Tag: Classification

  • Customer Services for easy writing a good resume

    Customer Services for easy writing a good resume

    Customer Services: In today’s society, commodities and products are emerging in an endless stream, and technology is constantly developing. Now, more than the appearance, technology, function, and material of commodities, and products, consumers, and customers care about the services behind the products. The quality of a product is important, but the service of the product is also essential. When a product fails, the quality of after-sales customer service is what customers value most, and publicity lies in customer service. It is the embodiment of emotion and respect between people and cannot replace by any product.

    Here are the articles to explain, What does customer services are? for writing a good resume

    Customer Service Specialist: Also known as an Account Manager, in simple terms, is the person who serves customers. Receive customer inquiries, help customers answer their questions, or undertake full-time customer service.

    Classification of customer services;

    Customer service divides into manual customer service and electronic customer service. Which can further subdivide into three categories: text customer service, video customer service, and voice customer service. Text customer service refers to customer service mainly in the form of typing chat, video customer service refers to customer service mainly in the form of voice and video, and voice customer service refers to customer service mainly in the form of mobile phones.

    Customer service generally divides into three categories in business practice, namely: pre-sale service, in-sale service, and after-sale service. Pre-sales service generally refers to a series of activities that an enterprise provides to customers before selling products, such as market research, product design, providing instruction manuals, and providing consulting services.

    In-sale service refers to the service provided by the seller to the buyer in the process of product transaction, such as reception service, commodity packaging service, etc. After-sales service refers to services that associate with the products sold and are beneficial to the characteristics of buyers, including services such as delivery, installation, product return, repair, maintenance, and technical training.

    Customer Service Job Responsibilities;

    • Accept customer inquiries, complaints, suggestions, and opinions, and make records;
    • Collect customer and related market data, establish and manage customer files and information databases;
    • Responsible for business coordination with relevant departments to solve problems raised by customers promptly;
    • Quickly grasp the company’s new policies, and new business, and actively promote the company’s new products during the telephone service process, to encourage customers to have the willing to use the company’s products;
    • Accept business applications and customer complaint calls and accurately record the content of complaints, and generate electronic work orders for businesses that require assistance from other positions and transfer them to the background team;
    • Assist in arranging training materials within the group and coaching junior customer representatives. Participate in various pieces of training to improve overall quality. Participate in various team activities and support team building;
    • For questions or materials that are not in the database, record the content of the question, hand it over to the assistant manager on duty and transfer it to the business team. Collect mobile business information in a timely and accurate manner, strive to learn mobile business knowledge, assist in collecting customer demand information, and put forward suggestions for improvement of service work;
    • Use multi-channel methods (such as phone calls, text messages, emails, etc.) to communicate with customers to achieve service or sales purposes;
    • Do a good job in user consultation and complaint handling, do a good job in reporting and dispatching users’ obstacles, and summarize and feedback on users’ suggestions and opinions;

    Job Requirements

    To be a qualified customer services staff, you should have a rigorous work style, enthusiastic service attitude, skilled business knowledge, positive learning attitude, patient explaining to customers, humble listening to customers’ opinions, etc.

    Full of enthusiasm for work and serious work attitude. To be a qualified customer services staff, only if you love this career can you devote yourself to it. So this is a prerequisite for qualified customer service staff.

    Proficient business knowledge. You should have the proficient business knowledge and keep studying hard. Only if you have mastered all aspects of business knowledge, you can accurately provide users with various services. Such as telephone bill inquiries, business inquiries, business handling, and complaint suggestions. Let customers get better service in satisfaction.

    Answer questions patiently;

    A qualified customer services staff, the core is the attitude to customers. In the process of work, you should maintain a warm and sincere working attitude. While doing a good job of explaining the work, you should be gentle and not arrogant or impetuous. If you encounter problems that customers do not understand or are difficult to explain, you must be patient. Do it again, until the customer satisfies, and always keep the promise of “melting smile into voice” and bringing sincerity to customers. In this way, you can better keep yourself moving forward.

    Good communication and coordination skills;

    Communication ability, especially effective communication ability is a basic quality of customer service staff. Customer service is the work of dealing with customers. Listening to customers, understanding customers, inspiring customers, and guiding customers are the basic skills when we communicate with customers. What kind of service and help do customers need, and where are the complaints and dissatisfaction of customers? Can we find out the problems existing in our company, prescribe the right medicine, and solve customer problems?

