied to the computer networks.

There is so much possibility that if a set of enterprise switch ports is open, then one of their employees can sniff the whole traffic of the network. Anyone in the same physical location can plug into the network using Ethernet cable or connect wirelessly to that network and sniff the total traffic.

In other words, Sniffing allows you to see all sorts of traffic, both protected and unprotected. In the right conditions and with the right protocols in place, an attacking party may be able to gather information that can be used for further attacks or to cause other issues for the network or system owner.

Types of Sniffing

Sniffing can be either Active or Passive in nature.

Passive Sniffing

In passive sniffing, the traffic is locked but it is not altered in any way. Passive sniffing allows listening only. It works with Hub devices. On a hub device, the traffic is sent to all the ports. In a network that uses hubs to connect systems, all hosts on the network can see the traffic. Therefore, an attacker can easily capture traffic going through.

The good news is that hubs are almost obsolete nowadays. Most modern networks use switches. Hence, passive sniffing is no more effective.

Active Sniffing

In active sniffing, the traffic is not only locked and monitored, but it may also be altered in some way as determined by the attack. Active sniffing is used to sniff a switch-based network. It involves injecting address resolution packets (ARP) into a target network to flood on the switch content addressable memory (CAM) table. CAM keeps track of which host is connected to which port.

Cyber–Vandalism

The term vandalism describes the deliberate act of damaging or destroying another person or company’s property without their permission. For example, with a computer, hardware vandalism is the act of intentionally breaking or destroying computer hardware. For example, a student could purposely damage a laptop given to them by the school.

Vandalism or cyber-vandalism could include any of the following.

• Intentionally damaging or destroying a digital object.
• Post fake reviews.
• Hacking into and defacing a website.
• Giving bad information on a forum or wiki.
• Posting fake news on a social network.
• Cheating or creating bots to cheat in online gaming.
• Post a virus or other malware for others to download unknowingly.

• Retail and Wholesale

E-commerce has a number of applications in retail and wholesale. E-retailing or on-line retailing is the selling of goods from Business-to-Consumer through electronic storesthat are designed using the electronic catalog and shopping cart model. Cybermall is a single Website that offers different products and services at one Internet location. It attracts the customer and the seller into one virtual space through a Web browser.

• Online marketing and purchasing

Data collection about customer behavior, preferences, needs and buying patterns is possible through Web and E-commerce. This helps marketing activities such as price fixation, negotiation, product feature enhancement and relationship with the customer.

• Manufacturing

E-commerce is also used in the supply chain operations of a company. Some companies form an electronic exchange by providing together buy and sell goods, trade market information and run back office information such as inventory control. This speeds up the flow of raw material and finished goods among the members of the business community. Various issues related to the strategic and competitive issues limit the implementation of the business models.

• Finance

Financial companies are using E-commerce to a large extent. Customers can check the balances of their savings and loan accounts, transfer money to their other account and pay their bill through on-line banking or E-banking. Another application of E-commerce is on-line stock trading. Many Websites provide access to news, charts, information about company profile and analyst rating on the stocks.

On-line banking; issues of transaction costs; Accounting and auditing implications where “intangible” assets and human capital must be tangibly valued in an increasingly knowledge based economy.

• E-Banking

Online banking or E- banking is an electronic payment system that enables customers of a financial institution to conduct financial transactions on a website operated by the institution, Online banking is also referred as internet banking, e-banking, virtual banking and by other terms.

• Production and Operations Management:

The impact of on-line processing has led to reduced cycle times. It takes seconds to deliver digitized products and services electronically; Similarly, the time for processing orders can be reduced by more than 90 per cent from days to

minutes

• Online Auction

Customer-to-Customer E-commerce is direct selling of goods and services among customers. It also includes electronic auctions that involve bidding. Bidding is a special type of auction that allows prospective buyers to bid for an item.

• Online publishing

Electronic publishing (also referred to as e-publishing or digital publishing) includes the digital publication of e-books, digital magazines, and the development of digital libraries and catalogs.

• Online booking (Ticket, Seat.etc)

An Internet booking engine (IBE) is an application which helps the travel and tourism industry support reservation through the Internet. It helps consumers to book flights, hotels, holiday packages, insurance and other services online. This is a much-needed application for the aviation industry as it has become one of the fastest growing sales channels.

• Human Resource Management:

Issues of on-line recruiting, home working and “intra-pruners” working on a project by project basis replacing permanent employees.

• Business Law and Ethics:

The different legal and ethical issues that have arisen as a result of a global “Virtual” market. Issues are copyright laws, privacy of customer information, and legality of electronic contracts.

Media Convergence simply refers to the merging of different types of mass media such as Traditional Media, Print Media, Broadcast Media, New Media and the Internet as well as portable and highly interactive technologies through digital media platforms. This results in the combination of 3Cs, i.e. Communication, Computing and Content as all three are integrated through technology. The most relevant example of media convergence is a Smartphone that blends together various media, i.e. print media (e-books, news apps), broadcast media (streaming websites, radio, music apps) as well as new media (the internet) into a single device that performs various functions from calling and texting to photography, videography, gaming and so much more.

Advantages:

The content producers can specifically target the best audience or group they are aiming towards by publishing customized content.

