Category: Maharashtra State Board Notes

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 10 Computer in Accounting students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 10 Computer in Accounting

Introduction, Concept of Computerized Accounting System (CAS)-

In modern age, computer is becoming inseparable automation instrument for business as well as individual. Nowadays knowledge and operation of computer are considered as an essential thing. If a person does not know the use of computer, its usefulness is questionable. Today most of the entities – including small traders – prepare their accounts using computers. Because of computers, business entities can store, use and analyse the raw data as and when required. In modern days, it is difficult to find out a field in which computer is not used, which shows its importance.

Applications of computers for accounting has grown phenomenally, when accounts are maintained using computers raw data based on vouchers and other documents are entered into computer. Computer process such raw data. This process includes recording, storing, analysing and retrieving information. Computers can store information, analyse them and such information can be retrieved when required. However, they respond according to set of instructions given to it and such instructions are known as Programme or Software. Based on such software only, computer processes raw data and generates meaningful information or reports as and when required.

Computerized accounting system are connected through computer, network server or remote accessed device with internet. Every company or firm prepares their reports as per Generally Accepted Accounting Principles (GAPP).

Features of Computerized Accounting System-

(1) Integrated date & Information : Computerized Accounting System is developed and designed for all business activities like purchase, sales, finance, inventory, payroll and manufacturing which is user friendly, automated and integrated for such process. Dueto computerized accounting system, businessman keep their accounting records accurate, up-to-date and get information within no time. When Computerized Accounting is mixed with Management Information System (MIS) with multi-lingual and Data organization capabilities to support the company then all the business operations will be easy and cost effective.

(2) Accuracy and Speed As per the need of business, Computerized Accouting has various templates and software due to which fast and accurate data entry and transactions operations are possible which generates various information and reports quickly and automatically.

(3) Quick Decision Making : Based on information and reports generated by Computerized Accounting System, the company or firm can plan its activities, can take quick decision and can access complete and critical information of the company.

(4) Modern and Integrated : Computerized Accouting System perform functions at much higher speed than the speed of human beings which saves time and other resources. If accounts are prepared with the help of computer. Trial balance and Final accounts can be derived at any point of time within fraction of seconds.

(5) Immediate Availability of Books of Accounts : Due to Computerized Accounting System, books and registers tike Cash book, Purchase register, Sales register, Bank book, Account of Receivables and Payables are readily available at any point of time.

(6) Security: By keeping security control at various stage, data and information in Computerized
Accouting System can be kept confidential and more secured. This kind of the security is not possible in the traditional accounting system.

(7) Transparency: For the business, greater transparency is possible in the day to day business operations due to Computerized Accounting System.

(8) Grouping of Accounts : In the Computerized Accouting System grouping of Accounts is easily possible. As per the business requirements, groups like Assets, Liabilities, Income, Expenditure, etc. and their subgroups can be derived as per convenience of user.

Importance of Computerized Accounting System-

Following are the points of importance of Computerized Accounting System for the various types of business organizations, firms, companies, etc.

• Automation: Compared to manual accounting calculations, all the calculations are automatically
  done by the accounting software with minimum time and without mistakes.
• Multi-user Facilities : Computerized Accounting System with multi-user facility enables business ‘
  houses to access accounting information online or offline, inside or outside the office, .
  simultaneously. –
• Accuracy: Computers performs functions with high degree of accuracy. If hardware, software and ^
  humanware are proper, the Computerised Accouting System can assure of accurate outcome.
• Speed : Computerized Accounting software perform functions at much higher speed than the speed of human beings. If accounts are prepared with the help of computer, final accounts can be prepared in much lesser time and as per user requirements.
• Reduction in cost: Reduction in cost due to Computerized Accounting System is possible as less persons in less time can complete the work with more speed and more accuracy.
• Systematic and up-to-date records: Compterized Accounting System ensures systematic and up-to-date financial records of the business organization.
• Huge Storage Capacity: Manual accounting requires seperate books and registers to be maintained
  every year while in Computerized Accounting System records of many years can be stored in system / computer.
• Compact: The voluminous financial information can be stored in a compact way by the means of hard disk or external storage device which requires very little Space.
• Transferability / Sharing Information : Business organization can share the financial information to interested parties through pen drive or through internet.

Components of Computerized Accounting System-

(a) Hardware : Hardware comprises of electronic equipments that includes computers, hard disks, monitors, printers and the network that connects with them. Most modern accouting system require a network, the system of electronic linkages which allows many computers to the main computer or server which stores the program and data, with right communication of hardware and software, one can perform all the work on site.

(b) Software : Software is a set of instructions and programme that can direct and perform desired task as required by users. Accounting software accepts, edits and stores transactions and data and generates reports as per the requirement.

(c) Personel: Personel / Humanware is the people who dealt with computer and software and play an imortant role in effective implementation of Computerized Accounting System.

Management of a Computerized Accounting System requires careful planning of data and access to the data. Security is sought by setting passwords, codes, etc. at different stage which gives them more safety of data.

Creation of Accounting Documents-

In accounting software generally the following components are used :

• Creation of Accounting Documents : With the help of computer software, different accounting documents like cash memos, vouchers, receipts, invoices, etc. can be created / prepared.
• Recording of Transactions: Day to day business transactions can be recorded through computerized accounting software which reduces the paper work.
• Preparation of Trial balance and Financial Statements: Based on the recorded business transactions, data is transferred into ledger through software and vouchers are also prepared. From these data, Final accounts are prepared automatically.

Transactions with missing data or other critical information are not accepted by the system.

Comparision between Manual Accounting Process and Computerized Accounting Process.

Basis of Difference	Manual Accounting	Computerized Accounting
(1) Meaning	Manual accounting is the system in which each business transactions are recorded in books of accounts like journal and ledger.	Computer accounting is the system in which transactions are recorded by using computers and accouting software for digital record.
(2) Calculation and total	In this system, all calculations are done manually. Here, balance of each accounts are to be found out by making total of debit and credit side	In this system, all calculations are done by computer system. Here, balance of each accounts are calculated / found automatically.
(3) Ledger Accounts	From the journal, recorded transactions have to be posted in different ledger accounts manually, so chances of mistake is always there.	Here, once a voucher is entered, it will automatically posted in the different ledger accounts without any mistake.
(4) Trial Balance	After posting, trial balance is to be prepared by taking balance of each ledger accounts.	Trial balance is automatically prepared using accounting software.
(5) Record of Adjustment Entries	Adjustment journal entries and its posting in the ledger accounts will be done manually one by one.	Adjustment entries are to be passed in the system, and posting in the ledger accounts will be done automatically.
(6) Financial Statements	Financial Statements are prepared manually by transferring trial balance figures carefully.	With the help of accounting software, such financial statements are automatically prepared after recording adjustment entries.
(7) Closing the books	After close of every year; in the beginning of year, opening balances are required to be carried forward in new books of accounts.	There is no need for recording opening balances as the balances are automatically carried forward to next year.

Sourcing of Accounting Software-

Before acquiring accounting software, expertise of people responsible in business for accounting work is to be considered, as people are responsible for accounting and not the computers.

The choice of the accounting software would depend upon the suitability to the organisation or firm, in terms of accounting and financial needs. From this perspective available accounting packages are classified into the following categories :

(a) Ready to use
(b) Customized
(c) Tailored
(d) Free and Open Source

(a) Ready to use: Ready to use software is suitable and developed for the need of organization or firm whose volume of accounting transactions are less. Ready to use software is cost effective and relatively easier to learn. Such software have many features and low level of secrecy. This kind of the software may not have linkage benefits.

(b) Customized : As per the need of the special requirements of customer, when accounting software is developed, it is known as Customized software, which is suitable for large and medium size businesses. Customization includes modification and addition to the software contents, provision for the specified number of users and other authentication, etc. The cost of training and installation and maintenance of customized software is relatively high. Customized software can be linked to the other infromation system with proper level of secrecy.

(c) Tailored : When software are designed and developed according to the need of a customer with multi-users facility and geographically scattered locations, it is known as Tailored software. This kind of the software form an important part of organizational Management Information System (MIS). The Secrecy and authenticity checks are most important things in such software. This software needs specialized training to the users and they offer high flexibility in terms of number of users.

(d) Free and Open Source ; When small business or firm wants to use accounting software but do not have enough budget, then they try to get it from open source software available on the internet, which can be downloaded and installed from the websites.

Legal / Licensed vs Pirated Accounting Software-

As Per the business needs, one should select legal and open source accounting software from the available packages and applications in the market.

Legal Software : Full functional and safe software, can be updated as per statutory changes.
Pirated Software: Cracked software, nearly full functional, but illegal to use and risky from the data safety point of view, i.e. data can be corrupted.

Demo Software : Used for demo purpose with all major features but with a very few restrictions.

Voucher Types in Tally

Voucher Types	Its Uses
F4 (Contra)	This voucher is used to deposit cash into the bank. Withdrawal of cash from the bank Transfer of fund i.e. cash from one Account to another. It is also used to transfer fund from one bank to another Bank.
F5 (Payment)	All types of payments i.e. payment by cash and payment by cheque are recorded through this voucher. Credit items of a payment voucher shall be either Cash or Bank Account only. There can be two modes : Single Entry Mode or Double Entry Mode.
F6 (Receipt)	There can be only two types of receipts, viz. Cash receipts and Bank receipts. Both these receipts has to be entered here. Debit item of Receipt Voucher will always be either Bank or Cash. TWo modes of voucher are : Single Entry Mode or Double Entry Mode.
F7 (Journal)	F7 (Journal) voucher is used for non-cash transactions, e.g., depreciation, provisions, transfer entries, purchase of fixed assets on credit etc. Journal voucher never to be used for credit sales or credit purchases.
F8 (Sales)	This voucher i.e. F8 (Sales) voucher is used for cash sales as well as credit sales. There are two modes viz. “As Invoice” or “As Voucher”. Write Party’s A/c Name when ledger to be debited and write Cash in case of Cash Sales.
F9 (Purchase)	This voucher type is used for Credit Purchases as well as Cash Purchases. There are two modes viz. “As Invoice” or “As Voucher”. Party’s A/c name is written when ledger to be credited.

 

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 8 Company Accounts – Issue of Shares students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 8 Company Accounts – Issue of Shares

Share and Share Capital-

Introduction : As the volume and scale of trade and industry expanded, especially after the Industrial Revolution (i.e. around 1760), a very large unit of commercial organisation requiring large capital and greater managerial skill called joint stock company came into existence rapidly. The company fulfils its need of large amount of capital from large number of investors called shareholders. The company raises its capital in the form of shares and debentures. The capital collected through issue of shares is called “Owned Capital” and capital collected by issue of debentures is called “Borrowed Capital”.

Meaning and Definition- The owned capital of a company, when divided into a large number of small parts having equal face value is called a Share. According to Section 2(84) of the Indian Companies Act, 2013, “Share means share in the share capital of the company and includes stock except where a distinction between stock and share is expressed or implied.”

A share is a unit of measurement of the share capital of a company. For instance, a capital of ₹ 2 crore may be divided into 20 lakh shares of ₹ 10 each.

According to the provisions made under Section 86 of the Companies Act 1956, now company is authorised to issue two types of shares viz. (i) Equity Shares and (ii) Preference Shares.

(i) Equity or Ordinary Shares : The shares other than preference shares are called Equity or Ordinary Shares. In other words, an equity share is the one which has no special preferential right as to dividend or repayment of capital. They participate in the profits of the company after all preferential rights have
been satisfied. They are risk bearer and real owners of the company. They get the dividend after payment of all expenses and dividend to preference share holders. An equity shareholder has normal voting rights and a right to participate in the management.

(ii) Preference Shares : According to provisions of the Companies Act 2013, a ‘Preference Share’, is a type of share which enjoys priority or preference over equity share for the payment of dividend at a predetermined fixed rate and for repayment of capital. It means preference shareholders are paid dividend at a predetermined fixed rate before any dividend is paid to the equity shareholders. Similarly, in the case of the winding up of the company, preference share capital is refunded first.

Types of Preference Shares : The different types of preference shares are :

• Cumulative and Non-cumulative Preference Shares
• Redeemable and Irredeemable Preference Shares
• Participating and Non-participating Preference Shares
• Convertible and Non-convertible Preference Shares

Types of Share Capital-

The different types of share capital are explained below :

(1) Authorised / Registered / Nominal Capital: This is the maximum limit up to which a company is authorised to raise share capital. It is mentioned in the capital clause of the Memorandum of Association. Authorised capital is determined by considering future financial requirements of the company. It is also called ‘Registered Capital’ or ‘Nominal Capital’. It can, however, be increased subsequently by altering capital clause of the Memorandum of Association.

(2) Issued Capital: It is that part of the authorised capital which is issued or offered for subscription to the public. The company issues shares as and when it needs additional capital. Issued capital also includes the nominal value of shares issued by the company to the public for cash, bonus shares, promoters of the company and vendors other than cash. The part of the authorised capital which is not yet issued to the public is called Unissued Capital.

(3) Subscribed Share Capital: It is that part of the issued capital which the company has actually received by way of application from the public and also allotted by the Company. It is the total amount of the face value of the number of shares applied for. Subscribed share capital also covers the face value of shares issued by the company for consideration other than cash. The part of the issued capital which is not subscribed by the public is called Unsubscribed Capital.

(4) Called-up Share Capital: The company collects the capital in instalments payable on application, allotment, first call, second call, etc. Called-up share capital is that part of the subscribed capital which is demanded (called-up) by the company from the applicants of the shares. The part of the subscribed capital which is not yet called up by the company is called Uncalled Capital.

(5) Paid-up Share Capital: All the shareholders may not pay the entire amount called-up by the company. That part of the called-up capital which is actually paid by the shareholders is called paid-up share capital. It may be equal to or less than called-up share capital. The difference between called up capital and paid up capital is known as Calls-in-Arrears.

(6) Reserve Capital: According to provisions made under the Companies Act, 2013, a company may maintain reserve capital by passing a special resolution. Reserve share capital is that part of the subscribed capital which is reserved to be called-up only at the time of winding up or liquidation of the company. It is created to offer additional security to the creditors.

Treatment of Share Capital in Balance Sheet-

Types / Methods of Issue of share capital:

1. Right issue to equity shareholders (sec. 62)
2. Employee stock option scheme (sec. 62 (l)(b))
3. To Any person (sec. 62 (1) (c)):
   • Private placement of shares (sec. 42)
   • Public issue of shares
   • Sweat Equity shares (sec. 54)
4. Issue of Bonus shares to members / shareholders (sec. 63 (1))

All the above mention methods of issue of shares capital is commonly acceptable by private company and public company.

(1) Right Issue to Equity Shareholders :
Meaning: Right issue of equity shares issued by the company in which existing shareholders are given priority or right of purchasing right issue shares. And also existing shareholders may get right issue shares at discounted price.

Same accounting entries are to be passed in the books of company as those for issue of ordinary shares to the public.

(2) Employees Stock Option Scheme :
Meaning: When company issue shares to its employees at a price lower than market price for the encouragement of employees to acquire ownership in the form of shares is known as Employees stock option scheme.

New accounts like Employees Compensation Expense account, Deferred Employees Compensation Expense account, etc. are opened. Based on fair value and intrinsic value of option, Accounting value is found out.

(3) (a) Private Placement of Shares :
Meaning: Direct private offering of the company’s securities to a selected group of sophisticated investors.

• Private placement is governed through SEBI.
• It is less expensive and less time consuming process.

(b) Public Offer:
Meaning : Public offer of shares implies selling of shares which are listed on stock exchange directly to public by issue of prospectus.

Through IPO capital collected is recorded as stockholder equity in the Balance Sheet.

(c) Sweat Equity Shares :
Meaning: When equity shares are issued by a company to its directors or employees at a discount or for any consideration other than cash, for any obligation of either side etc. is known as sweat equity shares. (Section 2(88) of the companies Act, 2013)

If the consideration is not by the way of cash, then it can be carried to the Balance Sheet of the company as per accounting standards.

(4) Issue of Bonus Shares :
Meaning : When company distributed equity shares to its current shareholders as fully paid, without any charge, then it is known as bonus shares.

Amount of Bonus shares transferred from different reserve to equity share capital.

Accounting for Share Capital-

Public Issue of Shares:
This is one of the important methods of issue of shares in primary market where new and first hand securities like shares and debentures are sold. Public issue of shares implies selling shares directly to public by issue of prospectus. Under this method issuing company makes direct appeal to the public or prospective investors to buy its shares. The procedure adopted by the issuing company to subscribe its shares is stated as follows :

(1) Issue of Prospectus : Under this method, the issuing company invites the prospective investors or the public to make an offer to purchase its shares through a prospectus. The prospectus gives details of number of shares offered to the public, the face value of shares and amount to be paid on application, allotment and calls.

(2) Receipt of Application : An offer made by the prospective investors to buy the shares is called an application. According to Section 39 (2) of the Companies Act, 2013, a company must receive at least 5 % of the nominal of face value of each share applied for or such other percentage or amount as may be indicated by SEBI. While calculating the amount of application money, premium and discount should not be taken into account. The company makes its application forms available to the public through its brokers and banks. All the money received on application for shares must be deposited in a scheduled bank.

(3) Allotment of Shares : The allotment of shares means distribution to the applicants all or certain number of shares in response to their applications. A company is allowed to make allotment of shares only after receiving minimum subscription amount of 90 % of the issued amount within 60 days from the date of closure of issue. If the company accepts the applications, it issues letter of allotment to the applicants and in case of rejection of shares it issues letter of regret to the applicants and the application money is refunded to the applicants.