    Work content

    Customer data management
    1. Data collection: In the company’s daily marketing work, the collection of customer information is very important to work, which is directly related to the realization of the company’s marketing plan. The collection of customer services data requires customer service specialists to carefully extract customer information files every day to pay attention to the development of these customers.
    2. Data collation: The customer information files extracted by the customer services specialist are submitted to the customer service supervisor. The customer service supervisor arranges the information summary, analyzes and categorizes, assigns special personnel to manage various data, and requires daily updates to avoid omissions.
    3. Data processing: The customer service supervisor is assigned to the relevant customer service specialist by the principle of balancing the number of customers and taking into account business capabilities. The customer in charge of the customer services specialist should communicate with the customer within a week and make a detailed record.
    Conduct irregular return visits to different types of customers

    The needs of customers are constantly changing. Through return visits, we can not only understand the needs of different customers and market consultation but also find out the deficiencies in our work, make timely remedial and adjustments, meet customer needs and improve customer satisfaction.

    Efficient complaint handling

    Improve the complaint handling mechanism, pay attention to the standardization and efficiency of handling customer complaints, and form a closed-loop management process, so that complaints are accepted immediately, results are quickly obtained, and there is a return visit after handling; so that customer complaint can be efficiently and satisfactorily resolved. Create a complaint file.

    Communicate closely with various departments, participate in marketing activities, and assist in market sales. The implementation of telemarketing by an enterprise plays an important role in the success of sales. Which requires customer service specialists to have certain sales business capabilities and master certain business skills.

    Development Path;

    Customer Service Specialist — Customer Service Supervisor — Customer Service Manager

    How to do good customer service?

    The ability to adapt to life without fear

    Customer service staff needs to be resilient. As a customer service agent, you face different customers every day, and many times customers present you with some real challenges. For example, front-line customer service personnel, those who work in hotels, those who work in retail stores, those who are telephone operators, and those who are telephone customer service personnel, may encounter some challenging environments.

    For example, a customer in a retail store complained. Maybe he drank a little wine and smashed the counter when he came in. What should you do as a customer services staff at this time? In this way, why is the customer so unreasonable? Hurry up and call the police, and some very experienced customer service staff can handle this matter safely. This requires a certain amount of resilience. Especially when dealing with some vicious complaints, it is necessary to be calm.

    The ability to withstand setbacks

    Salespeople often encounter some setbacks. What kind of setbacks can the customer service person suffer? For example, will you misunderstand the customer? Will you take anger on the customer service person? Because he has suffered too much, there needs to be an outlet. Therefore, customer service personnel need to have the ability to withstand setbacks.

    Emotional self-control ability

    What do you mean by self-control and the ability to regulate emotions? For example, if you receive 100 customers every day, you may scold by the first customer. So your mood becomes very bad and your mood is low. You don’t go home either, and the 99 customers behind are still waiting for you. At this time, will you transfer the unpleasantness that the first customer brought you to the next customer? This requires you to control your emotions and adjust your emotions. Because for the customer you are always his first. Therefore, the psychological quality of excellent customer service staff is very important.

    The ability to support the full emotional effort

    What is full emotional effort? It is that you provide the best service to every customer. I can’t have reservations, I can’t say it, because I need to laugh at 100 people today. And I guess I won’t be able to laugh for that long, so I should laugh less at the beginning. Is it okay to do customer service? No. You treat your first client with the same passion you need to treat your last client.

    Positive and enterprising, never-give-up mentality ability

    What is a good attitude of being proactive and never giving up? Customer service personnel need to constantly adjust in their jobs. The external ability of customer service personnel must be supported by an internal thing. The most important thing is literacy. So, what qualities do customer service personnel need to have? Take a look at “Qualities Necessary for Customer Service”

    Some people are not service-oriented or their service-oriented is not strong enough. Once they choose a career in customer service, they will be very miserable, because they do not have the initiative to help others, and they will feel very uncomfortable every time they provide service to customers. On the contrary, if you are a person with a strong service orientation, you will find that service is a very happy thing, because you can feel happy by helping others every time, and you will regard the happiness of others as your happiness, take the elimination of other people’s troubles as your own greater happiness.

    How to write a customer services resume?

    First, double-check the written CV for typos, grammar, and punctuation. It’s best to have a good writer review it for you because others are more likely to spot errors than you. Customer service work requires staff to be careful. If there is such a low-level mistake in your resume, it will make HR a bad impression of you, and even cause HR to directly ignore your resume, and you will lose an interview.