The instant availability of news and moment-based content is one of the top advantages of media convergence between traditional media and new media.

With media convergence, the audience has also become the creator themselves. From memes to social media posts, media convergence has truly been beneficial to integrate audience on a global level.

With the media convergence between traditional media and new media, the cost of digital marketing has also become economical thus making this process beneficial and affordable.

Another important benefit of media convergence that it has broadened the limitations of traditional media by blending it with new media, thus providing instant and latest content on an international level.

Types of Media Convergence are:

• Technological Convergence
• Economic Convergence
• Cultural Convergence

Technological Convergence

Technological convergence is a term that describes the layers of abstraction which enables different technologies to interoperate efficiently as a convergent system. It is when new technologies are created and take over from past technologies and perform the same task in a more efficient manner. Technological convergence is the combination of computing, communication, and content around networked digital media platforms.

Economic Convergence

Just like the general definition of Economic convergence which suggests that countries with lower GDPs are going to grow faster than countries with higher GDP, the Economic media convergence allows a single company to target larger interest groups through various kinds of media.

Cultural Convergence

This concept of media convergence occurs when two or more cultures adopt each other’s traits and become more alike. Those  Increasing similarities between cultures are not limited to beliefs of consumer brands and media. Some of the major forms of cultural media convergence are:

• Acculturation: When weaker among two cultures adopt traits from more dominant culture e.g Indians mostly speaking the English language.
• Assimilation: When original traits of weaker culture are completely erased and replaced by traces of more dominant culture e.g war immigrants no longer speak the native language.

3 C’s of Media Convergence

The 3Cs of Media Convergence are Computing, Communications, and Content. Media Convergence unites these 3Cs of Computing, Communications and Content and is an immediate result of digitization and promotion of the Internet. To put it even more simply, the convergence of Content with Communication technologies and Computer Networks is what leads to Media Convergence.

E-payment introduces digital circulation to realize information transmission, so all means of e-payment are digitalized. But, traditional payment is realized through physical circulation such as cash circulation, bill transfer and bank exchange.

The working environment of e-payment is based on an open system platform i.e. internet, while the traditional payment is operated in a relatively closed system.

E-payment has a very high requirement for both hardware and software facilities, generally including online terminals, relevant software and some other supporting facilities, while traditional payment does not have such a high requirement.

E-payment enjoys advantages for it is convenient, fast, efficient and economic. As long as the user has a computer connecting to the internet, he will be able to stay indoors and complete the whole payment within a very short time. The cost is even less than one per cent of that of the traditional way.

i) Where amount is lent in one installment

Procedure for calculation of Average Due Date when lending in lump sum but repayment in installments, is as follows:

1. The basic day is the lending date. Calculate the number of days (or months or years) from the date of lending to the date of each payment.
2. Find out the total number of days/months/years as calculated above.
3. Divide the total as calculated by number of installments to repay the loan.
4. Add the result (obtained above) to the date of loan to get Average Due Date.

Average due Date = Date of Loan + [Total number of days/months/years calculated from the date of loan to the repayment of installments / installments]

ii) Where amount is lent in various installments

1. Take any convenient date (preferably the first due date) as the Starting Point or Zero Date or Start Date or Focal Date or Base Date.
2. Count the number of days of each transaction from the base date.
3. Multiply the amount of each transaction with the number of days thus calculated.
4. Add all the products so obtained.
5. Add the amount of all transactions.
6. Divide the total products by total amount (of all items)
7. The result of is the number of days by which average due date is away from the Base Date

iii) Taking Grace Days into account

iv) Calculation of Due Date few months after date / Sight.

Average Due Date is the date on which several debts due on different dates can be paid by a single payment without any loss of interest either to debtor or creditor. Average Due Date or Equated Due Date is the arithmetic average of several due dates.

When a person owes various amounts on different dates to another person, it may be desired to discharge the debts on a single date by a lump sum payment without any loss of interest to either party.

Such an equated date of payment is called the Average Due Date. The application of the average due date comes into use in settlement of accounts, such as, Bill transactions, payment of credit transactions, calculation of interest on drawings by part­ners etc.

The concept of Average due date (ADD) is generally used in the following situations:

• For settling accounts between principle and agent.
• Calculating interest on drawings of partners.
• For settling contra accounts e.g. where parties sell goods to each other.
• Making lump sum payment against various bills drawn on different dates with different due dates.

Average due Date = Base date ± [Total of the products / Total of the amounts]

Points to Remember for Calculation:

• Base date/ zero date may be taken as the due date of the first transaction or the due date of the last transaction or any other due date between the first and the last but preferably an earlier due date may be taken.
• While calculating the number of days always ignore the first day and include the last day.
• If the due date is in the fraction, round it off.
• If the amount is paid before the due date, a rebate is given. While, where the amount is paid after the due date, then interest will be charged.
• Due date: Due date means the date on which the amount becomes payable.
• Maturity date: Always calculate the Maturity date after taking into consideration three days of Grace. Calculation of Due Date when there is a Holiday on maturity day, due date is the next preceding working or business day.

Uses

• The settlement of accounts by a series of bills of exchange due on different dates.
• Problems relating to the calculation of interest on drawings by partners, on different dates.
• The settlement of accounts between one trader and another or a trader and his customers.