(4) Calls on Shares : Call on shares is a request or demand made by the company to its shareholders to pay the whole or part of unpaid balance on shares held by them. There may be 1st call and 2nd and final call. The maximum amount of call per share should not exceed 25 % of the face value of the share. For instance, if the face value of the share is ₹ 10, the amount of a call should not exceed ₹ 2.50 at a time. A minimum notice of 14 days should be issued by the company to the members for the payment of call.

Pro Forma Journal Entries for Accounting of Issue of Equity Shares :

Issue of Shares at Par, Discount and Premium :

The value or price which is fixed for each share by the company is called face value. It is specified in the Memorandum of Association of the company. The value or price at which a company decides to sell its shares is called issue price which is different from its face value. Shares may be issued by the company to the public either at par or at a premium or at a discount.

Issue of Shares at Par : Shares are said to be issued at par when they are issued at their face value.
Example : When a share of ₹ 10 is issued at ₹ 10 only, it is said to be issued at par.

Issue of Shares at a Discount : Shares are said to be issued at a discount when they are issued at a price, less than their face value.

Example : When a share of ₹ 10 is issued at ₹ 9, it is said to be issued at a discount. In this case the difference between the face value and actual selling price is called the amount of discount, i.e. ₹ 10 – ₹ 9 = ₹ 1.

Pro forma journal entry for issue of shares at a discount:

When a discount is allowed at the time of share allotment:

Note : (i) Discount on issue of shares is a capital loss to the company. Hence it is shown on the assets side of Balance Sheet under the head “Miscellaneous Expenditure” as “Discount on Issue of Shares”.
(ii) As per new provision of government Act (2013), Public issue of shares cannot be at a discount.

Issue of Shares at a Premium : Shares are said to be issued at a premium when the shareholders are required to pay a price higher than the face value of the shares. The difference between the issue price and the face value is called the premium. For example, if a share whose face value is ₹ 10 is issued by the company at ₹ 50 the share is said to be issued at a premium of ₹ 40. Section 78 of the Companies Act, 1956, provides that the premium amount collected by the company must be deposited into a separate account called Share Premium Account. It is considered as capital gain. Share premium amount must be disclosed separately in the Balance Sheet of the company.

The share premium amount should be used for the following purposes :

• Premium amount cannot be paid as dividend to a shareholders. However, premium amount may be capitalised by the company by issuing fully paid bonus shares free of charge at a pro-rata basis to the existing equity shareholders.
• The amount received as premium is required to be deposited in a separate Bank Account called Share Premium Account.
• To write off the preliminary expenses of the company.
• To write off the expenses paid, commission paid or discount allowed on any issue of shares or debentures of the company.
• To provide for the premium payable on the redemption (repayment) of the redeemable preference shares or debentures of a company.
• To buy back its own shares.

Pro Forma Journal Entries for Issue of Shares on Premium :

(1) When premium amount is called by company with application money :

(Being money received with application transferred to Share Capital A/c and Securities Premium A/c)

(2) If premium amount is called with allotment money :

(Being share allotment money and premium amount due from shareholders)

Over Subscription and Under Subscription-

Over Subscription : When a company is in receipt of shares more than those actually offered or issued to the public, the issue is said to be over-subscribed. In case of over subscription, the company allots the shares by selecting any one of the following methods :

(i) Lottery method (ii) Pro-rata method (iii) Firm allotment method and (iv) Datewise method.
In the recent era most of the companies adopt pro-rata method to allot the shares. Under pro-rata method each applicant is allotted shares in proportion to the number of shares applied for by him.
Under Subscription : When a company is in receipt of applications for shares less than those actually offered or to be issued to the public, the issue is said to be under subscribed.

Full Subscription : When a company is in receipt of applications for shares equal to those actually issued to the public, the issue is said to be fully subscribed.

Pro Forma Journal Entries for Over Subscription:

Pro-rata / Proportionate Allotment:
When the number of shares applied for, is more than the number of shares issued, then directors proportionately issued shares on the basis of total shares application received and the number of shares issued. Under this circumstances, each applicant gets the shares less than those demanded or applied by him. In other way, directors can reject certain excess applications and refund their money and can allow full shares to some applicants and make pro-rata allotment to other where excess application money received adjusted with allotment money demanded.

Journal Entries:

(Being excess application money adjusted with allotment money)

Calls-in-Advance and Calls-in-Arrears-

Calls-in-Arrears : On account of several reasons, some shareholders fail to pay allotment or call money inspite of reminders sent to them. Such unpaid instalments are called Calls-in-Arrears. It is also called Unpaid Calls. Calls-in-Arrears represent the amount due but not yet collected from shareholders.
It is deducted from the called-up capital. The balancing amount represents paid-up capital. Paid-up capital is shown in the Balance Sheet. The defaulter shareholders are required to pay interest on the unpaid call amount at the rate of 5 % per annum for the period from the due date to the date of payment of such call amount. Usually provisions made in Articles of Association empower the directors to charge interest on the amount of Calls-in-Arrears.

Pro Forma Journal Entries of Calls-in-Arrears :

(1) Entry to record calls-in-arrears :

(Being share allotment money and call money still outstanding)

(2) Interest due on calls-in-arrears :

(Being interest on unpaid calls due)

(3) Receipt of interest:

(Being interest on outstanding calls received from shareholders)

Calls-in-Advance : A company may receive the money in advance from the shareholders, on the calls yet to be made. Calls-in-Advance is accepted by the company only when Articles of Association authorise the company to do so. As per Table A’, a company is required to pay interest at the rate of 6 % per annum on the amount received in advance to the shareholders. At the end of the accounting the balance appearing in the Calls-in-Advance Account is shown in the Balance Sheet under the head ‘Share Capital’. However it is not added to share capital.

Pro Forma Journal Entries of Calls-in-Advance :

(1) Receipt of call-in-advance :

(Being amount received for Calls-in-Advance)

(2) Adjustment of calls in advance :

(Being amount of calls in advance adjusted)

(3) Interest due on calls-in-advance :

(Being interest due to shareholders)

(4) On payment of interest on the amount of calls-in-advance :

(Being interest amount paid to shareholders)

(5) Transfer of interest on calls-in-advance to Profit and Loss A/c :

(Being interest transferred to Profit and Loss A/c)

Issue of Shares for Consideration other than Cash-

Many times a company may purchase some fixed assets such as building, machinery, furniture, etc., and pay purchase consideration to the vendor partly in cash and partly in the form of fully paid equity shares. It may also take over the business of partnership firm or other company and pay purchase consideration partly or fully in the form of fully paid-up shares.

Pro Forma Journal Entries for Issue of Shares for Consideration Other than Cash :

(1) Purchase of fixed assets :

(Being assets and liabilities taken over at agreed values and balance amount payable to vendor)

(2) Purchase consideration paid to vendor :

(Being purchase consideration paid by issue of fully paid shares at premium)

Allotment / issue of Shares to Promoters :
Sometimes a company compensates its promoters for their meritorious services by issuing its shares to them without receiving any payment. The full amount of these shares is regarded on the cost of goodwill. Entry is passed just same as purchase of any asset for consideration of shares :

Accounting Treatment for-

Forfeiture of Shares:

When a shareholder fails to pay the call money or premium on the shares in spite of repeated reminders and warnings, the company forfeits the shares of such defaulters by passing an appropriate resolution in a Board Meeting. Forfeiture means the compulsory termination of membership and the confiscation (taking possession by law) of the shares of defaulting members by way of penalty for the non-payment of a fixed instalment, call or premium. The Articles of Association of a company, therefore, can empower the Board of Directors of the company to forfeit the shares in case of non-payment of call money. The amount of forfeited shares is transferred to a separate account known as Forfeited Shares Account in the books of accounts of the company. At the end of the accouting year, the balance of Forfeited Shares Account is shown on the Liabilities of Balance Sheet under the heading ‘Share Capital’.

Pro Forma Journal Entries of Forfeiture of Shares and Re-issue of Forfeiture :

1) Forfeiture of shares issued at par :

(Being shares forfeited for non-payment of 1st or 2nd or Third final call money)

2) For forfeiture of shares issued at premium :

(Being share forfeited for non-payment of lst/2nd/final call money)

3) For forfeiture of shares issued at discount:

(Being shares forfeited for non-payment of allotment / First / Second / Final call money)

4) For re-issue of forfeited shares at par :

(Being forfeited shares re-issued at par)

5) For re-issue of forfeited shares at premium :

6) For re-issue of forfeited shares at discount:

(Being forfeited shares re-issued, at discount)

7) For transfer of Share Forfeited A/c :

(Being balance in Share forfeiture A/c transferred to Capital Reserve A/c)

Re-issue of Forfeited Shares :

Forfeited shares remain in the custody of company and become the property of the company. Hence, forfeited shares can be resold by the company at any price. Usually they are sold through auction. They cannot be allotted to the public.

• The issuing company should see that loss incurred on re-issue of forfeited shares should not exceed the forfeited amount.
• If the loss incurred on re-issue of forfeited shares is less than the amount so forfeited, the surplus supposed to be transferred to ‘Capital Reserve Account’.
• If the loss incurred on re-issue of forfeited share is greater than the amount so forfeited, the deficit or loss is required to be transferred and debited to ‘Forfeited Shares Account’.
• If forfeited shares are re-issued at premium, the excess amount so received is to be credited to ‘Share Premium Account’.
• If forfeited shares originally issued at discount are re-issued at loss, the loss incurred on issue of shares originally at discount is to be debited to ‘Discount on Issue of Shares Account’ and the loss incurred on re-issue of shares is to be debited to ‘Forfeited Shares Account’.
• If the total of the amount of forfeiture and amount received on re-issue of shares exceed the face value of the shares re-issued, such surplus amount is required to be transferred to ‘Capital Reserve Account’.

By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 3 Entrepreneurship Development students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 3 Entrepreneurship Development

→ Factors of production: The basic things or inputs or resources such as land, labour, capital and entrepreneur used in the process of production to produce economic goods.

→ Risk-bearing The function of a trader to assume some non-insurable risks such as risk of deterioration in the quality of goods due to passage of time, the risk of spoilage, fall in demand due to a change in fashion, etc.

→ Finance The provision of money for a particular purpose such as capital to build a factory or to run a business, or a loan to a farmer.

→ Technology A body of information and techniques and of skills and experience, developed for the practical purposes including production and use of goods and services.

→ Raw materials: Materials acquired to manufacture a product, e.g. sugar cane is the raw material for a sugar factory.

→ Research and development: Two closely related activities in modern industry by which new products and processes are being continuously developed especially by engineers, designers and scientists.

→ Human resources: The quantity, quality, character and calibre of the people working in a business enterprise. Human resource is one of the important resources of an organisation which makes other resources active.

→ Subsidy: Money or incentive given by the government to certain producers, such as farmers, to help them to produce without loss to themselves and yet at a low price, e.g. export subsidies to encourage foreign trade.

→ Tax holidays: Tax holiday means for the purpose of growth and development the government allows certain factories or industries established in backward areas not to pay any tax to the government for a certain period, say 5 years or more.

→ Capital formation: The practice by consumers of increasing their stock of wealth by not consuming it now; instead, some of it is used to increase the supply of capital goods such as machinery and buildings needed to produce further goods.

→ Auxiliary industries: Service (tertiary) industries such as transport, insurance, bank, etc. which provide supplementary or supportive services to primary and secondary industries.

→ Service tax: A tax levied by the government on various services rendered by the individuals, firms, companies, etc.

→ Corporate tax: A tax charged by the government on the assessable profits of individual firms or a limited company during each accounting period. The rate of corporate tax directly varies with the level of profits of the company. It is as good as income tax payable by companies to the government.

→ Value Added Tax (VAT): A tax levied on a product at each stage of manufacture or distribution in proportion to the estimated increase in its ultimate sales values.

→ Excise duty: An indirect tax levied on the consumption of particular goods. It is often levied at higher rates on the goods whose consumption are injurious or harmful to health, e.g. tobacco, alcohol, etc.

→ Customs duty: A tax imposed by the government on goods imported from abroad. Customs duty is charged either in the form of a percentage of the value of the goods or as a specific duty according to the volume of the goods.

→ Demonstration method: The basic method of instructions for teaching skills type subject matter. This method is recommended for teaching a skill because it covers all the necessary steps in an effective learning order.

→ Socially disadvantaged group: A group whose members have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities.

→ Semi-finished goods: Products that have not been completely assembled or manufactured and usually sent to other departments for finishing and converting them into finished products.

→ Consumers’ education: Knowledge and necessary information given to the consumers to educate and guide them about their rights and duties, marketing procedures, quality standards, availability of credit, etc.

→ Education cess : Cess is an alternative term for a tax. The term ‘cess’ is still frequently used in a few countries including Britain and Ireland to indicate a local tax, Scotland, to indicate a land tax and India applied as a suffix to indicate a category of tax such as property cess, education cess, etc.

→ Income inequality: A considerable gap in the earnings of various sections of society. On one side we find a sizeable number of people earning say ₹ 20,000 – 30,000 per month and another class of people earning millions of rupees per month.

→ Entrepreneurship: The activity of setting up a business, taking on financial risk to earn profit.

→ Innovators: A person who introduces new methods, ideas on products.

→ Entrepreneurs: A person who sets up a business, taking on financial risk to earn profit.

→ Private enterprise: Business on industries that is managed by independent companies or private individuals.

→ Industrial Base: The part of a country or region that is involved in producing goods in large quantities in factories.

→ Freelancing: Freelancing is a self employed person who offers services, by working on several
jobs for various clients at one time.

→ Synthesis: The combination of components or elements to form a connected whole.

→ Hindrances: A thing that provides resistance, delay or obstruction to something or someone.

→ Parametry: A numerical or other measurable factor forming one of a set that defines a system or sets the condition of its operation.

→ Aggrandize: To increase the power, status of wealth. „

→ Incalculable: Too great to be calculated as estimated.

→ Pervasiv : Spreading widely throughout an area or a group of people.

→ Standardisation: The process of making something confirm to a standard.

→ Fatigue: Reduce the efficiency by prolonged activity. ‘

→ Micro finance: Micro finance is a category of financial services targeting individuals and small ‘
business.

→Socio-Economic: Relating to or concurred with the interaction of social and economic factors. –

→Capital gain: A profit from the sale of property or an investment. x

→Incubators: A place, especially with support staff and equipment, made available at low rent to new small business.

→ Greenfield Enterprise: In infrastructure, the projects on the unused lands where there is no need .
to remodel or demolish an existing structure are called greenfield enterprise/project.

→ Collateral security: Collateral security is an asset which a borrower is required to deposit with or pledge to, a lender as a condition of obtaining a loan. It can be sold off if the loan is not repaid.

→ Moratorium period: A moratorium period is a time during the loan term when the borrower is not required to make any repayment.

→ Agritourism: Tourism in which tourists stay with local people in rural areas.

Introduction-

Entrepreneurship is a full time job which requires dedication and hard work. They are innovators, producers, owners, creators, etc. They are regarded as ‘fourth factors of production’.

History –

• In the early 16th century, the term ‘Entrepreneur’ was used by Frenchman for men leading in military expeditions.
• In France, contractors or architects were called entrepreneur around 1700 AD.
• The French economist Richard Cautillon used this term for business and economic activities, in early 18th century.
• In 1848, the famous economist John Sturt Mill described ‘Entrepreneurship’ as the founding of a Private enterprise.
• In India, the industrial base of our economy was very poor at the on set of independence.

The industries were facing difficulties, like shortage of raw material, capital and marketing problems, etc. However, the Indian Government is considerably enhancing the ease of doing business.

Concept-

The concept of entrepreneur differs from industry to industry, country to country and time to time. An entrepreneur is “a person who starts a business and is willing to risk loss in order to make money”. The common words ‘businesses’ and ‘risk’ are f interrelated. If there is no real business or risk, a
person cannot be called as an entrepreneur.

• The small businessman having a grocery shop or the founder of a laundry service across the street is an entrepreneur.
• The founder of the multi-billion companies like Reliance, Tata is an entrepreneur.
• The freelancing plumber, carpenter, electrician work for himself is also an entrepreneur.

The entrepreneurs are passionate to innovate, lead, invent or pioneer with a disruptive product or technology. The size of business, its type, his age, education, success, failure does not matter for a person to become an entrepreneur. They have courage to share an idea or a product and try to make market a better place.

Definitions-

• Webster dictionary gives a definition, “An I entrepreneur is a person who starts a business and is willing to risk loss in order I to make money.”
• The Oxford Dictionary defines “an entrepreneur is a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.”

Characteristics of an Entrepreneur-

• Intellectual Capabilities: An entrepreneur is a creative thinker with good intelligence. New innovative ideas are always floated by these people who have the ability of creative thinking.
• Future Vision: The entrepreneur has the ability of foreseeing the future market conditions. They can take appropriate decision by considering market situations and changes in market conditions. This enables them to take timely actions.
• Hard Work: Hard work is necessary in any type of venture or business activity to make it more successful. He is required to work more tediously, sincerely and seriously for long hours.
• Technical Knowledge: The entrepreneur should have adequate technical knowledge about the products, process, etc. He should also update his technical knowledge to understand latest changes take place in technology.
• Communication Skills: The entrepreneur should have good communicate skill and command over language he speaks. Good communication skill is important to convey ideas and influence customers, employees, creditors, etc.
• Highly Optimistic: To be successful, he should have positive thinking and approach in all the activities he undertakes.
• Risk- bearing capacity: He should be calculative in taking risk while facing challenges and seek more new opportunities.
• Self Confidence: He should be self confident to achieve his goals. He should keep himself motivated and confident to face various obstacles.