    Secondly, keep in mind that your resume must highlight the key points. It is not your autobiography. You should try not to write anything unrelated to the job you are applying for. Experience and experience that are meaningful to the job you are applying for must not miss. So, write about the experiences you’ve had about customer service work. For example, the following experience is good:

    Of course, if you don’t have relevant work experience, you don’t need to be afraid. Let’s take a look at the following requirements for a company’s recruiting customer service:

    • College degree or above from a national unified recruitment institution, with no restrictions on majors;
    • Good image, good temperament, clear articulation, outgoing personality, cheerful and confident;
    • Strong language skills and interpersonal communication skills;
    • More than one year of sales experience or service marketing management experience and traditional advertising industry work experience is preferred;
    • Proficient in using MS-office office software. Computer-level, outstanding graduates are preferred.
    Other things

    From the above description, we can see that the company does not have high requirements for the position of customer service, and students of any major can apply for this position. If it is a voice customer service, “articulate, outgoing, cheerful, and confident” is a must. So how do you reflect that you have the above abilities? You can write that you have served as the host of an activity in the school, participated in the school’s broadcast agency, or actively participated in the performance of various activities in the school.

    These can well reflect that you are suitable for customer service in terms of oral expression and character. Yes; if you are applying for written customer service, you need to highlight your good written expression skills. Such as contributing to the school newspaper, writing some small words, and joining the school’s literary club, all of which can write into your resume. For example, Some customer service positions require face-to-face communication with customers.

    At this time, you may require to have a “good image and good temperament”. Attaching a formal job search photo can bring a lot of extra points to your resume. Of course, If your appearance is more “graceful”, it is recommended not to attach photos, and the best job position is a customer service position that does not communicate with customer service face-to-face, to avoid reducing your chances of interviewing yourself due to some inherent disadvantages.

    Customer Services for easy writing a good resume Image
    Customer Services for easy writing a good resume; Photo by Amy Hirschi on Unsplash.
  • Accounting Software Meaning Definition Features Classification

    Accounting Software Meaning Definition Features Classification

    Accounting software is a computer software system and its functional modules specially used for accounting and financial management, including a set of programs that direct the computer to perform accounting and management work, stored data, and related materials. For example, the accounting processing module in they not only includes the procedures and basic data (accounting subjects, vouchers, etc.) that instruct the computer to perform accounting processing but also includes relevant technical materials such as software manuals to guide users to conduct accounting. Handling operations. 

    Here is the article to explain, How to define the Accounting Software Meaning Definition Features Classification!

    Accounting software usually has the following main functions: 1. Provide data input directly for accounting and financial management; 2. Generate accounting data such as vouchers, account books, and statements; 3. Convert, output, analyze, and utilize accounting data.

    Features and Characteristics of Accounting Software;

    The features and characteristics of functional modules of the accounting software include the following parts:

    Accounting processing module;

    The accounting processing module mainly uses accounting vouchers as the original data, records, classifies, calculates, processes, and summarizes the economic contents contained in the accounting vouchers according to the accounting subjects and statistical index system, and outputs the general ledger, the detailed ledger, Journals, and other auxiliary books, vouchers, and reports.

    The accounting processing module mainly includes 1. Initial accounting (account establishment); 2. Voucher processing (input, review, summary); 3. Inquiry; 4. Reconciliation;

    The initial accounting is the process of customizing the accounting subject system, accounting voucher format, and account book system according to program requirements and internal management needs. It is equivalent to setting up a new accounting system in a manual state, which is the process of using a computer to create an account. Also, Voucher processing includes voucher input, modification, review, summary, and printing.

    The query is to set the query condition flag, to flexibly and quickly query the accounting vouchers of a certain accounting period, and also the relevant content of the sub-ledger and general ledger. For example: find accounting documents of specific content, find the balance or balance of accounting subjects, etc.

    Other things;

    Part of the reconciliation function exists automatically checked and checked by the program during the design of the accounting software, such as checking the accounts between the general ledger, the subsidiary ledger, and the journal; the other part is provided for the user to check, such as checking with the bank statement. , check with the current account, check with other auxiliary accounts, etc., and can make relevant information such as reconciliation tables.

    The checkout function stands completed by the program. Also, According to the provisions of the national accounting system, the calculation and summarization are carried out according to the classification of the accounting subjects, the loan amount and balance are settled, the current accounting is ended, and the next accounting cycle is started. The checkout also includes the carry-over of accounting information across years and special content that starts a new fiscal year. The printout function is to print accounting vouchers, account books, and other accounting information for users to use and archive.

    Report processing module;

    The report processing module prepares accounting reports according to the accounting data according to the national unified accounting system and provides financial reports to company managers and government departments. Accounting statements can stand divided into individual statements, summary statements, and consolidated statements according to the scope of their compilation.

    The report processing module includes 1. report definition; 2. report calculation; 3. report summary; 4. report query; 5. report output.

    Statement definition is the work done to establish a new reporting system based on accounting software. It mainly includes: defining the report name, describing the format of the blank form, defining the data source of the report item filling content, the report item and the operation relationship, determining the form item auditing and checking and the linking relationship between the report items, checking the formula and the summary scope of the summary report and so on.

    After the report stands defined, the required accounting report can exist calculated or summarized according to the regulations. After verification and verification, the accounting report can be printed, copied, inquired about, and output.