Qualities of a Successful Entrepreneur-

• Disciplined: An entrepreneur should have comprehensive strategies and tactics to accomplish the organisational goal. Successful entrepreneur is disciplined enough to take steps every day towards the attainment of his objectives.
• Confidence : An entrepreneur is confident with the knowledge that he will make his business succeed. He shows that confidence in everything he does.
• Open Minded: An entrepreneur has the ability to look at everything around him and realizes that every event and situation is a ‘business opportunity.’
• Self Starter: An entrepreneur is proactive, not waiting for someone to give him permission. For everything that needs to be done, he should start it himself.
• Competitive: An entrepreneur knows that he can do a job better than others. He needs to be competitive to win every game of the business.
• Creativity: An entrepreneur often comes up with solutions which are the synthesis of other items and thus find connection between unrelated events.
• Determination: An entrepreneur is determined to make all of their endeavours succeed, so will try and try again until it does. He is not backdown by defeats or not believe the something cannot be achieved.
• Strong Communication Skills: The entrepreneur has strong communication skills to sell the product and to motivate employees so as to expand and grow business.
• Strong Work Ethics: An entrepreneur’s mind is constantly on his work, whether he is in or out of the work place to ensure that an outcome meets his expectations.
• Passion: Passion to make business better is the most important quality of a successful entrepreneur. He loves his work because there is a joy that his business gives which goes beyond the money.

Functions of an Entrepreneur-

• Innovation: An entrepreneur is basically an innovator. He introduces new combinations of means of production, new products and makes changes in the existing products to satisfy his customers.
• Determination of objectives: An entrepreneur has to determine the aims and objectives of business and differentiate between primary and secondary objectives.
• Development of Markets: An entrepreneur has to find out different ways for marketing the products and services by conducting constant research to increase customers demand.
• New Technology: Everyday there is an invention of new technology in the global world. Introduction of new and advanced technology, scientific methods will always result in growth of business.
• Good Relations: Good and efficient relations between subordinates, superior and employees is necessary to maintain healthy working atmosphere in an organisation.
• Organising Funds: An entrepreneur needs to find out different financial resources because adequate and continuous finance is always necessary for every business.
• Taking Decisions: Timely and correct decisions are important and necessary for a proper business plan. He should always consider the pros and cons for taking any business decisions.

Entrepreneurship Development-

Meaning :
Entrepreneurship is a purposeful activity of an individual or a group of associated individuals undertaken to initiate, maintain and aggrandize profit by production and distribution of economic goods and services. It is a process of setting up a new organisation.

Characteristics of Entrepreneurship :

• Innovation: Entrepreneurship is an innovation in view of changing taste of consumers from time to time. Entrepreneurship focuses on the research and development to produce goods and services to satisfy the customers.
• Economic Activity: Systematically planned activities as per his skills and knowledge to satisfy the human wants and to earn a better livelihood is quality of an entrepreneur. Hence entrepreneurship is an economic activity.
• Organisation building: It is an activity place, time and form utility is considered under one roof.
• Creative Activity: Innovation and creativity in producing something new is a big challenge for the entrepreneur. It is an essential part of entrepreneurs.
• Managerial Skills and leadership : Leadership and managerial skills are the most important quality of an entrepreneur to be successful. He should lead, have more passion of doing something new than just earning profit.
• Skilful Management: With professional and skilled managers, entrepreneurship becomes a successful activity.
• Risk-Bearing: Uncertainty is the risk which cannot be insured against and is incalculable. Entrepreneurs are risk-bearing agents in production.
• Gap Filling Functions: It is the entrepreneur’s job to fill the gap or make up the deficiencies which always exists in the knowledge about the production function.

Process of Entrepreneurship Development –

(1) Training: As against traditional thought that entrepreneurs are born, modern ways thinks entrepreneurs can be made by education and training. Training is a scheme of instructions which is planned, systematic, consistent, pervasive and monitored to measure its effectiveness. It imparts knowledge of marketing of goods, production methods, consumer’s education, etc. Training teaches an entrepreneur for the latest development which can directly or indirectly affects him. By number of methods of training, efficiency of an entrepreneur can be increased.

(2) Entrepreneurship Development Programme (EBP): EDP is a device through which people with talent, entrepreneurial traits are identified, motivated to take up new industrial venture, trained in managing the unit and guided in all aspects of starting a venture/an enterprise. These programmes are designed to strengthen motive, capabilities and help to play his role efficiently.

(3) Steps in EDP:

• Arrangement of Infrastructure.
• Selection of potential entrepreneur.
• Identification of enterprise.
• Actual training program.
• Selection of training personnel.
• Selection of method of training.
• Actual training.
• Monitoring and follow-up.

(4) Objectives of EDP:

• To foster entrepreneurial growth in the country.
• Optimum use of available resources.
• Development of backward regions and improving economic status of socially disadvantaged groups.
• Generation of employment opportunities.
• Widening base for small and medium scale industries.

Recent Initiatives in Entrepreneurship Development –

Start up India :

Meaning : A start-up is defined as an entity having its headquarter in India, which was opened less than 10 years ago and has an annual turnover of less than 100 crores. Government want to encourage entrepreneurship and to promote innovations. The MUDRA Bank’s scheme, a scheme started by Government of India, in providing micro¬finance at low interest rates to low socio-economic background entrepreneurs. It was started in 2016 for economic growth and generate large scale employment. The Government has announced start¬up Indian Action Plan in following areas :

1. Simplification and Handholding : Procedure for start up will be easy and winding up will be on fast track basis.
2. Funding support and Incentives : Indirect participation by government in funding and tax exemptions will be allowed.
3. Industry – Academia Partnership and Incubation : To introduce start up Fests, pre-incubation training, set up incubators, launch programmes for students.

Objectives of Start ups :

• ₹ 10,000 crore start-up funding pool.
• Reduction in patent registration fees.
• Improved Bankruptcy Code i.e. 90 days exit window.
• Freedom from mystifying inspections for first 3 years of operation.
• Freedom from Capital Gain Tax for first 3 years of operation.
• Freedom from tax for first 3 years of operation.
• Self-glorification compliance.
• To target 5 lakh schools, and involve 10 lakh children in innovation-related programmes.
• Encourage entrepreneurship within the country.
• Promote India across the world as a start¬up hub.
• Built Start-up Oasis as Rajasthan Incubation Center.

Stand-up India-

Stand-Up India scheme for financing bank loans between ₹ 10 lakh and ₹ 1 crore to at least one SC/ST borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise.

Following points to be learned:

(1) Objectives (2) Eligibility (3) Nature of loan (4) Purpose of loan (5) Size of loan (6) Interest rate (7) Security (8) Repayment (9) Working Capital (10) Margin money.

Agro Tourism (Rural Tourism)-

Meaning: Agro tourism is a commercial enterprise at a working farm, ranch, or agricultural plant conducted for the enjoyment of visitors that generates supplement income for the owner. Agro tourism provides a chance to reconnect with land and provide ‘hands on experience’ with local food to tourists.

Definition : “Agro tourism is the idea of bringing urban residents to rural areas for leisure travel and spending”.

Maharashtra is at the forefront in developing and promoting agro tourism in India. Agritourism is an activity which brings visitors to farm. It has grown in many countries of the world like Australia, Canada, US, etc. Business planning finding land, employees, record keeping, following regulations insuring crops, preparing for rainy day and its retirement all come under ‘Farm Management’.

Activities in Agro Tourism:

• Outdoor recreation.
• Educational experiences.
• Entertainment.
• Hospitality services.
• On-farm direct sales.

Intrapreneurs –

An intrapreneur is an employee who has the authority and support of his company/employer to implement his own innovative and creative ideas. The main difference between an intrapreneur and an entrepreneur is that, the latter takes financial risk while the intrapreneur does not have to invest his capital. Such innovative ideas may earn good profit for the organisation.

Definition:
Gifford Pinchot ill, “Intrapreneurs are the dreamers who take hands-on responsibility for creating innovation of any kind, within a business.”

By going through these Maharashtra State Board 12th Science Chemistry Notes Chapter 12 Aldehydes, Ketones and Carboxylic Acids students can recall all the concepts quickly.

Maharashtra State Board 12th Chemistry Notes Chapter 12 Aldehydes, Ketones and Carboxylic Acids

General methods of preparation of aldehydes:

General methods of preparation of ketones:

Preparation of Aromatic aldehydes and ketones:

Preparation of carboxylic acids:

The general reactions of aldehydes and ketones:

Reactions of carboxylic acid:

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 2 Accounts of ‘Not for Profit’ Concerns students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 2 Accounts of ‘Not for Profit’ Concerns

Introduction-

In the society we come across with two types of organisations viz. (1) Trading organisation or Profit making organisation and (2) Non-trading organisation or Not for profit-making organisation.

Aim of Trading organisation/concern is to earn maximum profit by undertaking process of manufacturing goods or purchase of goods and sells them at a profit or to earn income by rendering services to its customers. Trading concerns prepare Trading Account, Profit and Loss Account and Balance Sheet to ascertain the profit of the firm and financial position of the firm. Examples of trading organisations are : Sole proprietorship firm, Partnership firm, Public and Private companies, Co-operative organisations, etc. Other type of organisations are Non-trading organisations and the aim of these type of concerns is not to earn profit but to give services to its members or services to the society at large.

Non-trading organisation prepare Receipts and Payments Account to get summary of cash transactions, prepare Income-Expenditure Account to ascertain whether their incomes are sufficient enough to meet their expenditures and prepare Balance sheet to know financial position of organisation as on a particular
date.

Not for Profit Organisation:

• Formed for promotion of art, culture, religion, sports, charity, health, education, etc.
• Main objective is to provide services to its members or society without profit motive.
• Collects income through subscriptions, donations, admission fees from members and grants, subsidies, concessions from Government.
• Spends its income to promote its objectives.
• Never pays dividend to its members.

Meaning of ‘Not for Profit’ Concern-

A concern or an organisation which is formed and established to serve its members and society or general public by undertaking various activities without any profit motive is called a ‘Not for Profit’ concern or organisation. Main objective of these concerns, is to provide social service and to promote art, culture, sports, education, etc. ‘Not for Profit’ concerns collects income through different sources such as subscription from its members, entrance fees / admission fees, donations, government grants or aid, subsidies, etc.

Features of ‘Not for Profit’ Concern-

The features of ‘Not for Profit’ concern are explained as follows :

• Objective :‘Not for Profit’ concern undertakes various activities without any profit motive to promote art, culture, education, religion, sports, charity, health, etc. Its primary objective is to provide goods and services to its members.
• Dividend : ‘Not for Profit’ concern is not allowed to make the payment of any dividend to its members.
• Membership :Any person who is interested in the organisation can become its member by contributing towards entrance fees, life membership fees, subscriptions, etc.
• Democratic Management : The management of this organisation or concern is looked after by the elected representatives of the members. The elected representatives form themselves into a managing committee or governing body. They elect a Chairman and other office bearers such as secretary, treasurer, etc. The Chairman is the official head of the concern. Usually office bearers are working on an honorary basis.
• Accounts to be prepared : It prepares Income and Expenditure Account to record incomes and expenses of the concern and to find out surplus or deficit. Excess of income over expenditure is called surplus while excess of expenditure over income is called deficit.
• Capital fund : It is necessary for every such organisation to have its capital fund. The capital fund of the organisation includes entrance fees, surplus, legacies and donations specifically received, for creating capital fund, etc. The excess of assets over liabilities is also termed as ‘Capital Fund’.
• Special funds :Any receipts, donations or grants received for creation of a certain funds, e.g. Prize fund, Building fund, etc. are credited to such specific funds.

Difference between Profit Organisation and ‘Not for Profit’ Organisation-

Profit Organisation:

1. Meaning: An organisation which Is established with the objective of earning profit and serving society through undertaking production or distribution of goods or services is called Profit organlsat1on.
2. Primary Objective: Primary objective is to earn profit.
3. Trial Balance: It prepares Trial Balance.
4. Net Result: It prepares Profit and Loss A/c to ascertain net result in the form of profit or loss.
5. Accounting Statements: It prepares the following accounting statements:
   (1) Trading Account (2) Profit and Loss Account and (3) Balance Sheet.
6. Owner’s Fund /Capital Fund: Capital balance and balances in Reserves and Surplus together constitute owners fund/capital fund.

‘Not for Profit’ Organisation:

1. Meaning: An organisation which is established to serve its members and society or general public by undertaking various activities without any profit motive, is called a ‘Not for Profit’ organisation.
2. Primary Objective: Primary objective is to provide services.
3. Trial Balance: It prepares Receipts and Payments Account.
4. Net Result: It prepares Income and Expenditure A/c to find out net result in the form of deficit or surplus.
5. Accounting Statements: It prepares the following statements: (1) Receipts and Payments Account (2) Income and Expenditure Account and (3) Balance Sheet.
6. Owner’s Fund/ Capital Fund: Capital fund includes accumulated amount of surplus. surp1us shown by Income and Expenditure A/c, Subscriptions, Donations, etc.

Need for Maintaining Books of Accounts and Preparing Final Accounts-

‘Not for Profit’ concern never engages itself in any field of activity where the object of earning profit is present. As ‘Not for Profit’ concern deals with public money (i.e. subscriptions and donations received from its members and general public, grants received from government), it is answerable to society or public. It is required to maintain the various books of accounts for the following reasons :

• To have control over the cash transactions i.e. inflow and outflow of cash.
• To know the sources of funds and its application i.e. different heads of expenditures on which amount is spent.
• To comply with the provisions of laws applicable to such organisation, e.g. co-operative society registered under the Co-operative Society’s Act, is required to follow the provisions to make budget, audit the accounts, maintain books of accounts, etc.
• To find out surplus or deficit of the concern during a particular period.
• To know the financial position and net worth of the concern on a particular day.
• To avoid illegal or wrong practices and misappropriation of funds and assets.

Meaning of Receipts and Payments Account:

An account which is prepared by a ‘Not for Profit’ concern to record summary of all types of cash receipts and cash payments inclusive of bank transactions is called Receipts and Payments Account. It discloses the various sources from which cash comes in and the various ways through which cash goes
out. It is just similar to the cash book maintained by the trading concerns. Like Cash Account, it has two sides, viz. debit side and credit side. On the debit side, all the receipts of cash and on credit side, all disbursements or payments of cash are recorded.

The opening balance of Cash and Bank balance are shown on the debit side of this book. Bank overdraft is shown on the credit side of this book. This book closes with cash balance and bank balance or overdraft at the end of the accounting year. All receipts and expenditures irrespective of their nature i.e. revenue or capital are recorded in this book. Receipts tand payments related to previous year, current year or next year are also recorded in this book.

Features of Receipts and Payments Account-

The features of Receipts and Payments Account are explained as follows :

• Receipts and Payments Account is a Real Account.
• It is similar to Cash Book and gives a summary of cash transactions and bank transactions.
• The receipts and payments of all kinds i.e. revenue as well as capital are recorded in this account.
• The receipts and payments relating to past, current and future accounting years, if received and paid during the current year are recorded in this account.
• It records the amount actually received as well as paid during the current year. However, amount receivable as well as amount payable (outstanding) are not recorded in this account.
• It provides base for preparation of final accounts consisting of Income and Expenditure Account and Balance Sheet of ‘Not for Profit’ concern.
• Opening balances of the Cash and Bank Account are brought down to this account from the last Balance Sheet and the closing balances of these accounts are transferred to the Balance Sheet prepared at the end of that accounting year.
• Accounting items such as Bad debts, R.D.D., Depreciation provided on the fixed assets, etc. are not recorded in this book because they are non-cash items of the business.

Types of Receipts-
Receipts may be of two types viz. (i) Capital Receipts and (ii) Revenue Receipts.

Capital Receipts :
Receipts which are non-recurring in nature and do not form the part of regular flow of business income are called Capital Receipts.
Examples : Sale proceeds of fixed assets, life membership fees, donation received for building construction, etc.
Capital receipts may be either added to capital fund or treated separately on the Liabilities side of the Balance Sheet.

Revenue Receipts :
Receipts which are recurring in nature and also form the part of regular flow of business income are called Revenue Receipts.
Examples : Subscriptions received from members, interest on investments received, rent received, entrance/ admission fees, etc.

Types of Payments-
Payments may be classified into three categories viz. (i) Capital expenditure (ii) Revenue expenditure and (iii) Deferred Revenue expenditure.

Capital Expenditure :
An expenditure which is non-recurring in nature and benefits of which are likely to be received for a long period of time is called Capital expenditure. It is usually spent to increase fixed assets units, to increase earning capacity, efficiency and life span of the fixed assets and to achieve economy of operation of existing fixed assets.
Examples : Amount spent on purchase of land, building, machinery, furniture, etc.

Revenue Expenditure :
An expenditure which is incurred for carrying out day-to-day business activities and maintaining fixed assets in working condition is called Revenue expenditure. It is recurring in nature and benefits of which are enjoyed immediately.
Examples : Amount spent on payment of wages and salaries, rent, taxes, insurance premium, commission, etc.

Deferred Revenue Expenditure :
Expenditure which is basically of revenue nature but benefits of which are received for more than one or more years is called Deferred revenue expenditure.
Example : Advertisement expenditure paid at a stretch for 4 years say ₹ 40,000. In this case, 1/4 of ₹ 40,000 i.e. ₹ 10,000 is required to be written off to Income and Expenditure A/c in the Current year and balance of ₹ 30,000 is required to be shown on the Assets side of Balance Sheet.

Specimen of Receipts and Payments Account-

Meaning of Income and Expenditure Account-

An account which is prepared by the ‘Not for Profit’ concern to record expenses and incomes of revenue nature and to ascertain whether the concern has sufficient incomes to meet its expenses, is called Income and Expenditure Account. It is just similar to the Profit and Loss Account of the trading concerns.

Other Information : In this Account only incomes or gains of revenue nature that too of the current year are recorded on the credit side.

Examples : Subscriptions received, Entrance fees received, Sundry receipts, Donations (General) received, etc.
Please note that revenue incomes pertaining to current year whether actually received or not or received during past year are recorded in this account.
Similarly, in this account only revenue expenditure of current year whether actually paid or not or paid during previous year are recorded on debit side.

Debit balance of Income and Expenditure A/c indicates deficit which is deducted from the Capital fund and Credit balance of Income and Expenditure A/c shows surplus which is added to the Capital fund.
In this account capital receipts and capital expenditure are not recorded. They are directly recorded in the Balance Sheet.

Features of Income and Expenditure Account-

The features of Income and Expenditure Account are explained as follows :

• Income and Expenditure Account is a Nominal Account.
• In this account only revenue expenses and revenue incomes relating to current year are recorded.
• This account is just like Profit and Loss Account. It gives result of the working of the organisation. ‘Not for Profit’ concerns prepare Income and Expenditure Account in place of Profit and Loss
  Account.
• This account is prepared with the primary aim of finding out surplus or deficit of the ‘Not for Profit’ concern over the particular accounting year.
• This account is a part of final accounts of ‘Not for Profit’ concern and hence it is always prepared with Balance Sheet.
• No opening balance is shown in this account.
• At the end of the accounting year, the debit balance of this account shows a deficit and the credit balance of this account indicates a surplus.
• All cash items such as salaries paid, rent paid, etc. as well as non-cash items such as outstanding salaries, bad debts written off, depreciation, provisions for bad debts, discount, etc. are also recorded in this account.

Specimen of Income and Expenditure Account-

Distinction between Receipts and Payments Account and Income and Expenditure Account:

Receipts and Payments Account:

1. Meaning: An account prepared by a Not for Pr’ concern to record the summary of all types of cash receipts and cash payments is called Receipts and Payments account.
2. Nature: It gives the summary of the cash transactions and bank transactions. It is similar to cash book maintained by the trading organisation.
3. Type of Account: Receipts and Payment Account Is a Real Account.
4. Openinng Balance: This account starts with opening cash and bank balances or overdraft.
5. Closinng Balance: Closing difference of this account shows either cash and bank balance or bank overdraft.
6. Period: All cash transactions Irrespective of period of occurrence, if received and paid In the relevant accounting year are recorded.
7. Nature of Items: In this account only cash transactions (items) are recorded.
8. Concerned period: Incomes and expenditures of both capital and revenue nature if received or paid during the current year are recorded in this account.
9. Contaings: In this account, tranšactions relating to all types of accounts viz. Personal Acccount, Real Account and Nominal Account are recorded.
10. Balance Sheet: It Is never accompanied by a Balance Sheet.

Income and Expenditure Account:

1. Meaning: An account prepared by a Not for Profit’ concern to record Its expenses and incomes of revenue nature is called Income and Expenditure account.
2. Nature of Account: It gives the net result of working of the concern. It Is similar to the Profit and Loss Account prepared by the trading concern.
3. Type of Account: Income and Expenditure Account Is a Nominal Account.
4. Openinng Balance: No opening balance Is shown In this account.
5. Closing Balance: Closing difference of this account shows either deficit or surplus.
6. Period: Income and expenses relating to the relevant (current) accounting year only arc recorded.
7. Nature of Items: In this account cash as well as non-cash transactions (Items) are recorded.
8. Concerned Period: Only revenue incomes and expenditure related to current year whether received or not are recorded in this account.
9. Contains: In this account, only transactions relating to Nominal Account are recorded.
10. Balance Sheet: It Is always prepared along with Balance Sheet.

Preparation of Income and Expenditure Account-

Income and Expenditure Account is prepared on the basis of Receipts and Payaments Account and additional information if any. It is a Nominal Account and hence all expenses and losses of revenue nature are debited to this account and all incomes and gains of revenue nature are credited to this account. The method of preparation of Income and Expenditure Account is similar to that of preparation of Profit and Loss Account.

Preparation of Balance Sheet-

Balance Sheet of a Non Trading organisation is similar to Balance sheet of sole trading concern. To get the exact idea of financial position of an organisation on a particular date, Balance sheet is prepared with the capital receipts and capital Expenditures amounts. Generally, excess of Assets over Liabilities is called as capital fund. If ‘Capital Fund’ balance is not known, it can be found out by preparing opening balance sheet.

Specimen of Balance Sheet:

Adjustments-

Adjustments	Accounting treatment in
	Income and Expenditure Account	Balance Sheet
1. Outstanding Expenses	Add to concerned expenses on the debit side.	Show ‘Outstanding Expenses’ on the Liabilities side
2. Prepaid Expenses	Deduct from the related expenses on the debit side.	Show ‘Prepaid Expenses’ on the Assets side.
3. Accured Income	Add to related income on the credit side.	Show ‘Accured Income’ on the Assets side.
4. Income received in advance	Deduct from the related income on the credit side.	Show ‘ Income received in advance ‘ on Liabilities side.
5. Subscriptions received in advance	Deduct the amount of subscriptions received in advance from subscriptions on the credit side.	Show ‘Subscriptions received in advance’ on the Liabilities side of Balance Sheet.
6. Subscriptions outstanding (receivable)	Add the amount of subscriptions outstanding (receivable) to subscriptions on credit side.	Show ‘Subscriptions Outstanding’ (receivable) on the Assets side of Balance Sheet.
7. Depreciation on fixed assets	Show ‘depreciation’ on the debit side.	Deduct ‘depreciation’ from the related fixed asset on the Assets side.
8. Capitalisation of entrance fees	Deduct the amount of capitalisation of entrance fees from entrance fees on credit side.	Add the amount of capitalisation of entrance fees to capital fund on the Liabilities side.
9. Creation of special funds out of donation	Deduct the amount of special funds so created from the donations on credit side.	Show separately special funds so created on the Liabilities side.
10. Closing stock of stationery	Deduct the closing stock of stationery from ‘ Printing and Stationery’ on debit side.	Show ‘stock of stationery’ separately on the Assets side.

Implied Adjustments:

Accounting treatment of the important items-

(1) Capital Fund : The excess of total assets over the total liabilities is called capital fund. Capital fund is recorded on the Liabilities side of Balance Sheet prepared by the ‘Not for Profit’ concern. It is created out of capital incomes and capitalisation of funds or incomes such as donations, entrance fees, admission fees, etc. The surplus shown by the Income and Expenditure Account is added to Capital Fund and deficit if any shown by Income and Expenditure Account is deducted from Capital Fund.

(2) Entrance Fees or Admission Fees : Fees or specific amount received from the new members at the time of their entry into the ‘Not for Profit’ concern are called Entrance fees or Admission fees. It is different from annual subscription received from the members. It is paid by each member only at the time of his admission. Capital fund of ‘Not for Profit’ concern is mainly made of entrance fees received from all the past and present members. Some people argue that entrance fees are capital receipt as it is received only once from each member. It is not recurring in nature. While others have pointed out that entrance fees are revenue receipt because though it is paid only once by each member, it is received regularly by the ‘Not for Profit’ concern.

Note : In the absence of any specific information given in the problem, entrance fees should be treated as revenue receipt. If any specific instruction is given in the problem, entrance fees should be treated accordingly. IJ according to instruction 60% of entrance fees is to be capitalised, then 60 % of entrance fees is to be added to capital fund on Liabilities side of Balance Sheet and remaining 40% of entrance fees is to be credited to the Income and Expenditure Account.

(3) Subscriptions : A payment as a contribution by the members towards some object or service, is called subscription received. It may be a payment or promise of payment for subscription of a magazine, newspaper, book, etc., over a specified period of time. In such a case it is called subscription paid. Subscriptions or fees received from the members constitute the main source of income for a ‘Not for Profit’ concern. All subscriptions received will be recorded on the debit side of Receipts and Payments Account. Out of such subscriptions, subscriptions relating to current accounting year are transferred and recorded on the credit side of the Income and Expenditure Account. It is considered as revenue receipt.

(4) Legacy : Any asset, property or amount of cash which ‘Not for Profit’ concern receives as per the provisions made in the will of the donor on his death is called legacy. As and when cash is received as legacy, it is recorded on the debit side of the Receipts and Payments Account. Since amount received on legacy is not of recurring nature, it is considered as capital receipt. Therefore, it is shown on the Liabilities side of the Balance Sheet.

(5) Life Membership Fees : The member of the ‘Not for Profit’ concern, if wants to become a life member, he is required to pay a lump sum amount of fees to the concern either at the time Of his entry or later. Such amount of fees is called life membership fees. Life membership fees are non-recurring in nature because members are required to pay the fees once in a lifetime and not periodically. Since it is a capital receipt, it is added to the capital fund on the Liabilities side of the Balance Sheet.

(6) Sale of Old Assets * Fixed assets like machinery, furniture, office equipments, etc., are sold by the ‘Not for Profit’ concern when they become old or outdated. Profit or Loss on sale of such assets is ascertained by using the following formulae :

(i) Profit on Sale of old Assets = Sales proceeds – Cost of Sale of old Assets.
(ii) Loss on Sale of old Assets = Cost of Sale of old Assets – Sales proceeds.

Sale proceeds so received are recorded in Receipts and Payments Account on receipts side. If ‘Not for Profit’ concern earn profit on sale of old assets, the amount of such profit, is recorded on the credit side of Income and Expenditure Account. In case there is a loss on sale of old assets, the amount of such loss is debited to Income and Expenditure Account.

(7) Scrap : Small piece of something larger, parts of the outdated machines, waste materials, used articles especially metals, etc. are called scrap. Scrap value refers to the net amount which is realised on the final disposal of scrap. The amount received on sale of scrap is first recorded on the debit side of Receipts and Payments Account. It is treated as miscellaneous income and as such it is credited to Income and Expenditure Account.

(8) Newspapers : Newspapers, periodicals, magazines, etc. are used by the members of the ‘Not for Profit’ concern to update their knowledge. The amount received from the sale of old newspapers, periodicals, magazines, weeklies, etc. is shown on the debit side of the Receipts and Payments Account and then posted on the credit side of the Income and Expenditure Account. It is considered as miscellaneous income.

(9) Specific Donations : Donation i.e., the gift in monetary terms received from the members or outsiders for a specific purpose like donation for building, charity, etc., is called specific donation. Donation received for specific purpose is treated as capital receipt and is added as contribution to specific fund on the Liabilities side of the Balance Sheet. Expenses spent for acquiring such donations are not debited to Income and Expenditure Account, but they are deducted from the amount of such donations only.

(10) Genera! Donations : Donations may be classified as general donations and specific donations. Donations received for general purpose like welfare of members, achieving general aims and objectives of the concern, etc. are called general donations. General donations are treated as revenue receipts as they are expected to be received every year. In case no specific information is given in any problem, donation should be treated as revenue income and accordingly, it should be considered in Income and Expenditure Account as income.

(11) Specific; Fund : Fund created for specific purpose is called specific fund. Specific fund may be created for the construction of building, construction of operation theatre, swimming pool, awarding prizes, etc. If specific fund is created, then all incomes and expenses relating to the specific fund should not be recorded in the Income and Expenditure Account. All incomes relating to specific fund are added to that fund and all the expenses related to it are deducted from that specific fund. The balance of specific fund is shown on the Liabilities side of the Balance Sheet.

(12) Endowment Fund : Fund which is created or raised from bequest (means the thing that is left by a will) or gift, the income of which is used or devoted for a specific purpose is called endowment fund. In other words, fund which provides permanent source of income to the institution is called endowment fund. The amount of such fund is invested in the government or non-government securities to create a source of regular income. The amount of income or interest received from the investment of endowment fund is used for a specific purpose, e.g., distribution of prizes to the meritorious students in the society, etc. An amount received for endowment fund is considered as capital receipt because such fund provides permanent source of income to the ‘Not for Profit’ concern. It appears on the receipts side or debit side of the Receipts and Payments Account. It is shown separately on the Liabilities side of the Balance Sheet. The amount of income or interest received from the investment of endowment fund is not credited to Income and Expenditure Account but to be added to endowment fund. Similarly all expenses relating to endowment fund are to be deducted from the amount of such fund.

By going through these Maharashtra State Board Book Keeping & Accountancy Notes 12th Chapter 1 Introduction to Partnership and Partnership Final Accounts students can recall all the concepts quickly.

Maharashtra State Board 12th Accounts Notes Chapter 1 Introduction to Partnership and Partnership Final Accounts

Introduction, Meaning and Definition of Partnership-

Introduction : When development of single ownership firm takes place or when expansion of the business is planned then naturally, third party help is mandatory. The partnership firm is emerged from capital and managerial limitations of single ownership firms. Hence, when two or more persons, competent to enter into a contract, make an agreement, contribute required capital, undertake certain lawful business for earning profit and sharing the same in agreed proportion, then such union is termed as ‘Partnership’.
The persons who have entered into partnership are individually known as ‘Partner’ and collectively known as a ‘Firm’.

Meaning : Partnership is a business organization, where more than one person come together, make an agreement, contribute capital to carry on a lawful business with the primary objective of earning profit.

Definition : Section 4 of the Indian Partnership Act. 1932 defines a partnership as, “The relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. ”

Prof. Haney defines partnership as, “The relation existing between persons competent to make contract who agree to carry on a lawful business in common with a view to earn private gain. ”

Features of partnership firm : The main features of partnership firm are stated below :

(1) Agreement: Foundation of partnership is agreement. Agreement may be either in oral or in written form. Written form of agreement is advisable because it can be used as a proof in the court of law, in case of any future disputes. The written agreement is termed as partnership deed.

(2) Number of partners : Minimum two persons are required to form the partnership firm. According to the Companies Act 2013, maximum number of partners is fifty.

(3) Lawful business : The business undertaken by partnership, must be lawful. It cannot undertake illegal activities or business not permitted by law.

(4) Sharing of profit and losses : Main objective of partnership is to earn maximum profits, and distribute it among the partners in agreed proportion. Profit or loss is to be shared equally among the partners if the agreement is silent on ratio.

(5) Unlimited liability : The liability of all partners except minor partner is unlimited. The creditors can claim and recover their dues from the private property of partners, if business property is not sufficient to settle their claims. If any partner is declared insolvent, then his liability is to be borne by the solvent partner.

(6) Registration : According to the Indian Partnership Act 1932, registration of partnership firm
is optional. However, registration of partnership firm is made compulsory only in the state of Maharashtra. Registration means entering the name of partnership firm in the register maintained by the Registrar after the completion of required formalities.

(7) Joint ownership and management : Each partner is joint owner of the property of the firm. So any partner of the firm cannot use property of firm for personal use. Each partner has right to participate in the management of a firm, so all the partners are jointly responsible for all the activities of the firm.

(8) Principal and Agent : Partners carrying on business, works as a Principal and Agent. A partner
act as a principal of the firm for business concerned persons or outsiders and act as a partner with other partners of a firm.

(9) Dissolution : Dissolution of firm means closure of business of the firm. Dissolution of partnership firm is simple and easy. Any one of the partners can take active part to dissolve the firm by giving fourteen days notice. Unless there is an agreement, partnership gets dissolved on death, retirement or insolvency of a partner.

Partnership Deed : A partnership is contractual relationship. Agreement may be oral or written. An agreement which is written and signed by all the partners is called Partnership Deed. It contains terms and conditions of partnership and also rules relating to internal management of the firm.

The usual contents of a partnership deed are : (1) Name and address, Telephone nos., e-mail address of the firm and its main business. (2) Name, addresses and other information of all partners and duration of the partnership. (3) The amount of capital contributed or to be contributed by each of the partners. (4) The profit and loss sharing ratio of the partners. (5) Rights, duties and liabilities of all partners. (6) Provisions for admission, retirement and death of partner. (7) Rate of interest on capital, loan and drawings, if any. (8) Salaries, commission, etc. payable to partners or any partner. (9) Procedure for dissolution of the firm and settlement of accounts after dissolution.

(10) The methods of settlement of disputes among the partners. (11) Other terms and conditions relating to the conduct of business which are agreed by all the partners.

Importance of Partnership Deed : As partnership deed contains all the terms and conditions of partnership and haying bases of mutual relationship among the partners, it is known as a very important document. With the help of partnership deed, rights, duties and liabilities of all partners and firm can be regulated. To avoid any disputes in future, Partnership Deed duly signed by all the partners and registered under the Indian Partnership Act 1932 is always advisable.

The Indian Partnership Act 1932-

At the time of commencement of partnership, partnership deed is prepared which contains all the required terms and conditions of Partnership. However, if there is no agreement, written or oral, and if partnership deed is silent about any issue among the partners, provisions of the Indian Partnership Act 1932, section 12 and 17 are made applicable, which are as follows :

(1) Distribution of Profits : In the absence of partnership deed or if partnership deed is silent about profit and loss ratio, profits or losses are to be shared equally among the partners.

(2) Interest on Drawings : As per the provisions of the Indian Partnership Act 1932, no interest is to be charged on drawings made by the partners. If provisions are made in the partnership deed in respect to payment of interest on drawings, then interest on drawings is charged. If the date of withdrawal of money is not given, then interest on drawings is charged for average period of 6 months.

(3) Interest on Partner’s Loan : As per the provisions of the Indian Partnership Act, 1932, if any partner has advanced loan to the firm over and above his capital contribution, such a loan is to carry interest @ 6 % per annum. However, if any provision is made In the partnership deed In respect to payment of interest on loan given by a partner to partnership, then interest is paid on such loan at the specified rate.

(4) Interest on Capital : As per the provisions of the Indian Partnership Act, 1932 no partner is entitled to receive any interest on his capital contribution. However, if provisions are made in the partnership deed in respect to payment of interest on capital, then partners are entitled to receive interest on their capital contributions as per the rate of interest mentioned in the agreement.