    Fixed assets accounting module;

    The fixed assets accounting module is mainly used for detailed accounting and management of fixed assets.

    The fixed assets accounting module includes; 1. establishing a fixed assets card; 2. establishing a fixed asset account book; 3. inputting changes in fixed assets; 4. withdrawing depreciation of fixed assets; 5. summary calculation; This module is mainly based on the provisions of the financial system to establish a fixed asset card, determine the coefficient and method of depreciation of fixed assets, enter the increase or decrease of fixed assets, and summarize and calculate the original value, accumulated depreciation and net value of fixed assets. Automatically prepare transfer entries according to the pre-design, complete the transfer records, print out the fixed asset sub-ledger and data card, and reflect the value of fixed assets in detail.

    Payroll accounting module; 

    The salary accounting module calculates the salary of the employees and also handles the salary accounting based on the original data of the individual salary of the employees.

    The salary accounting module includes 1. Designing salary items and project calculation formulas; 2. Entering basic salary data of employees; 3. Increase, decrease, change, and modification; 4. Calculation summary; 5. Query; 6. Print output.

    The payroll accounting module, firstly designs the project and project calculation formula of salary, enters the amount that should be paid, deducted, and paid by the employee according to the project, and calculate and distribute the zero and whole money of different denominations according to the user’s requirements.

    This module should have items for self-defining salary, select the classification method, flexibly revise salary items, adjust basic personal information of employees, and define salary calculation formula (such as withholding personal income tax calculation formula) for summary calculation. Automatically make transfer vouchers, fill in entries, make a salary distribution, and calculate salary and welfare fees.

    Other modules;

    Other modules mainly include inventory accounting, cost accounting system, accounts receivable accounting, sales accounting, financial analysis, and so on. According to the characteristics of the industry, there are retail invoicing accounting systems, wholesale invoicing accounting systems, and so on. According to the needs of management, there are labor, capital, and also personnel management system, state-owned asset management system, etc.

    Types or Classification of Accounting Software;

    The types and classification of the accounting software include the following parts:

    According to the scope of the application;

    General accounting software refers to them that is applicable within a certain range. It is further divided into full general and industry general accounting software.

    Fixed-point development of accounting software, also known as special-purpose accounting software; refers to them that is only applicable to the accounting business of individual units.

    According to the hardware structure;

    Single-user refers to the installation of accounting software on one or several computers, each computer runs independently, and also the generated data is only stored in this computer, and data exchange and exchange between computers cannot be performed directly shared.

    Multi-user (network) refers to the installation of accounting software on the host (server of a computer network) of a multi-user system; each terminal (workstation) in the system can run at the same time, and accountants on different terminals (workstation) can share accounting information.

    Accounting Software Meaning Definition Features Classification Image
    Accounting Software Meaning Definition Features Classification; Image by Mohamed Hassan from Pixabay.
  • Network Intrusion Detection Systems (NIDS) Comparison Essay

    Network Intrusion Detection Systems (NIDS) Comparison Essay

    The network intrusion detection systems (NIDS) network security technology monitors network traffic for suspicious activity; and, issues alerts when action is required to deal with the threat. Any malicious activity is reported and can be collected centrally by using the security information and event management (SIEM) method.

    Here is the article to explain, Essay, and Comparison of Network Intrusion Detection Systems (NIDS)!

    Security information and event management (SIEM) software give enterprise security professionals both insight into; and a track record of the activities within their IT environment. The SIEM method incorporates outputs from multiple sources and employs alarm filtering techniques to identify malicious actions. There are two types of systems, host-based intrusion, and network intrusion detection. In this essay, I will be looking at both techniques, identifying what classifies as a NID and comparing different types of NIDS.

    Classification of Network Intrusion Detection Systems (NIDS);

    As previously highlighted in the introductory part of the essay; there are two types of systems, host-based intrusion, and network intrusion detection. They are known as HIDS or NIDS. They are different from each other as host-based intrusion monitors malicious activities on a single computer; whereas network intrusion detection monitors traffic on the network to detect intrusions. The main difference between both systems is that network intrusion detection systems monitor in real-time; tracking live data for tampering whilst host-based intrusion systems check logged files for any malicious activity. Both systems can employ a strategy known as signature-based detection or anomaly-based detection.

    Anomaly-based detection searches for unusual or irregular activity caused by users or processes. For instance, if the network was accessed with the same login credentials from several different cities around the globe all in the same day; it could be a sign of anomalous behavior. A HIDS uses anomaly-based detection surveys log files for indications of unexpected behavior; while a NIDS monitors for the anomalies in real-time.

    Signature-based detection monitors data for patterns. HIDS running signature-based detection work similarly to anti-virus applications; which search for bit patterns or keywords within files by performing similar scans on log files. Signature-based NIDS work like a firewall, except the firewall, performs scans on keywords, packet types, and protocol activity entering and leaving the network. They also run similar scans on traffic moving within the network.

    Comparison of different types of Network Intrusion Detection Systems (NIDS);

    There are various types of NIDS available to protect the network from external threats. In this essay, we have discussed both HIDS (Host-based) and NIDS (Network Intrusion Detection System) and signature-based IDS and anomaly-based IDS. Both of them are very similar but they function differently but when combined, they complement each other.

    For example, HIDS only examines host-based actions such as what are being applications used, kernel logs, files that are being accessed, and information that resides in the kernel logs. NIDS analyzes network traffic for suspicious activity. NIDS can detect an attacker before they begin an unauthorized breach of the system; whereas HIDS cannot detect that anything is wrong until the attacker has breached the system.

    Both signature-based IDS and anomaly-based IDS contrast each other. For example, anomaly-based IDS monitor activities on the network and raise an alarm; if anything suspicious i.e. other than the normal behavior detected.

    There are many flaws with anomaly-based IDS. Both Carter (2002) and Garcia-Teodoro (2009) have listed disadvantages

    • Appropriate training required before the IDS installed into any environment
    • It generates false positives
    • If the suspicious activity is similar to the normal activity, it will not detected.

    However, there are flaws with signature-based IDS. Carter (2002) highlights some disadvantages of signature-based IDS.

    • It cannot detect zero-day attacks
    • The database must updated daily
    • The system must updated with every possible attack signature
    • If an attack in a database is slightly modifies, it is harder to detect

    Advances and developments of Network Intrusion Detection Systems (NIDS);

    There have been many advances and developments towards NID over the last few years such as honeypots and machine learning. Spitzner defines honeypots as computer systems that exist designed to lure & deceive attackers by simulating a real network. Whilst these systems seem real, they have no production value. Any interaction with these systems should be illicit. There are many kinds of honeypots such as low interaction systems to high interaction and more complex systems to lure and attract advanced attackers.

    For example, high interaction honeypots provide attackers with a real operating system that allows the attacker to execute commands. The chances of collecting large amounts of information on the attacker are very high as all actions exist logged and monitored. Many researchers and organizations use research honeypots; which gather information on the attacker and what tools they used to execute the attack. They exist deployed mainly for research purposes to learn how to provide improved protection against attackers.

    Other Things;

    Another advancement of Network Intrusion Detection is machine learning. Machine learning provides computers with the capability of learning and improving from events without existing programs explicitly. The main aim of machine learning is to allow computers to learn without human intervention and intervene accordingly.

    Unsupervised learning algorithms exist used when the information provided for training exists neither marked nor classified. The task given to the machine is to group unsorted information according to patterns, similarities, and differences without any training data given prior. Unsupervised learning algorithms can determine the typical pattern of the network and can report any anomalies without a labeled data set.

    One drawback of the algorithm is that it is prone to false-positive alarms; but, can still detect new types of intrusions. By switching to a supervised learning algorithm, the network can exist taught the difference between a normal packet and an attack packet. The supervised model can deal with attacks and recognize variations of the attack.

    Implementation of Network Intrusion Detection Systems (NIDS) within an SME;

    With threats developing every day, businesses need to adapt to the changing landscape of network security. For example, a business should focus on developing a strong security policy. This helps to define how employees use IT resources and define acceptable use and standards for company email. If a business creates a set of clear security policies and makes the organization aware of these policies; these policies will create the foundation of a secure network.

    Another suggestion provided in the report by SANS is to design a secure network with the implementation of a firewall, packet filtering on the router, and using a DMZ network for servers requiring access to the internet.

    More things;

    Testing of this implementation must exist done by someone other than the individual or organization that has configured the firewall and perimeter security. Developing a computer incident plan is key as it will help to understand how to respond to a security incident. The plan will help to identify the resources involved and recover and resolve the incident. If a business is reliant on the internet during day-to-day operations, a company will have to disable their resources, reset them and rebuild the systems for use again which will resolve the issue.

    Using personal firewalls on laptops is another suggestion for businesses to take into consideration. For example, laptop computers may exist used in the office and at other times, may exist connected to foreign networks which may have prominent security issues.

    For example, the Blaster worm virus which spread from August 11th, 2003 gained access to many company networks after a laptop existed infected with the worm from a foreign network, and then the user subsequently connected to the corporate LAN. The worm eventually spread itself across the entire company network.

    From the report, SANS identified that personal laptops should have personal firewalls enabled to address any prominent security issues. They also highlighted that laptops that contain sensitive data, encryption, and authentication will reduce the possibility of data existing exposed if the device is lost.