(5) Salary or Commission to Partners : As per the provisions made in the Indian Partnership Act,
1932, no salary, commission, allowance or any remuneration is to be given to any of the partners for any extra work done by partners for the firm. However, if any provision is made in partnership deed, then partners are entitled to get commission or salary as per the agreement.

(6) Admission of a new Partner : As per the provisions of the Indian Partnership Act, 1932, no outside person can be admitted into the firm as a partner without the consent of all partners.

Methods of Capital Accounts-

Amount in cash or in kind brought in by the partner to manage business activities is called Capital. The capital contribution may be in the form of cash or in the form of assets other than cash, e.g. Goods, Machinery, Land, Buildings, Furniture, etc. An amount of capital may be either in their : profit sharing ratio or in equal ratio. Such amount of capital may be in any proportion as per the mutual understanding of the partners. There are two methods of maintaining the capital accounts of the partners, viz. (1) Fixed Capital Method and (2) Fluctuating Capital Method.

The Indian Partnership Act, 1932 is silent on the point of adoption of specific method of capital by the Partnership firm. The partners themselves may decide which method of capital is to be followed and mention the method of capital adopted in the partnership deed. If partnership deed is silent on
this point, then the partnership firm has to adopt Fluctuating Capital Method.

Fixed Capital Method : Under this capital method opening balance of capital of a partner remains same upto at the end of that financial year. These capital balances will change only when partner introduces an additional capital or withdraws a part of his capital from the firm. Under Fixed Capital Method, along with capital account, a separate personal account, called Current Account is also opened and operated for every partner to record other dealings of partner with the partnership firm.

(i) Partner’s Capital Account: In this account the entries for the following transactions are recorded :

• Amount contributed by the partner in the beginning or opening balance of capital if the partnership firm is already established its business.
• Additional capital if any introduced by the partner during the accounting year.
• Part of the capital withdrawn by the partner during the accounting year.

Usually Partner’s Capital Account shows credit balance and it is shown on the Liabilities side of Balance Sheet.

Pro forma of Partners’ Capital Accounts : The pro forma of Partners’ Capital Accounts prepared under Fixed Capital Method is shown below : It is assumed that there are two partners, viz. X and Y.

Journal Entries:

(1) When cash is brought In the firm by the partner as additional capital:

(2) When additional capital is introduced in the firm by the partner in the form of Assets:

(3) When part of the capital is withdrawn by the partner:

(ii) Partners’ Current Accounts : If Fixed Capital Method is adopted by the firm, then Current Account for each partner is opened and operated. In Current Account, following transactions are recorded :

• Drawings (if any) made by the partner in the current accounting year.
• Cash or goods or any other asset taken over by the partner.
• Interest on Partners’ Capital allowed by the firm.
• Interest on Partner’s Drawings charged by the firm.
• Salary, commission, rent, interest on loan, allowance, etc. payable to the partner.
• Distribution of net profit or net loss of the firm.

Pro forma of Partners’ Current Accounts : The pro forma of Partners’ Current Accounts prepared under Fixed Method is shown below : in the following pro forma ledger accounts, it is assumed that X’s Current A/c showed a credit balance and Y’s Current A/c showed a debit balance at the beginning of the year.

Journal Entries :

(1) Interest allowed on Partners’ capital :

(2) Salary/Commission allowed to Partners :

(3) Cash/Goods withdrawn by the partners from the business for their personal use :

(4) Interest charged on Partners’ Drawings :

(5) Division or distribution of net divisible profit or loss :

Partners’ Current Accounts may either show debit balance or credit balance. Credit balances of Partners’ Current Accounts are transferred to Liabilities side of Balance Sheet. Similarly, debit balances of Partners’ Current Accounts are transferred to Assets side of Balance Sheet.
Effects of above entries in Profit and Loss A/c is as follow :

Pro forma of Profit and Loss Account :

Fluctuating Capital Method : In the Fluctuating Capital method, balances on capital accounts changes every year. Under this method, to record partners dealings with partnership firm, only one account ‘Capital Account’ is opened and following transactions are recorded in it:

• Initial or opening balances of capital
• Additional capital brought in by partners in form of cash or its kind (Assets)
• Salary/Commission payable to partners
• Interest payable on capital balance to partners
• Drawings made during the year and interest payable on drawings by the partners
• Withdrawal of part of the capital by the partners
• Division and transfer of net divisible profit or net adjustable loss of the firm.

The credit balances of fluctuating capital accounts of the partners are recorded separately on the Liabilities side of the Balance Sheet.

Pro forma under Fluctuating Capital Method :

By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 2 Functions of Management students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 2 Functions of Management

→ Budget : Plan expressed in financial terms; a summary of planned financial expenditures and receipts over a period or related to an activity.

→ Strategies : A plan or method for achieving a business goal; a general method or policy for achieving specific objectives of the business.

→ Environment ; The factors which affect surroundings of anything including human beings as well as organisations.

→ Evaluate : To determine the value, progress, quality or importance of anything.

→ Missions : Specific goals or important tasks that one has to achieve or perform in a given period of time.

→ Innovative ideas : Ideas which lead to discover or creation of something new.

→ Delegation of authority : Transferring or giving away authority and corresponding responsibility by a superior to a trusted subordinate to manage part of the business.

→ Administration : The control, direction and management of a business or service.

→ Plant : Plant is an industrial establishment that is either a factory, a mill or a workshop concerned with some type of operations. It refers to a place where large machinery is installed and goods are produced or from where distribution of goods takes place.

→ Recruitment : The process of searching for prospective employees and encouraging them to apply for jobs in an organisation. It involves detailed and systematic study of manpower requirements, both operative and executive.

→ Personnel department : This is a department of the organisation that is primarily concerned with the management of human relationships within an organisation. It deals with the organising and training of people at work.

→ Orientation and development programmes : An introductory stage in the process of new employee assimilation and a part of his or her continuous socialisation process in an organisation. Major objective of orientation are to gain employee commitment, reduce his or her anxiety, help him or her understanding organisation’s expectations and convey what he or she can expect from the job and the organisation.

→ Eco-friendly : Eco-friendly literally means earth-friendly or not harmful to the environment. This term most commonly refers to products that contribute to green living or practices that help conserve resources like water and energy.

→ Corporate culture : The beliefs and behaviours that determine how a company’s employees and management interact and handle outside business transactions. A company’s culture will be reflected in its dress code, business hours, office set up, employee benefits, hiring decisions, treatment of clients and their satisfaction and every other aspect of operations.

→ Corporate image : The way an organisation is presented to or perceived by its members and the public; the impression of the policies, personnel and operations of a corporation that is imparted to its employees and the general public.

→ Hierarchy : It is a structure of organisation where there are positions created from top to bottom to monitor the work at each level with ease.

→ Motivation : The material and psychological incentives provided by the management to the employees so that they are motivated to accept the delegated responsibility.

→ Synchronise : To cause to move at the same rate or exactly together.

→ Deviation : Behaviour that differs or departs from what is thought of as normal or standard.

→ Break-even analysis : Computing costs and revenues for different volumes of production in order to determine a point after which an enterprise starts earning profit.

→ Efficiency : Ability of producing and functioning effectively with the least waste of efforts, time, cost, etc.

Introduction-

The success of every business organisation is how effective and efficient is its management. Management is a set of principles which is the result of many functions, such as planning, organising, staffing, directing, coordinating, controlling, etc.

Functions of Management-

According to L. A. Allen, ‘Management is what manager does.’ So the function of manager starts with planning and completes with controlling. Luther Gullick give a keyword ‘POSDCORB’ for management. P = planning, O = Organising, S = Staffing, D = directing, Co = Co-ordinating, R = Reporting, B = Budgeting.

Planning –

Meaning :
Planning means deciding in advance what to do, when to do it, how to do it, where to do it j I and who is to do it. It involves selecting missions and objectives and the actions to achieve them. It is an intellectual process of logical thinking and rational decision-making.

Definition : According to James Stoner, “Planning is the process of establishing goals and a suitable course of action for achieving those goals.”

Importance :

• Helps to set clear objectives : Planning is straight way connected with setting clear objectives, targets and making road rfiaps to achieve them.
• Provides path of action : Planning provides guidelines and directions in doing the right things in the right direction and in the right way.
• Improves performance : Due to proper planning, the employees work with established objectives and a clear course of action. It results in improvement of performance and achieving higher profit for the organisation.
• Minimises the risk : Proper planning helps to deal with changes and uncertainties of future. It can be tackled with preventive measure.
• Leads to optimum utilisation of resources : Planning facilitates optimum utilisation of resources which brings higher efficiency and better results. Planning reduces ‘ wastage of resources.
• elps in decision making : Decisions are taken after selecting best available alternative course of action. It helps management to take rational decision.
• Useful in setting the standards for controlling : Actual performance can be measured with what was planned and any deviation can be bridged by taking controlling steps. Thus, it is important to maintain I discipline at work place.
• Facilitates co-ordination of all activities : All activities in organisation are j inter-linked and with the help of proper planning it avoids overlapping among activities. Various departments work as per the plan which creates ; smooth flow of hassle-free co-ordination.
• Facilitates other management functions : Planning is the basis of all functions of management. Once the proper planning is done and goal is set, functions like organising, staffing, etc. can be done.
• Promotes innovative ideas : It is the most challenging activity and promotes innovative ideas as an outcome of critical thinking.

Organising-

Meaning : Organising implies the process of identifying, assembling the needed resources men, money, machine an method, grouping and arranging them in proper manner to achieve organisational goals. .
For the execution of the plans, organising is more important. Organising function decides the ways and means to achieve that is planned by the management.

Definition : According to Mooney and Railey, “Organization is the form of every human association for the attainment of a common purpose

Importance of Organising :

• Facilitates Administration as well as operation : Grouping and assigning the activities is the task of administration and processing accordingly is operational activity. Duplication of work and wastages are minimised and it helps in effective delegation of work.
• Brings specialisation : The division of work helps in bringing specialisation and leads to increased efficiency in an organisation.
• Defines the job properly : Organising helps in putting right men on right job according to their qualification, skill and experience. It defines job properly with clarify of roles and responsibilities.
• Clarifies authority and responsibility : Organisational structure clarifies the way to exercise the power so that misuse of power is controlled. This results in efficiency and increases productivity of the managers.
• Establishes co-ordination : Organising ensures mutual co-operation among various departments and employees. It establishes smooth co-ordination of all organisational activities.
• Helps in effective administration : Proper organisational structure with right men at right place with proper delegation of authority and responsibilities leads to efficient and effective administration.
• Helpful for growth and development : Clearly defined roles and responsibilities, co¬ordination with appropriate control techniques ensures growth and development in every organisation. It is possible when the organisational structure is well-defined.
• Creates sense of security : Organising defines clear job profile with proper authority and responsibility. It brings mental satisfaction and creates sense of job security among the employees.
• Scope for innovation : Clarity in job profile, roles and responsibilities provide enough space for manager to develop talent and encourage innovation when the organisational structure is well-defined.
• Helps in Optimum utilization of resources : Different jobs for different employees brings specialisation and the right workforce utilizes resources at its optimum level. This achieves the desired result in desired time.

Staffing-

Meaning : Staffing is a process through which competent employees are selected, recruited properly trained, effectively developed and placed and suitably rewarded. Their efforts are harmoniously integrated towards achieving the objectives of an organisation. It is the function of execution. Right person at right job with right pay in the basic principle of staffing.

Definition : According to Theo Haiman, “The staffing Junction pertains to the recruitment, selection, development, training and compensation of subordinate managers.”

Importance :

• Effective managerial function : Staffing is the key managerial function as the outcome of other managerial functions is based on the effectiveness of staffing.
• Leads to effective utilization of human resources : Staffing function takes proper care at every stage such as recruitment, selection, placement, remuneration, training, etc. It results in improvement in performances and progress – of organisation.
• Builds cordial relationship : Effective staffing encourages smooth human relation which is the key to better communication and co-ordination in an organisation.
• Helps human resource development : Staffing function trains and develops the existing workforce. It helps to inculcate the organisational culture into employees and ensures smooth functioning of all managerial aspects.
• Helps in effective use of technology and other resources : Use of latest technology, capital, material and methods helps in improving standard of work and productivity in terms of quality and quantity.
• Improves efficiency : Proper selection and proper training, the performance level of employees can be improved which leads to the efficiency and organisational development.
• Long term effect : Staffing function has long term effects on the efficiency of an organisation. Qualified, efficient and well motivated workforce is an asset of the organisation.
• Essential contribution : Selection of staff is based on the ability of prospective employees to meet the future challenges of an organisation. It contributes for future changes and challenges.
• Provides job satisfaction : Adequate remuneration, financial and non-financial incentives, training and development programmes motivate employees. It leads to job satisfaction.
• Maintains harmony : Proper staffing process ensures regular appraisal and promotion on merit basis. Effective communication for the same brings peace and harmony in an organisation.

Directing-

Meaning : Directing as a management function is concerned with instructing, guiding, communicating, inspiring and motivating the. employees so that their efforts result in the achievement of pre- determined organisational goals. It is a continuous function which flows from top level to the lower level of organisation.

Definition : According to Theo Haiman, “Directing consists of the process and techniques utilising in issuing instructions and making certain that operations are carried out as planned.”

Importance :

• Initiates action : The manager gives direction to subordinates about what to do. how to do and when to do and sees that his instructions are properly followed.
• Integrates efforts : Effective direction with proper communication helps in integrating the efforts of all the employees and departments. It results in achievement of organisational goals.
• Means of motivation : Financial and non-financial incentives boost morale of the employees. Considering their opinion motivates employees to work to their full potential and improves their performance.
• Provides stability : Effective leadership and direction develops co-operation and commitment among the employees. This provides stability and creates balance among various departments and groups.
• Coping up with changes : With the right leadership and direction, employees are motivated to understand the nature of change in business environment. Adapting to changes is necessary for the growth of an organisation.
• Effective utilization of resources : With the help of directing, employees are assigned with duties and responsibilities with proper instruction to avoid wastages. It helps them to use men, materials, machines, money in best possible way which in turn helps to reduce the cost and increase profit.
• Creates team spirit: Directing focuses or motivating the subordinates for group efforts. The manager as a director plays a vital role in guiding and motivating the employees to achieve the organisational goals with team spirit.
• Explores capabilities of individuals : Direction helps employees to identify their potentials, abilities for best performance by encouraging and motivating them like a leader.
• Increases efficiency level : Guidance and motivation of a director as a leader develops team spirit in the organisation. It results into increase in the efficiency level of the whole organisation.
• Co-operation : Proper direction from top level to the bottom level of management ensures smooth flow of co-operation, team work and efficiency level which leads to attainment of goals.

Co-ordination-

Meaning : Co-ordination means the integration and synchronisation of group efforts to achieve all goals of an organisation. Co¬ordination between all functions and all levels of employees is most important for an organisation to succeed. It binds all the other functions of management.

Definition : According to Henry Fayol, “to co-ordinate is to harmonise all the activities of a concern to facilitate its working and its success.”

Importance :

• Encourages team spirit : Co-ordination helps in arranging the work in such a way that minimum conflicts arise between all. It increases the team spirit at work place.
• Gives proper direction : Co-ordination integrates departmental activities and interdependence on each other in a very systematic way.
• Facilitates motivation : An effective co¬ordination motivates employees to take initiative which increases efficiency growth and prosperity of the organisation. Monetary and non-monetary incentives motivates an employee to work hard and job security.
• Optimum utilization of resources : Co¬ordination helps to integrate all available resources systematically and ensures minimum wastage. It helps to control the cost of work.
• Achieve organisational objectives : Co¬ordination leads to minimum wastages of materials, idle time of employees, department disputes and ensures smooth working in the process of achieving organisational goals.
• Improves relations : Co-ordination develops cordial relations between all levels of management as every department depends on functioning of other department.
• Leads to higher efficiency: With the help of optimum utilization of resources with effective integration, the organisation can achieve higher productivity and higher profitability.
• Improves Goodwill : Synchronized efforts of employees with strong human relations results in higher sales and higher profitability.
  It directly results in goodwill in the market and creates good images in society.
• Unity of direction : Co-ordination harmonizes activities of all departments for achieving common goal by giving proper j direction to all departments of the organisation.
• Specialisation : The specialised knowledge of all expert department heads in their respective fields leads the organisation towards growth and success in the competitive business world.

Controlling –

Meaning : Controlling means the function of comparing the actual performance with the pres determined standard performance. Due to this, it identifies the causes of deviation, provides \ corrective measures and helps in formulating future plans of an organisation.

Definition : According to Philip Hotter, Control is the process of taking steps to bring actual results and desired results closer together”.

Importance of Controlling :

• Fulfilling goals of organisation : The main function of controlling is to measure the performance at every stage and take corrective, action if necessary. So, it helps to fulfil the organisational goals.
• Making efficient utilization of resources : Controlling techniques sets standard of every performance to reduce the wastages and every employee has to follow these standards. This will lead to efficient utilization of resources.
• Accuracy of standards : An efficient control system helps management in judging the accuracy of standards. They are revised from time to time which is beneficial for checking performances accurately.
• Motivates employees : The advance intimation of standard of performance gives an idea to employee about what to do and how to do. Their performances are rewarded with bonus and other incentives which motivates employees to perform at their best level.
• Ensures order and discipline : Continuous checking of performance by superiors and preventive action leads to reducing of unprofessional behaviour of employees. It brings order and discipline in organisation.
• Facilitates Co-ordination : Control is a function in which the roles and responsibilities of all departmental manager and their sub¬ordinates are well-defined. Controlling helps to use remedial measures to derive result of the organisation.
• Psychological Pressure : This psychological pressure that their performance will be evaluated and will be rewarded accordingly works as a motivational factor for employees. So they give their best performance.
• Ensures organisational efficiency and effectiveness : Factors of control makes managers responsible and motivate them for higher and better performance which leads to organisational efficiency and effectiveness.
• Builds good corporate image : Proper control helps to improve overall performance of the organisation and results in progress of business. This builds a good corporate image and goodwill for the business.
• Acts as a guide: Controlling function sets the standard of performance and managers as well as subordinates take the help of these standards and achieve the desired results.