    Conclusion;

    From my findings, I believe that NIDS is essential in protecting a company’s network from external and internal threats. If a company chose not to implement a NID within the business, the subsequent impact would be the company would cease to exist if an attack damaged customer records or valuable data.

    With the implementation of a NID within a company, the business can mitigate the impacts of an attack by using a honeypot to capture information about an attacker and what tools they used to execute the attack. This allows businesses to prepare themselves against attacks and secure any assets that could damage the company’s ability to operate. By enforcing a security and fair use policy within the company, employees are aware of the standards they must abide by when employed by the business.

    This also allows the company to scrutinize employees that do not follow the practices and take legal action if necessary. A business can hire managed security service providers who can assist in implementing the appropriate security measures for the business. Businesses must check whether the company has qualified staff and proven experience of their work as the main threat of most attacks on small to medium businesses lies within the company.

    Network Intrusion Detection Systems (NIDS) Comparison Essay Image
    Network Intrusion Detection Systems (NIDS) Comparison Essay; Image by Pete Linforth from Pixabay.
  • Expert Systems (ES): Features, Classification, and Limitations

    Expert Systems (ES): Features, Classification, and Limitations

    Expert Systems (ES): The expert system is one of the most active and extensive topics in artificial intelligence (ai) application research. In AI (artificial intelligence), It is a computer system that emulates the decision-making ability of a human expert. Since the first expert system DENDRAL was introduced at Stanford University in the United States in 1965, after 20 years of research and development, by the mid-1980s; various they have spread across various professional fields and achieved great success. Now, they are more widely used and further developed in application development.

    Here explains Expert Systems (ES) in their points of meaning, Features, Classification, Development, and Limitations.

    Expert systems are a component of artificial intelligence (ai); which contains a large amount of expert-level knowledge and experience in a certain field, and can use human expert knowledge and problem-solving methods to deal with problems in this field. That is to say, it is a program system with a lot of expertise and experience. Also, It uses artificial intelligence and computer technology to make inferences and judgments based on the knowledge and experience provided by one or more experts in a certain field Decision-making process to solve complex problems that require human experts to deal with.

    In short, It is a computer program system that simulates human experts to solve domain problems. In 1982, the Japanese Government made an ambitious plan to build fifth-generation computers. This project aimed to use the computer for the following objectives i.e. Conversation, see objects, and adapt to new tasks; it will have memory and reasoning capabilities.

    Inspiring with these projects both the US and European governments initiated and directed their resources in the direction to develop advance computer systems. Within a short period, AI and ES (Artificial Intelligence and Expert System) became the national concern as critics suggested that the Japanese were intent on dominating the information industry of the 1990s and beyond.

    Features or characteristics of the expert systems (ES):

    In general, the expert systems (es) has some common characteristics and advantages, and its characteristics mainly have three aspects in artificial intelligence (ai):

    1] Inspiring:

    They can use expert knowledge and experience to make inferences, judgments, and decisions. As well as, most of the work and knowledge in the world are non-mathematical. Only a small part of human activities are based on mathematical formulas or numerical calculations (about 8%). Even in the chemistry and physics disciplines, most of them are based on reasoning. Thinking; the same is true for biology, most medicine, and all laws. Also, thinking of enterprise management is almost entirely based on symbolic reasoning, rather than numerical calculation.

    2] Transparency:

    They can explain its reasoning process and answer the questions raised by the user so that the user can understand the reasoning process and improve the trust in them. For example, if a medical diagnosis expert system diagnoses a patient with pneumonia and must be treated with an antibiotic; then this expert system will explain to the patient why he has pneumonia and must be treated with an antibiotic; just like A medical expert explained the patient’s condition and treatment plan in detail.

    3] Flexibility:

    They can continually increase knowledge, modify the original knowledge, and continuously update. Because of this feature, they have a very wide range of applications. Also, expert systems with application ranking.

    Classification of Expert System (ES):

    The expert systems used in a specific field can be divided into the following classification or categories in artificial intelligence (ai):

    1] Diagnosis:

    Based on the observation and analysis of symptoms, deducing the cause of symptoms and troubleshooting methods, such as medical, mechanical, economic, etc.

    2] Interpretation:

    A type of system that interprets deep structures or internal conditions based on surface information, such as geological structure analysis, material chemical structure analysis, etc.

    3] Predictive:

    A type of system that predicts the future situation based on the current situation, such as weather forecast, population forecast, hydrological forecast, economic situation forecast, etc.

    4] Design:

    A type of system that designs products according to the given product requirements, such as architectural design, mechanical product design, etc.

    5] Decision-making:

    A type of them that comprehensively evaluates and optimizes feasible solutions.

    6] Planning:

    A type of them used to formulate action plans, such as automatic program design, military plan formulation, etc.

    7] Teaching:

    A type of them that can assist in teaching.

    8] Mathematical:

    A type of them for automatically solving certain mathematical problems.

    9] Surveillance:

    A type of them that monitors certain types of behavior and intervenes when necessary, such as airport surveillance, forest surveillance, etc.

    Development of Expert Systems (ES):

    There are indeed some limitations in the development of the current expert system. In the coming years, many of today’s expert system deficiencies will be improved. I believe that the projects that they should continue to study in the future include: As well as, the ability to deal with common sense; the development of deep inference systems; Also, the ability to explain at different levels; the ability of expert systems to learn; the distributed expert system; As well as, the ability to easily acquire and update knowledge.

    The future development of they can directly receive data from the outside world through sensors, and can also obtain data from the knowledge base outside the system. In addition to inference in the inference machine, it can draw up plans and simulate problem conditions. The knowledge base contains not only static inference rules and facts, but also dynamic knowledge such as planning, classification, structural patterns, and behavior patterns.

    Expert Systems (ES) Features Classification and Limitations Image
    Expert Systems (ES): Features, Classification, and Limitations, Image from Pixabay.

    Advantages of the expert systems (ES):

    In the past 20 years, they have developed rapidly, the application field is getting wider and wider, and the ability to solve practical problems is becoming stronger and stronger. This is determined by the excellent performance of the expert system and its important role in the national economy.

    Specifically, the advantages of expert systems include the following in artificial intelligence (ai):

    • They can work efficiently, accurately, thoughtfully, quickly, and tirelessly.
    • It is not affected by the surrounding environment when solving practical problems, and it is impossible to miss or forget.
    • It can make the expertise of the experts not limited by time and space, to promote the precious and scarce expert knowledge and experience.
    • They can promote the development of various fields, enables the professional knowledge and experience of experts in various fields to be summarized and refined, and can widely and effectively spread the knowledge, experience, and ability of experts.
    • They can gather and integrate the knowledge and experience of experts in multiple fields and their ability to collaborate to solve major problems. It has more profound knowledge, a richer experience, and stronger working ability.
    • The level of the military expert system is one of the important symbols of a country’s national defense modernization and national defense capabilities.
    • The development and application of the expert system have huge economic and social benefits.
    • Research can promote the development of the entire science and technology.

    Limitations of Expert Systems (ES):

    Limitations, problems, and demerits of an expert systems (es) are as follows in artificial intelligence (ai):

    • It is hard, even for a highly skilled expert to abstract good situational assessment when he is under time pressure.
    • The expert system performs well with specific types of operational and analytical tasks.
    • The designing and construction of an expert system require expert engineers, they are rare and expensive. This limitation makes an expert system very costly.
    • It excels only in solving specified types of problems in a limited domain of knowledge.
    • The vocabulary that experts use for expressing facts & relations is frequently limited.
    • Another limitation is that most experts have no independent means of checking whether these conclusions are reasonable or not.
    • The approach of each expert to the assessment of the situation may be different, yet it may be correct.
    • The expert system is comparatively costly to develop and maintain.
  • How to the Classification of Cost according to 4 functions?

    How to the Classification of Cost according to 4 functions?

    Classification of Cost according to 4 functions: This is a traditional classification. A business has to perform several functions like manufacturing, administration, selling, distribution, and research.

    This article explains the topic of the Classification of Cost according to 4 functions.

    Cost may have to ascertain for each of these functions.

    On this basis, costs are classifying into the following groups:

    How to the Classification of Cost according to 4 functions
    How to the Classification of Cost according to 4 functions?

    Manufacturing costs:

    This is the cost of the sequence of operations. Which begins with supplying materials, labor, and services and ends with the completion of production. What are the manufacturing costs? Manufacturing costs are the costs of materials plus the costs to convert the materials into products. Manufacturing costs are the costs incur during the production of a product.

    The costs are typically present in the income statement as separate line items. An entity incurs these costs during the production process. Direct material is the materials uses in the construction of a product. Direct labor is that portion of the labor cost of the production process that assigns to a unit of production. Manufacturing overhead costs are applying to units of production based on a variety of possible allocation systems. Such as by direct labor hours or machine hours incurred.

    Administration costs:

    This is general administrative cost and includes all expenditure incurs in formulating the policy, directing the organization and controlling the operations of an undertaking. Which is not directly related to production, selling and distribution, research and development activity or function.

    Define administrative costs as the costs not directly related to operations. Generally, they are incurring in the process of directing a company. These costs, though indirect, are still important because they assist those who operate and sell company products by making their work more efficient.