By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 1 Principles of Management students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 1 Principles of Management

→ Team spirit : Team spirit means willingness to cooperate with each other as a part of a team or a group of people. When the entire group of employees works as a team their efforts get directed towards realising the goals of the organisation.

→ Co-operation: In the context of management, co-operation is the attitude of helping each other to achieve organisational goals.

→ Co-ordination : Integrating or linking the activities of different units of an organisation. It is the result of deliberate or consistent efforts by the management to create unity of action to achieve its goals.

→ Productivity : The degree to which a person, company, firm, etc. is able to produce efficiently. From management point of view, productivity means output per unit of input employed.

→ Goal: The aim or object towards which efforts of an individual or a group are directed.

→ Management : The art or science of directing, organising, co-ordinating, conducting, administering and controlling the work of others to achieve defined objectives.

→ Professional management : Managing the affairs of the organisation by professionally qualified persons at all the levels of management. It also means application of professional approach to manage the organisation.

→ Discrimination : Unfair treatment given to a person, a group, minority, etc.

→ Rule of Thumb : Unwritten but accepted operating practices that are considered to be average; practical and generally accepted business practices and principles. It also refers to a rough and practical approach based on experience, rather than theory.

→ Decision-making : The process of selecting from among possible alternatives. The process of decision-making involves five stages, viz. defining the problem, analysing the problem, developing of alternative solutions, selecting the best solution and converting the decision into action and its follow-up.

→ Division of labour : The specialisation of workers in particular parts or operations of production process. Application of division of labour increases skill and speed of operation, saves time and energy of the worker.

→ Remuneration : Payment of money for service or work done.

→ Moral: Of or relating to the principles of right conduct. Morals are nothing but principles and beliefs relating to right or wrong behaviour.

→ Centralisation : Imposing or placing of a high degree of control with officials at the centre or top level of an organisation, leaving little freedom of action to officials at lower levels.

→ Decentralisation : The placing of a large amount of responsibility with the officials at lower level and controlling of major and important issues rest with the top level executives.

→ Turnover : The amount of business done in a given time. It also means the rate at which workers are replaced.

→ Esprit de corps : ‘Union is Strength’. Strength of a business lies in the co-operation and harmony among its workers. It also means team work.

→ Piece rate system : It is a system of wage payment in which the wages paid to a worker are related to the result of his performance i.e. to his output rather than on the basis of time. Under this system, wages are calculated as Earnings of worker = No. of units produced x Rate per unit

→ Standard time : Amount of time it should take an average qualified worker (or group of workers) to complete a specified task.

→ Time study : Systematic observation, analysis and measurement of the separate steps in the performance of a specific job for the purpose of establishing a standard time for each performance, improving procedures and increasing quantity of production or productivity.

→ Fatigue : Physical or mental exhaustion due to exertion, long working hours without sufficient breaks, poor working conditions, target pressure, heavy working tools, etc.

→ Social responsibility : An obligation (responsibility) of the business enterprise to take those actions which promote the welfare of the society. For this, business enterprises should adopt policies that fulfill expectations, values and interest of society.

→ Scalar Chain : The hierarchy of authority from the top level to the lower level for the purpose of communication.

Introduction :

Management is necessary in all types of business organisations, non-business organisations and social activities as it is key to success in achievement of goal. To establish co- ordination among all the resources of the organisation, one must understand all about the management. Various principles, theories and techniques of management introduced and developed by the management thinkers are useful in managing the business affairs of the organisations successfully.

However, its use varying from organisation to organisation, person to person and situation to situation. Thus, in every type of organisation or in group activity, one needs to apply management principles as per nature, size and requirement of that organisation. Management co-ordinates and harmonises all the functions of the business organisation like planning, organising, staffing, controlling, etc.

Meaning and Definition :

For achieving the goals of an individual or an organisation the system or techniques which are used, adopted and accepted universally are called principles. Principles can be defined as, “a fundamental truth or proposition that serves as the foundation for a system or belief or behaviour or for a chain of reasoning.”
Management principles are statements of fundamental truth of management which act as guidelines for managerial decision-making and action. They are both descriptive and prescriptive in nature. They are universal and applicable everywhere.

Nature of Principles of Management :

(1) Universal application ; Management principles are universal in nature. They apply to all types of organisation irrespective of their type, size or nature. Their application may have to be modified but they are suitable for all kinds of organisation and even an all levels at management of the organisation.

(2) General guidelines : Management principles provide general guidelines to tackle the organisational situation in sensible way and solve the problems systematically. They are not rigid I and their application depend upon the situation, size and nature of organisation.

(3) Principles are formed by practice and experiments : The management principles are developed slowly and gradually through experiments, systematic observations and complete research work. The results of such observations and experiments are developed through regular practice in the organisations.

(4) Flexibility : Management principles although fundamental but they are flexible. They can be changed, modified or adjusted to suit an organisation and as per its need and changing situations.

(5) Behavioural in nature : Management is a team work and a group activity. Management principles are aimed and designed to influence human beings and their efforts and directed to achieve the organisational objectives.

(6) Cause and effect relationship : The management principles provide base for decision-making. They first determine the cause for particular effect, e.g. effective advertisement leads to increase in the sales.

(7) All principles are of equal importance : All principles of management have equal importance.
If any specific principle is given more importance than others, then working of the whole organisation
would affect adversely. Management principles are the principles of social science i.e. they can be applied with some modifications according to the requirements of an organisation.

Significance of Management Principles :

(1) Provides useful insight to managers : The management principles help the managers to understand and know the organisation, to improve the understanding of the situations and problems. The use and application of management principles help the managers about the manner in which they should act in different situations.

(2) Helpful in efficient utilisation of resources : The core function of management is to create and maintain proper balance between physical resources and human resources by putting them to optimum use and thereby control the wastage of resources. Through the use of different techniques and principles, management’ maintains discipline and healthy working environment to establish cordial relationship between management and employees which will increase efficiency level of employees.

(3) Scientific decisions : Management principles help the manager to handle critical situations tactfully. By using various management principles, managers learn to analyse the situations systematically, search alternative options and their results.

(4) Understanding social responsibility : Management principles guide the management in understanding social responsibility of organisation. It helps them to concentrate on providing quality products at affordable rate, avoiding unfair competition and artificial monopolistic situations in market, fair remuneration, change in environment, healthy working place, standard tools and machinery, etc.

(5) Encourages Research and Development : Management principles are dynamic as their nature changes with the changes in business world. Management principles can be modified according to the need of the organisation. Training helps to develop scientific approach towards research and development and growth and development of organisation. New techniques in the field of production, marketing, finance, human resources, etc. are discovered and developed through research and development.

(6) Helps to co-ordinate and control : Management principles serve as guidelines for the better co-ordination and control. They provide suitable systems to establish co-ordination and control.

(7) Develops objective approach : By using various management principles, the manager can develop an objective approach. The manager can find out and identify opportunities, root causes of the problems in right direction and provide appropriate solutions to the problems.

Theories of Management:

The sets of general rules which provide guidelines to the managers to enable them to manage the organisation systematically are called management theories. Some management thinkers such as Fredrick Winslow Taylor, Elton Mayo, Henry Fayol, etc. have presented different theories based on different approaches. These theories are
more suited to all types of organisations. By modifying these theories, adding some innovative techniques and strategies, managers use them in an organisation more efficiently. Thus, old theories of management provide basis for modern ; management theories.

Management theories provide appropriate solutions to organisations, employees and society who are facing problems such as centralisation of authority, low motivation, stress, environmental issues, behavioural problems, health problem, work-like balance, accountability, etc.

Henry Fayol’s Administrative Theory of Management :

After conducting many experiments and observations in organisation, Henry Fayol introduced 14 principles of management. He was a French mining engineer, who became Chief Managing Director. On account of his contribution I in management, he is called as “Father of Modem Management.” His 14 principles of management are as follows :

(1) Principle of Division of Work : This principle suggests that entire work, job or task should be divided into different parts such as technical, financial, commercial, accounting management and security operations. Each part should be assigned to different groups of employees according to their qualifications, qualities, capabilities and experience. It gives benefits of specialisation and improves efficiency.

(2) Principle of Authority and Responsibility : According to this principle, manager should be given authority to get the work done from his subordinates. Authority should always go with corresponding responsibility. Manager should have proper authority to take managerial decisions and also responsibility to complete the job in time.

(3) Principle of Discipline : This principle states that strict observance and respect for general rules, regulations, agreements, etc., at every level of organisation are essential for smooth working and achieving organisational goals.

(4) Principle of Unity of Command : As per this principle every employee should receive orders and instructions from only one superior (boss) and he should be accountable to same. If he receives orders from more than one superior, he will get confused.

(5) Principle of Unity of Direction : According to this principle, a group of employees working on similar activities should have common objectivesand must work under one head (senior) i.e. there should be one head and one plan. It leads to effective co-ordination of individual efforts and energies.

(6) Principle of Subordination of Individual Interest to Organisational Interest : According to this principle, organisational interest must be j given greater importance than individual interest. While taking the decision, the manager must consider the interest of whole group (or organisation) rather than the interest of a single
employee. This is because individuals will be able to achieve their objectives only when organisation makes profit.

(7) Principle of Centralisation : According to this principle, a company must not be completely centralised or decentralised. There must be a combination or proper balance between centralisation and decentralisation, depending upon the nature and size of the organisation. It leads to smooth functioning of am organisation.

(8) Principle of Remuneration : This principle states that the employees in the organisation must be paid just and fair remuneration to keep them satisfied financially and to retain them for long span of time. It boosts the morale of employees which results in greater efficiency and productivity.

(9) Principle of Scalar Chain : According to this principle, orders, information, instructions, messages, explanations, etc. must be passed \ through every key of the chain without skipping any one key in between. This is called Scalar Chain which is time consuming. However, in the case of emergency and to take quick decision, a short cut (Gang Plank) in the chain is permitted.
It means direct communication between the authorities working at same level of management.

Principle of scalar chain :

In the above diagram, the communication between ‘D’ and ‘G’ thorugh C, B, A, E and F is called Scalar Chain and direct communication between ‘D’ and ‘G’ without taking help of any one is called Gang Plank.

(10) Principle of Order : This principle suggests that in every organisation there should be proper, systematic and orderly arrangement of men and materials. The main purpose of this principle is that there should not be a wastage of time and energy for searching or finding out any material or any employee.

(11) Principle of Equity : This principle states that management should be fair and friendly while allocating the work, delegating authority or deciding monetary term. The management should not make any discrimination among the employees. Employees working on the same level but in different departments should be paid equal remuneration. It helps to boost the morale of employees and develops a sense of belongingness among the employees.

(12) Principle of Stability of Tenure : This principle suggests that the management should guarantee stability of tenure to the employees. This minimises the turnover ratio of talented employees and wastage of resources.

(13) Principle of Initiative : This principle states that managers should give freedom to the subordinates to come up with new ideas. The | initiative taken by the employee should be welcomed by the manager with thorough discussion on those ideas. This ultimately leads to healthy organisational culture.

(14) Principle of Esprit de corpse (Team work) : Esprit de corpse implies Union is Strength.
According to this principle, leader or manager should create the feeling of team spirit and understanding among the employees. It integrates and coordinates the individual and group efforts to achieve goals.

Fredrick Winslow Taylor’s Scientific Management Theory :

F. W. Taylor was an American mechanical engineer. He experimented in the Midvale Steel j workers in USA in early 20th century. He formulated and developed his observations and experiments based on scientific data. His approach towards management is called the scientific management.

On account of his scientific approach towards management, he is called Father of Scientific Management. He was of the opinion that problems must be solved by scientific techniques rather than the rule of thumb and trial and error approach.

Principles of scientific management : F. W. Taylor’s principles of scientific management are summarised as follows :

(1) Science, Not Rule of Thumb : This principle states that to increase organisational efficiency, manager should not use personal judgements but should use the scientific method to determine every activity performed by the employee. This principle related with the selection of the best way to perform a job after scientific analysis and not be rule of thumb or trial and error methods. Taylor insisted upon scientific plan even for small production activity like loading iron sheets into box carts.

(2) Harmony, Not Discord : This principle states that in order to achieve goals of the organisation, there should be harmony and proper co-ordination between the employees and management. This helps in minimising conflicts between them. Perfect understanding between them will also be helpful in creating healthy work environment. At the same time, organisation should pay attention to maximum prosperity of employees.

(3) Mental revolution : This principle focuses attention on the complete change in the attitude of the management and employees towards each other. This change will help in achieving goals, increase in productivity and sense of belongingness among the employees.

(4) Co-operation, not Individualism : This principle states that in every organisation there should be mutual cooperation between management and employees. Trust, team spirit, co-operation, etc. are essential to avoid internal competition and to create healthy working environment. Employees’ suggestions, new and innovative ideas should be appreciated and considered by the management in decision making process and treat them as an internal part of the organisation in all respects. At the same time, employees should not use actions like going on strike and making unacceptable demands from the management.

(5) Division of Responsibility : This principle states that while dividing the work between the management and employees, there should be corresponding division of responsibility as well.
Major planning should be done by the top and middle level of management authorities and these plans should be executed by the employees. It helps the management and the employees to perform their task in better manner.

(6) Development of employer and employees , for greater efficiency and maximum prosperity This principle states that profitability and best performance in any organisation depends upon the skill, intelligence and capabilities of its employees. This can only be possible by providing training and development programmes to the employees at regular interval. Each and every employee should be given proper opportunity to attain efficiency and maximum prosperity.

Techniques of Scientific Management :
The techniques of scientific management are explained below :

(1) Work Study : Before allotting the work among the available employees, systematic work study should be done by the management. This study includes an organised, systematic and critical assessment of the different functions or activities.

Work study based on different techniques are :

(a) Time Study : It is a method in which the management observes the employees on the work and determines the precise time required to complete the work. This technique is used to fix standard time needed to complete a specific task under given conditions. Manager can measure the efficiency of employees and control the cost of j work.

(b) Method Study : Under this method, management identifies and accepts best method of doing a job for best quality and cost effectiveness. It helps in reducing the wastage of time, raw material and improve the utility of all resources as per objectives determined in advance.

(c) Motion Study : Under this method, the close study of the movement of employee and machine in completing a particular task or job is done to eliminate unnecessary movements and find out best method. It improves efficiency and productivity of the employees. This method is useful to know whether some elements of job can be eliminated or their sequence can be changed for better job performance.

(d) Fatigue Study : Usually, long working hours with insufficient breaks, heavy working tools, target pressure and poor working conditions lead to fatigue. It reduces efficiency and creates adverse effect on health. Management must take certain measures to reduce the level of fatigue.

(2) Standardisation of Tools and Equipment : On the basis of experiments conducted at work j place, Taylor recommended to provide standard tools and equipment, standard working environment and can suggest standard methods of production to reduce wastage and spoilage of materials, cost of production, fatigue. It ultimately helps to improve quality of work.

(3) Scientific Task Setting : The technique of scientific task setting is useful to restrain the employees from doing the work much below their strength and capacity. This technique helps the employees to complete the job according to the standards given. The management can keep control on the optimum use of available labour.

(4) Scientific Selection and Training : According to this technique as per requirement, job specifications need to be fixed and employees are selected as per predetermined standard in an impartial way. Proper training need to be arranged for employees to increase their efficiency.

(5) Functional Organisation : Taylor suggests that planning should be separated from implementation. He further suggested that planning of the work and actual work should be done by different sets of people. He recommended eight foremen to control various parts of the production.

(A) At planning level :

• Route clerk : tells the employees how work moves from one machine to other.
• Instruction clerk : records instruction to complete the work.
• Time and cost clerk : determines time in which work should be completed and workout the cost.
• Discipline : ensures that workers are working as per factory rules.

(B) At implementation level :

1. Gang boss : Actually gets the work done.
2. Speed boss : Ensures that work is completed in specified time.
3. Repair boss : Handles security and maintenance of mechanism.
4. Inspector : Ensure that the work is done as per specified standards.

(6) Differential Piece – Rate Wage Plan : Under this technique, management fix the standard quantity of production. The employees who produce more than standard output are to be paid remuneration at higher rates and those who produce less than standard output are to be paid remuneration at lower rate. This technique is useful to encourage employees to attain higher standard performance to earn wages at higher scale.

By going through these Maharashtra State Board 12th Science Biology Notes Chapter 2 Reproduction in Lower and Higher Animals students can recall all the concepts quickly.

Maharashtra State Board 12th Biology Notes Chapter 2 Reproduction in Lower and Higher Animals

Reproduction-

1. Reproduction is defined as the biological process of formation of new life forms from pre-existing similar life.
2. Through reproduction, species can survive over a long period.
3. Reproduction in animals occur mainly by two methods, i.e. asexual and sexual.

Asexual Reproduction in animals-

1. Common and primitive method among animals.
2. Meiosis or the gamete formation and fertilization process does not take place in asexual reproduction.
3. Single parent is involved and offspring identical to parent. Also called clone.
4. E.g. Gemmule formation and budding.

5. Gemmule formation :

• Gemmule is an internal bud. In sponges, during unfavourable conditions this method of asexual reproduction is adopted.
• Gemmule is thus an asexually produced mass or aggregation of dormant archcocytes cells. They develop into a new organism.
• Around archaeocytes, amoebocytes secrete a layer of thick resistant membrane.
• Gemmules hatch and develop into new individual when favourable conditions return.
• Seen in Spongilla.

6. Budding :

• Ii is a simple method of asexual reproduction seen in coelenterates (Hydra and corals) and in some colonial ascidians.
• A bud, i.e. small outgrowth is produced towards the basal end of the body, in Hydra.
• Bud grows and forms tentacles and develops into a new individual.
• This newly formed Hydra later detaches from parent and becomes a separate organism.

Sexual Reproduction in animals-

1. Offspring is produced by fusion of gametes or amphimixes in sexual reproduction. For the formation of gametes, both male and female parent undergo meiosis in their gonads.
2. Two main phases in the life of sexually reproducing animals : Juvenile phase/pre- reproductive phase which involves growth and reproductive/maturity phase in which sex organs undergo maturation.
3. Animals are either seasonal breeders like goat, sheep and donkey which breed only in particular season or continuous breeders like human and apes who can breed throughout the year.

4. Human reproduction :

• Sequential steps in the process of human reproduction : gametogenesis, insemination, internal fertilization, zygote formation and embryogenesis, gestation and parturition followed by lactation.
• Primary Sex organs – testes (testis : singular) in male and ovaries (ovary : singular) in female.
• Secondary or accessory Sex organs – Organs other than testis in male and organs other i than ovaries in female.
• Secondary sexual characters in males – Presence of beard, moustache, hair on the chest, muscular body, enlarged larynx (Adam’s apple), etc.
• Secondary sexual characters in females – Developed breast, broader pelvis, high pitched voice, etc.
• Sexual dimorphism : The phenomena by which sexes can be identified externally.

5. Male Reproduction System : Parts of male reproductive system – Testes, accessory ducts, glands
and external genitalia.
(1) Testes

(2) Accessory ducts:

(3) Glands :

(4) External Ganitalia:

Terms associated with external genitalia of male:

• Inguinal canal : The passage through which testes descend into scrotum.
• Gubernaculum : Fibro-muscular band present in the scrotum.
• Cryptorchidism : Failure of testis to descend into scrotum which may cause sterility.
• Three bundles of erectile tissues in penis :
  •  Paired Corpora cavernosa
  • Median corpus spongiosum.

6. Semen : Single ejaculate of semen is 2.5 to 4.00 ml of viscous, alkaline and milky fluid (pH 7.2 to 7.7) containing 400 million sperms and secretions of epididymis, prostate gland, and Cowper’s glands. It is rich in fructose, Ca⁺⁺ , bicarbonates and prostaglandins.

7. Histology of testis :

• External coverings of testis seen in L.S. from outer to inner side tunica vaginalis, tunica albuginea and tunica vasculosa.
• Testicular mass divided into 200-300 testicular lobules by tunica albuginea.
• Each lobule has 1-4 seminiferous tubules.
• In between the seminiferous tubules there are interstitial cells of Leydig or Leydig’s cells. They secrete the male hormone androgen or i testosterone.
• Internal lining of cuboidal germinal epithelial cells or spermatogonia inside the seminiferous l tubules.
• Few large pyramidal cells called Sertoli or sub-tentacular cells (nurse cells) Sertoli cells provide nutrition to the developing sperms,
• Various stages of developing sperms such as spermatogonia, primary spermatocyte, secondary spermatocyte, spermatids and sperms are seen in the seminiferous tubules.

8. Female Reproductive System : The female reproductive system consists of the following parts :

• A pair of ovaries
• A pair of fallopian tubes. (Also called oviducts, but usually this term is used for lower animals)
• Uterus
• Vagina
• External genitalia (vulva)
• A pair of vestibular glands
• A pair of mammary glands

9. Puberty / Sexual maturity in Females :

• Menarche : Onset of menstrual cycle, usually occurs at the age 10-14 years.
• The reproductive system then becomes functional.
• Menopause : End of menstrual cycles in females, usually occurs at the age of 45-50 years.
• Reproductive age of female : The period from menarche to menopause.

10. Structure and development of the ovary : The process of oogenesis starts in ovary much before the birth of the female baby. The various developing follicles and their fate is shown in the following flow chart :

11. Histology of ovary :

• TWo parts in ovary : Central part is medulla while the peripheral part is called cortex.
• Layer of germinal epithelium covers the cortex.
• Germinal epithelial cells form groups of oogonia in the form of cords called egg tubes of Pfluger which project into the cortex. Each cord ends in egg nest, which is group of oogonial cells. The primordial ovarian follicles develop from these cells.
• Different stages of development of oocyte viz. primordial follicle, primary follicle, secondary follicle, Graafian follicle, rupturing Graafian follicle, corpus luteum, corpus albicans are seen in a cortex of mature ovary.
• Medulla has blood vessels, lymph vessels and theca externa.
• Graafian follicle is a mature ovarian follicle with eccentric secondary oocyte in a fluid filled cavity called antrum surrounded by membrane granulosa, theca interna and theca externa.
• The ovum is surrounded by vitelline membrane, zona pellucida and membrana * granulosa.
• In the antrum, ovum is situated on discus proligerus. Ovum along with discus proligerus ; is called cumulus oophorus. Antrum is filled : with liquor folliculi.

Menstrual cycle (Ovarian cycle)-

1. Primates show menstrual cycle. Human female shows cycle with 28 days periodicity.
2. It involves a series of cyclic changes in the ovary and uterus.

3. Menstual cycle:

4. If the ovum is fertilized corpus luteum is retained.
5. A once embryo gets implanted in the endometrium, it starts secretion of human chorionic gonadotropin (hCG) which extends the life of corpus luteum.
6. Presence of hCG in maternal blood and urine is an indicator of pregnancy.
7. If ovum is not fertilized, corpus luteum regresses and forms corpus albicans. Then the next menstrual cycle begins.

Gametogenesis-

1. The process of formation of gametes in sexually reproducing animals is called gametogenesis.
2. Sperm is the male gamete and ovum/egg is the female gamete.
3. The gametes are formed from primordial germ cells of gonads.
4. Spermatogenesis : The process by which sperms are formed is called spermatogenesis.

• In the testis, i.e. male gonads there are seminiferous tubules which are lined by germinal epithelium.
• Cells of germinal epithelium undergo spermatogenesis and form sperms.
• In between the germinal cells there are nurse cells or cells of Sertoli which provide nourishment to the developing sperms.

(1) Phases of spermatogenesis : There are three phases of spermatogenesis, viz. multiplication phase, growth phase and maturation phase. Germinal cells are called primordial germ cells.

• Multiplication phase : Repeated mitotic divisions produce large number of spermatogonia which are diploid (2n).
• Growth phase : The spermatogonium accumulates food and grows in size. This is now called primary spermatocyte.
• Maturation phase : The primary spermatocyte undergoes first meiotic division. At the end of this division two haploid secondary spermatocytes are formed. Secondary spermatocyte
  undergoes second meiotic division and produce spermatid.

Spermatids are non-motile and non-functional. They undergo metamorphosis in the process of spermiogenesis and mature into motile sperms. Each haploid spermatogonium thus forms four haploid spermatids which later transform into the sperms.

(2) Changes occurring during spermiogenesis :

• Increase in sperm length
• Distinction of centrioles into proximal and distal one.
• Formation of axial filament from distal centriole
• Formation of spirally coiled mitochondria.
• Formation of acrosome from Golgi complex.

(3) Structure of the sperm (spermatozoa) :

• Microscopic, elongated haploid motile male gamete measuring about 0.055 mm (60 /;) in length.
• Produced by the process of spermatogenesis.
• Their viability remains viable for seventy- two hours, but can fertilize the ovum in first 12 to 14 hours only.

(4) Parts of sperm:

5. Oogenesis : Oogenesis takes place in ovary by which the secondary oocyte is formed.
(1) Phases of oogenesis :

• Phase of multiplication : In the phase of multiplication, large number of oogonia are formed.
• Phase of growth : In the phase of growth, one of the oogonia becomes large. It is now called primary oocyte.
• Phase of maturation : In this phase the rimary oocyte undergoes meiosis-I and forms large haploid secondary oocyte. There is equal nuclear division but unequal cytoplasmic division during the phase of maturation. Secondary oocyte and polar bodies undergo arrested meiotic-I division. Secondary oocyte completes the meiosis-II if and only if it undergoes fertilization.

(2) Structure of ovum, i.e. secondary oocyte : j

• The ovum discharged by the ovary during ovulation is actually a secondary oocyte.
• Rounded, haploid, non-mo tile. Female gamete is largest cell of the body.
• Measures about 0.1 mm or 100 in diameter.
• It is microlecithal, i.e. almost free of yolk.
• It has abundant cytoplasm or ooplasm having a large eccentric nucleus surrounded by vitelline membrane.
• Centriole is absent in the ovum.
• Ovum shows polarity having two poles.
• Animal pole is the side which shows the presence of polar body and nucleus while the opposite side is termed as vegetal pole.
• The ovum is enclosed by two additional coats inner, thin, transparent and noncellular zona pellucida and outer, thick cellular corona radiata.
• Between the vitelline membrane and zona pellucida there is a narrow perivitelline space.
• The zona pellucida is secreted by ovum j itself while corona radiata is formed of radially elongated follicular cells which are glued together by hyaluronic acid.

Fertilization/Syngamy-

1. Fertilization : Process of fusion of the haploid male and female gametes into diploid zygote is called fertilization.
2. Fertilization is internal and in the ampulla of the fallopian tube the gametes meet.
3. The sequence of events of fertilization :

• Capacitation of sperms : Movement of sperms towards the secondary oocyte.
• Release of acrosomal enzymes: Enzymes are secreted by sperm head when it touches secondary oocyte.
• Separation of cells of corona radiata : This happens due to acrosomal enzymes like hyaluronidase and corona penetrating enzymes.
• Compatibility reaction/ Fertilizin-anti fertilizin interaction : Fertilizin of egg binds with anti fertilizin of sperm. The zona pellucida of egg has fertilizin receptor proteins (ZP3, ZP2). Also acrosome ruptures releasing enzyme acrosin / zona lysin.
• Acrosome reaction : Acrosin dissolves zona pellucida and vitelline membrane at the point of contact of sperm head.
• Entry of sperm nucleus in ovum : Nucleus and centriole enter the ovum.
• Formation of fertilization membrane/ Cortical reaction : Vitelline membrane of ovum is converted into a fertilization membrane. This prevents polyspermy.
• Activation of ovum : Completion of meiosis- II of secondary oocyte takes place. When ovum receives centriole from sperm, it completes meiosis-II. This releases second polar body.
• Syngamy/Karyogamy : Fusion of male pronucleus and female pronucleus. Synkaryon is formed after fusion of male and female nucleus.
  Formation of diploid zygote conclude the process of fertilization

4. Significance of fertilization :

• Secondary oocyte can complete meiosis only after fertilization.
• Diploid number of chromosomes is restored in the zygote.
• Genetic characters of two parents can be mixed leading to variation and evolution.
• It determines the sex of young one.
• Only through fertilization centrioles are introduced into the ovum which are otherwise absent in ovum.

Embryonic development-

1. After syngamy the zygote that is formed undergoes divisions to form embryo. These mitotic divisions are called cleavages.
2. When the zygote passes through the fallopian tube, the cleavages start.
3. Till morula stage, zona pellucida layer is retained as it prevents the implantation of the blastocyst at an abnormal site.

4. Cleavage :

• Cleavages are rapid mitotic divisions of zygote to form a hollow spherical multicellular blastula. Cleavage converts the zygote first into a mass of cells called morula.
• Cleavage occurs during its passage through the fallopian tube to the uterus.
• In human beings, cleavage is holoblastic, equal and indeterminate.
• Cleavage divisions are rapid with short interphase.
• There is no time for cells to grow in size.
  Thus, cells become progressively smaller. The resulting daughter cells are called blastomeres.
• Cleavage shows faster synthesis of DNA.

5. Blastulation :

• During blastulation hollow and multicellular blastocyst is formed from 16-32 celled stage of morula.
• Blastocyst now reaches uterus and starts absorbing glycogen rich uterine milk.
• The outer layer of cells forms trophoblast layer whereas inner large cells form inner cell mass or embryoblast.
• Size of blastocyst doubles from 0.15 mm to 0. 30 mm.
• Due to the absorption of glycogen rich uterine milk, the trophoblast cells become flat and a cavity called blastocyst cavity is formed.
• Cells of rauber : These are the cells of trophoblast which are in contact with the embryonal knob.
• Blastocyst becomes fully developed by the end of the 7th day.

6. Implantation :

• Implantation is the process of embedding the blastocyst in the uterine endometrium for further gestation.
• On 7th to 10th day after fertilization, implantation takes place. Embryo is completely buried inside the endometrium.
• Trophoblast divides into two layers, viz. cytotrophoblast and syncytiotrophoblast. With processes of synctiotrophoblast the blastocyst is buried in the endometrium layer of uterus.

7. Gastrulation :

(1) Formation of gastrula from the blastocyst is called gastrulation. It starts at about 8 days after fertilization.
(2) Two important events during gastrulation are :

• Differentiation of blastomeres : Three germinal layers are formed by rearrangement of blastomeres.
• Morphogenetic movements : Movements of cells to reach their destined area of differentiation is called morphogenetic movements.

(3) Gastrulation and implantation of blastocyst takes place simultaneously.
(4) Gastrulation involves the following sequential changes :

• Formation of endoderm
• Formation of embryonic disc
• Formation of amniotic cavity
• Formation of ectoderm
• Formation of mesoderm
• Formation of extra-embryonic coelom
• Formation of chorion and amnion

8. Organogenesis : Process of forming organs after the process of gastrulation is called organogenesis.
9. Fate of germinal layers : At the end of gastrulation, embryo develops into three germinal layers.
Different tissues and organs are formed from germinal layers. This process is called histogenensis.

Pregnancy / Gestation-

1. Gestation or pregnancy is the condition of developing foetus in the uterus. It may be one or two as in twins.
2. In human beings, gestation period is about 280 days.

Placenta-

1. Placenta is a flattened, discoidal organ attached to the wall of the uterus and to the baby’s umbilical cord.
2. It facilitates the supply of oxygen and nutrients and also for removal of carbon dioxide and excretory products produced by the foetus.
3. Placenta is the only organ, which is formed of tissues from two different individuals the mother and the foetus.
4. Foetal placenta is the choronic villi while maternal placenta is the highly vascularized uterine wall. So human placenta is called haemochorial.
5. The placenta also acts as an endocrine tissue and produces hormones like hCG, progesterone, estrogen and relaxin.

Parturition-

• Parturition is the birth process which is accompanied with labour pains.
• It is a neuro-endocrine mechanism which involves rise in estrogen : progesterone ratio and increase in oxytocin receptors in myometrium of uterine wall.
• The fully developed foetus gives signals for the uterine contractions by secreting Adrenocorticotropic hormone (ACTH) from pituitary and corticosteroids from adrenal gland.
• This triggers release of oxytocin from mother’s pituitary gland, which acts on uterine muscles of mother and causes vigorous uterine contractions.
• This leads to expulsion of the baby from the uterus.
• Parturition involves three stages, viz. dilation stage, expulsion stage and after birth or placental stage.

Lactation-

• After parturition the new born is given nourishment through milk. The process of secretion of milk is called lactation in which mammary glands of mother become functional.
• The first milk is called colostrum which is rich in proteins, lactose and mother’s antibodies e.g. IgA.
• Lactation is also neuroendocrine process, in which almost all endocrine glands of mother are involved.

Reproductive Health-

• Total wellbeing of a person’s emotional, behavioural, physical and social aspects involving reproduction is called reproductive health.
• In India, Reproductive and Child Health Care (RCH) programmes are undertaken to improve reproductive health.
• One of the objectives of this programme is to control the population growth of India.

Birth Control-

1. For controlling the family size, birth control measures are taken which me called contraceptive measures.
2. Contraceptive methods are of two main types, i.e. temporary and permanent.

Birth control measures:

3. Medical termination of pregnancy (MTP) :

• MTP is induced abortion. This can indirectly control population. MTP is legalized in India since 1971.
• MTP is performed if unwanted pregnancy has to be discontinued or if there are defects in the growing foetus. MTP to abort healthy female embryo is illegal.
• MTP can be safely done only during the first trimester of pregnancy.

4. Amniocentesis :

• Process in which amniotic fluid containing foetal cells is collected using a hollow needle inserted into the uterus under ultrasound guidance.
• This is done for studying the chromosomes to check any possible abnormality in the developing foetus.
• Sex determination by amniocentesis is legally banned in India.

Sexually Transmitted Diseases (STDs)-

1. 1. Disease or infections which are transmitted through sexual intercourse are collectively called Sexually Transmited Diseases (STDs) or Venereal Diseases (VDs) or Reproductive Tract Infections (RTI).
2. The major venereal diseases are syphilis and gonorrhoea.

Infertility-

1. Infertility is defined as the inability to conceive naturally after (one year of) regular unprotected intercourse.
2. Today infertile couples have many options to have a child such as fertility drugs, test tube babies, artificial insemination, IUI, surrogate motherhood, etc.

• In Vitro Fertilization (IVF) : When fertilization process is carried out of the body and the embryo is transferred back into the mother’s body, then it is called IVF technique. (Commonly known as test-tube baby.)
• Zygote Intra Fallopian Transfer (ZIFT) : The embryo is transferred in the fallopian tubes by ZIFT (Zygote Intra Fallopian Transfer) technique.
• Gamete Intra Fallopian Transfer (GIFT) : Transferring the ovum collected from the donor into the fallopian tube of another female who can act as a surrogate mother (a female with suitable environment for fertilization and development) is called GIFT.
• ICSI (Intra Cytoplasmic Sperm Injection) : Single sperm cell is injected directly into cytoplasm of an ovum in the laboratory in this technique.
• Artificial insemination (AI) : The collected sperms are artificially introduced into the
  cervix of female, for the purpose of achieving a pregnancy through in vivo fertilization.
• IUI (Intra Uterine Insemination) : Similar to artificial insemination, but in this technique the sperms are introduced into the uterine cavity instead of cervix.
• Sperm bank / Semen bank : Sperms are collected from donors and stored in a sperm bank or semen bank. These are stored by cryopreservation method and given to needy couples.
• Adoption : A couple or a single parent can legally adopt a child. They also get legal rights, privileges and responsibilities for raising up adopted child.

Know the Institute :

Cord blood bank, Kolkata

• First Government-run cord blood bank at Kolkata, established in 2001.
• Accredited by AABB (American Association of Blood Bank).
• Work carried out Collection of the cord blood, extracting and cryogenically preserving for its stem cells and other cells of the immune system for future potential medical use
• Stem cells are used to treat diseases, e.g. leukaemia, certain cancers, sickle-cell anaemia and some metabolic disorders.

By going through these Maharashtra State Board 12th Science Biology Notes Chapter 1 Reproduction in Lower and Higher Plants students can recall all the concepts quickly.

Maharashtra State Board 12th Biology Notes Chapter 1 Reproduction in Lower and Higher Plants

Introduction – Reproduction

1. Reproduction is production of young ones like parents.
2. Essential Process related to continuity of species.
3. To maintain continuity of life, organisms produce offspring showing similar characters.
4. TWo types – Asexual reproduction and Sexual reproduction.

Asexual reproduction

1. Fusion of two compatible gametes or sex cell is not involved.
2. Production of genetically identical progeny, i. e. Clones.
3. Progeny from single organism.
4. Inheritance of genes of parent by progeny.
5. Modes of Asexual Reproduction

(1) Fragmentation

• Multicellular organism
• Small piece
• Accidental breaking E.g. Algae Spirogyra.

(2) Budding

• Unicellular organism
• One or more outgrowths, i.e. buds
• E.g. Yeast

(3) Spore formation

• Different types
• Flagellated motile zoospores
• Zoosporangia
• Biftagellate zoospores. E.g. Chlamydomonas

(4) Fission
Binary Fission E.g. Amoeba, Paramoecium

(5) Conidia formation
E.g. Fungus Penicillium

(6) Gemmule formation
E.g. Sponges

6. Vegetative reproduction :

• Asexual method
• Reproduction with vegetative plant parts.
• Artificial methods useful in agriculture and horticulture.
• New plants are identical to parent plant

7. Artificial methods-

(1) Cutting
Small piece of plant part selected.
Must possess one or more bud.

• Stem cutting
  e.g. Rose, Bougainvillea
• Leaf cutting
  e.g. Sansev feria
• Root cutting
  e.g. Blackberry

(2) Grafting

• Joining of two plant parts stock and scion
• Rooted plant — Stock
• Joined plant – Scion
• Grow together as one plant
  • Stem grafting e.g. Apple
  • Bud grafting, budding e.g. Rose

(3) Tissue Culture

• A small amount of plant tissue is carefully and aseptically grown to get plantlets.
• Micropropagation — Modern method to get plants from tissue culture. e.g. Orchids

Sexual Reproduction-

1. Involves fusion of two compatible gametes (male and female).
2. Takes place after certain maturity.
3. In higher plants, flowering indicates beginning of reproductive phase.
4. Production of genetically different offspring.
5. Variations are useful for survival and evolution of species.
6. Flowers, specialized reproductive structure producing haploid gametes-

7. Sexual reproduction – Two major events –

Meiosis-
Production of gametes (n):

• Male gametes in anther
• Female gametes in ovule

Fusion of gametes (Fertilization):

• Diploid zygote
• Embryo
• New plant-(2n) sporophyte

8. Diploid sporophyte is dominant plant body → Meiosis → Haploid spores →
gametes ← within flower ← Reduced structure ← gametophyte

9. Structure of anther – Mature anther :

• Usually dithecous (Having two lobes) → tetrasporangiate (Having four pollen sacs)
• Monothecous (Having single lobe) → Bisporangiate (Having two pollen sacs)
• When young it is homogeneous.
• Parenchymatous with epidermis.
• Heterogeneity appears with formation of archesporial cell.

10. T. S. of anther :

• Mature anther has anther wall and microsporangium.
• Anther wall is outer layer and microsporangium has sporogenous tissue.
• Anther wall has four layers, viz. Outer epidermis (Protective) followed by fibrous endothecium, thin walled middle layers and tapetum innermost nutritive layer.
• Microsporangium contains microspore mother cells (2n) which undergo meiosis to form microspore tetrad.
• Haploid (n) microspores separate from tetrad.
• When microspores develop wall around it then it is known as pollen grain.
• From archesporial cell primary parietal cell forms anther wall and sporogenous cell forms sporogenous tissue.

Microsporogenesis-

1. Process of formation of Microspores by meiosis from MMC — Microspore Mother Cell
2. Pollen grain – Non-motile with single nucleus.
Haploid
3. Pollen wall, double layered — Sporoderm

4. Pollen wall-

• Exine (outer wall)
• Intine (inner wall)

Exine (outer wall)

• Thick
• Composed of non- biodegradable sporopollenin
• Protective layer
• Smooth or variously sculptured, spiny
• Presence of thin areas germ pores for emergence of pollen tube

Intine (inner wall)

• Thin
• Cellulose and pectin
• Forms pollen tube
• Smooth

5. Pollen Viability : It is the ability of pollen grain to germinate and develop male gametophyte.

• Depends on environment factors – Temperature and humidity.
• It lasts for few minutes (Grasses, Wheat, Rice) to months (Members of Rosaceae, Solanaceae, Fabaceae, Leguminosae)

6. Development of male gametophyte :

• It is considerably reduced.
• Develops in flower.
• Pollen grain (n) is first cell of gametophyte.

7. Pollen grain-

1. First mitotic division → 2 unequal cells →

1. Vegetative cell
2. Generative cell

Vegetative cell

• Larger, Naked
• Rich in food
• Irregular nucleus

Generative cell

• Smaller, thin walled
• Dense cytoplasm
• Floats in cytoplasm of Vegetative cell

2. Second mitotic division → In generative cell → equal cells

• Two non-motile male gametes produced
• Either occur in pollen grain or in pollen tube.

3. Pollen grains are shed in either two celled stage or three celled stage.

• Pollen grains are lodged on stigma of pistil.

Structure of Anatropous ovule (Most common type)

1. Anatropous Ovule:

Ovule are preset in ovary.
Uniovulate – Mango, Wheat, Rice.
Multiovulate – Tomato, Lady’s finger

3. Parts of ovule :

• Funiculus : Stalk by which ovule is attached to placenta.
• Hilum : Point of attachment.
• Anatropous ovule : Curved ovule, where micropyle is near stalk.
• Nucellus : Parenchymatous tissue that forms body of ovule.
• Integuments : Outer and inner two protective coverings.
• Micropyle : Narrow opening at apex.
• Chalaza : Base of ovule.
• Female gametophyte or embryo sac remains embedded in nucellus.
  Oval, elongated, multicellular 7 celled structure.

Megasporogenesis-

1. Process of formation of haploid megaspores from Megaspore Mother Cell (MMC) which is diploid (2n).
2. Megaspore mother cell is situated in nucellus towards micropylar end.
3. By meiosis → Linear tetrad of 4 megaspores (n).
4. Upper 3 degenerate but lower one is functional,

• Functional megaspore – First cell of female gametophyte
• 1st mitosis -2 nuclei which migrate to opposite poles
• 2nd mitosis-2 nuclei formed at each pole
• 3rd mitosis-4 nuclei formed at each pole
• One from each pole moves towards centre – polar nuclei

5. Egg apparatus : 3 nuclei at micropylar end.
6. Central egg cell with 2 synergids.
7. Synergids with filiform apparatus – guides pollen tube towards egg.
8. Antipodal cells : 3 cells at chalazal end.
9. Definitive or secondary nucleus : 2 Polar nuclei fuse in central cell – form diploid nucleus.
10. This 7 celled 8 nucleate mature embryo sac is monosporic and endosporic, enclosed in ovule.

Pollination-

1. Pollination : Transfer of pollen grains from anther to stigma of flower.

• Pollen grains are non-motile and female gametes are produced at different site. To bring both gametes together, this is a necessary act.
• Agents of pollination also act as agent for seed dispersal.

2. Types of Pollination :
(1) Self pollination – Inbreeding

• Occurs in single flower or two flowers in same plant.
• Autogamy : Bisexual flower pollinated by its own pollen shows autogamy.
• Offspring produced by self-pollination is genetically identical to parents, e.g. Pea.

(2) Cross Pollination – Outbreeding

• Xenogamy : Two different plants are involved.
• Need pollinating agent.
• Genetically varied offspring e.g. food and fibre crops

(3) Types of cross pollination :

• Chasmogamy : When flowers open and expose their sex organs.
• Homogamy : Condition when anther and stigma mature at same time.
• Cleistogamy : Condition when flowers remain closed, e.g. Viola, Commelina.
• Geitonogamy : Conditon where transfer of pollen grains to stigma of other flower produced on same plant, e.g. Unisexual flowers of Cucurbita.

3. Agents of Pollination:

4. Comparison of different mechanisms of pollination:

Outbreeding devices – Contrivances-

1. Mechanism to prevent self-pollination and promote cross pollination.
2. Self-pollination results inbreeding depression, hence cross pollination needed.

3. Devices observed in plants.

(1) Unisexuality:

• Unisexuality flowers
• Dioecism e.g. Maize or Monoecism e.g. Papaya, Mulberry

(2) Dichogamy:

• Maturity at different times for anthers and stigma
• Protandry earlier maturity of androecium e.g. sunflower
• Ptotogyny earlier maturity of gynoecium e.g. Gloriosa

(3) Prepotency:
Rapid pollen germination on other stigma of same type e.g. Apple.

(4) Heteromorphy:

• Different forms of flowers
• Stigmas and anthers placed at different levels.
• Divided into two types
  1. Heterostyly
  2. Hcteroanthy e.g. Prtmula

(5) Herkogamy :

• Natural physical barrier between sex organs.
• Contact of pollen with stigma is avoided. eg. Calot ropis

(6) Self – sterility:

• Genetic mechanism
• Inhibits pollen germination on stigma of same flower e.g. Tobacco, Thea

Pollen-Pistil Interaction-

1. Pistil has ability to recognise right type of pollen.
2. Special proteins help in determining compatibility.
3. Physiological mechanism operates on stigmatic surface.
4. Compatible pollen absorbs water and nutrients.
5. Pollen tube emerges from germ pore and passes through style to ovule.
6. Tip of pollen tube enters synergid.
7. Growth of pollen tube is determined by specific chemicals.
8. Pollen grains can be induced to grow on artificial medium having sucrose and boric acid – in vitro tube growth.
9. Artificial hybridization :

• Crop improvement and plant breeding programmes
• Selected desired pollens are handpicked and pollinated.
• Emasculation (Removal of anthers before opening of flowers) and bagging are important steps.

Double fertilization-

1. Complex fertilization mechanism where both male gametes participate.
2. Characteristic feature of angiosperms

• Porogamy : Pollen tube entering the ovule through micropyle.
  (Most common type – enters synergid and releases its content – 2 non-motile male gametes)
• Chalazogamy : Entry of pollen tube through chalaza.
• Mesogamy : Entry of pollen tube through integuments.
• Siphonogamy : Non-motile gametes present in pollen tube.

Process of double fertilization :

Process of double fertilization in embryo sac

(1) Syngamy (Generative fertilization)

• 1 male gamete unites with egg cell, (n) + (n) =2n
• Zygote (2n)
• Embryo (Generative fertilization)

(2) Triple fusion (Vegetative fertilization)

• 1 male gamete unites with Secondary nucleus, n+(2n)=3n
• PEN – Primary Endosperm Nucleus (3n)
• Endosperm — Nutritive tissue (Vegetative fertilization)

Both male gametes are utilized in the fertilization process hence it is described as a double fertilization.

4. Significance of double fertilization :

• Unique feature of angiosperms.
• Concerned with production of seed.
• Zygote develops into embryo which in turn forms new plant.
• Triploid PEN forms endosperm – nutritive tissue for developing embryo.
• Restoration of diploid chromosome number.
• Avoids polyembryony.

Development of Endosperm-

1. Post fertilization event.
2. Developed from triploid PEN.
3. Development of embryo and endosperm is simultaneous.
4. Endosperm also regulates growth of embryo.

5. Types of endosperm:

(a) Nuclear

• Free nuclear divisions
• No wall formation
• Large central vacuole
• Wall formation at later stage
• e.g. Coconut, Wheat, Sunflower

(b) Cellular

• Divisions of PEN followed by wall formation
• e.g. Petunia
  Adoxa
  Balsam

(c) Helobial:

• First division of PEN followed by wall formation
• 2 celled unequal
• Smaller chalazal cell and larger micropylar cell
• Further free nuclear divisions

6. Mosaic Endosperm : It is variation in the endosperm having tissue of two different types, e.g. Corn – Patches of different colours giving mosaic pattern.

Development of Embryo-

1. Embryogenesis : The process of development of zygote into embryo is called Embryogenesis.
2. Zygotic embryo is situated towards micropylar end in embryo sac.
3. When some amount of endosperm is formed then only growth of embryo starts.
4. Zygote develops wall around it and becomes
oospore.
5. Oospore divided into 2 celled pro-embryo.
6. 2 celled proembryo

1. Larger Cell
2. Smaller Cell

Larger Cell

1. Towards micropyle
2. Called basal cell.
3. Suspensor initial
4. Transverse divisions to form filamentous suspensor
5. Suspensor pushes embryo
6. First swollen cell – Haustorium
7. Lowermost cell is hypophysis
8. Hypophysis forms radicle, root cap.

2. Smaller Cell:

• Towards Chalaza
• Called terminal or apical cell
• Embryonal initial
• 3 mitotic divisions
• 8 cells – octant
• Lower tier forms hypocotyl and part of radicle
• Upper tier forms plumule and Cotyledon
• Divisions to form heart shaped
• TWo lateral cotyledons
• Curvature – Horse shoe shaped

7. Embryogenesis is similar till octant stage in dicot and monocot embryo development.
8. In Monocot embryo – Single cotyledon

• Scutellum – shield shaped cotyledon
• Coleorhiza – Protective covering of radicle
• Coleoptile – Protective covering of plumule Unit

Seed and Fruit development-

1. Formation of seeds inside fruit for creating offspring for next generation.
2. Fertilization initiates seed formation.
3. Integuments form seed coat – Testa : Outer integument.
Tegmen : Inner integument.
4. Perisperm : Remnants of nucellus in seed e.g. black pepper, beet
5. Pericarp : Ovary wall becomes fruit wall
6. Seed

• Endospermic or albuminous- e.g. Castor, Maize
• Non-Endospermic or exalbuminous e.g. Bean. Pea

7. Cotyledons : Store food materials.
8. Micropyle in seed coat: For emergence of radicle.

9. Significance of Seed and Fruit Formation

• Nourishment to seed that is present inside fruit.
• Protection of seed.
• Propagating unit.
• Dispersal, spread of species.

10. Seed dormancy – Structural and physiological adaptive mechanism for survival.
11. Helpful during adverse environmental conditions.

Apomixis –

1. Phenomenon of formation of embryo through asexual methods.
2. Apogamy : Gametophytic cell produces embryo without fertilization.
3. Apospory : Sporophytic cell produces embryo without fertilization.
4. Agamospermy : Seed is produced but embryo inside is formed without meiosis and syngamy.

5. Apomixis

(A) Recurrent

• Diplospory – unreduced.
• Diploid embryo sac from megaspore mother cell.
• e.g. Taraxacum
• Apospory – apomictic embryo sac.

(B) Non-recurrent

• Parthenogenesis, Embryo formed from egg cell (n)
• Apogamy – embryo from haploid cell.
• Sterile plants.
• e.g. Nicotiana

(C) Adventive Embryony

• Addition to zygotic embryo, embryo formed from nucellus or integuments.
• e.g. Mango, Lemon, Orange.

Parthenocarpy-

1. Parthenocarpy: Fruit formation without fertilization.
2. Stimulus provided by placental tissue.
3. Chemical stimulus of auxins (IAA) responsible for enlargement of ovary.
4. No seed formation (seedless).
5. E.g. Banana, Pineapple, Papaya
6. Can be induced artificially by spraying hormones gibberellins or other physical methods.
E.g. Grapes.

Polyembryony-

1. Development of more than one embryo in the seed
2. Adventive Polyembryony : Embryo
development from nucellus or integuments.
3. Cleavage Polyembryony : Cleavage of zygote pre-embryo and the units develop into embryos.

4. Advantages :

• Genetically uniform seedlings.
• Emergence of multiple seedlings.
• Beneficial in horticulture – Growing fruits.

Learn this as well :

• Fibrous endothecium of anther wall helps in the dehiscence of anther when pollen grains are mature.
• Pollination by animals is known as zoophily. Animals like snakes, rodents, squirrel, monkeys, lemurs and elephant act as pollinating agents.
• Pollination by snails and slugs is known as malacophily.
• Pollenkitt substance in insect pollinated pollen grains is contributed by tapetum.
• In ovule, the part of the funiculus united with body of ovule, ovule wall is known as raphe. It is seen as a line or a Ridge.
• In maize grain, aleurone layer is the outer part of starchy endosperm which stores proteins.

Know your Scientist/Conservationist :

• Nawaschin : Discovery of phenomenon of double fertilization in Liliaceae family plants : Lilium and Fritillaria.
• Noll : Coined term parthenocarpy.
• Leeuwenhoek : Noticed polyembryony in Citrus seeds for first time.
• Rahibai Popare : Conservationist of Maharashtra, seed mother, created seed bank for varieties of native seed.