    Selling and distribution costs:

    Selling cost is the cost of seeking to create and simulating demand and securing orders. Distribution cost is the cost of a sequence of operations. This begins with making the packed product available for despatch and ends with making the reconditioned returned empty package for re-use. There are some overhead about them;

    • What is Selling Overhead? Selling overhead is the indirect expenses incur for seeking to create and stimulate demand for the product and up to the stage of securing orders.
    • What is Distribution Overhead? Distribution overhead is the expenses incurred in connection with the execution of an order. It begins with making the packed product available for dispatch and ends with making the reconditioned empty package, if any, available for re-use.

    The various items included in manufacturing administrative, selling and distribution costs ate available in Table:

    Functional Classification of Costs - Table
    Functional Classification of Costs – Table.

    Research and development costs:

    Research cost is the cost of searching for new or improved products or methods. It comprises wages and salaries of research staff, payments to outside research organizations, materials used in laboratories and research departments, etc. After completion of research, the management may decide to produce a new improved product or to employ a new or improved method.

    Development cost is the cost of the process which begins with the implementation of the decision to produce a new product or to employ a new or improved method and ends with the commencement of formal production of that product or by that method. Pre-production cost is that part of the development cost which incurs in making in trial production run preliminary to formal production.

  • What does Labor cost? Introduction, Meaning, and Control

    What does Labor cost? Introduction, Meaning, and Control

    Labor costs represent human contribution. Labor cost is sensitive. The second Major element of cost in most of the manufacturing undertakings is labor cost. Proper accounting and control of labor costs, therefore, constitutes one of the most important problems of management. In controlling labor costs, the problem is complicated by the human element.

    Here are explain; What does Labor cost? Introduction, Meaning, and Control.

    Introduction: Under the present political conditions with restive labor in an organized industry, it is very difficult to reduce labor costs. Therefore, proper control and accounting for labor costs are one of the most important problems of a business enterprise. But control of labor costs presents certain practical difficulties unlike the control of material cost. The human element in labor makes difficult the control of labor costs whereas materials, being inanimate, could subject to rigid control.

    Labor is the most perishable commodity and as such should effectively utilize immediately. Labour, once lost, cannot recoup and is bound to increase the cost of production. On the other hand, materials, being durable, can use as and when required and can store without having to incur an immediate loss.

    Meaning of Labor Cost:

    Payment of remuneration to the workers for their service to the firm knows as labor payment. This is the second element of the total cost. It may be direct or indirect. If it treats as a direct expense, it will include prime cost and if it relates to the factory, it will treat as an item of factory cost. Direct labor costs or Direct wages represent the cost that is incurred directly to change the composition, form or condition of a product.

    Its primary nature is that it can easily identify and allocated to specific cost units. It also varies directly with the volume of production/output. Indirect labor costs, on the other hand, are the number of wages paid to workers who are not related to change the form, composition of a product but they engage themselves to complete the product, e.g. Supervisor’s Salary works office staff salaries, etc.

    Bakers Labor!
    Bakers Labor! #Pixabay.

    It is interesting to note that the difference between direct labor costs/direct wages and indirect labor costs/indirect wages depends on the types of work/job done and at the same time, the conditions in which cost of labor incurred. Under the circumstances, some labor costs treated as direct whereas the same treats as indirect in some other cases.

    So, they will treat as a direct one when; 1) the payment makes to the workers to change the composition of a product, and 2) identification of the job is possible. Similarly, labor costs will treat as indirect when; 1) the same is not directly related to change or form of a product, 2) identification is not possible.

    Control of Labour Cost:

    To control the cost of labor (both direct and indirect), it becomes necessary to study the behavior of labor, to control the attendance and departure of workers, measurement of performances, assessing the results, time and motion study, etc. It is the function of the management to control the cost of labor in every step whether the same is direct or indirect. Individual columns of timesheet and job cards should maintain direct and indirect labor costs for proper ascertaining and controlling the cost of labor.

    We know that direct labor costs/direct wages an element of prime cost whereas indirect labor costs/indirect wages an element of factory cost. Direct labor cost can control easily as it relates to variable cost which varies with the quantity produced, i.e. if more quantity produces with the same rate of remuneration, a post per unit must reduce. But it is not so easy to control the indirect labor cost.

    What does Labor cost Introduction Meaning and Control
    What does Labor cost? Introduction, Meaning, and Control. #Pixabay.

    Control over Labor cost:

    This is so because labor consists of a lot of different individuals, each with a different mental and physical capacity and each with a different personality.

    Proper control over it involves the following:

    • Appropriate systems for recruitment and selection, training and placement of workers.
    • Satisfactory methods of labor remuneration.
    • Healthy working conditions consistent with legal requirements and competitive undertaking.
    • Method of assuring efficient labor performance.

    Direct and Indirect Labor Costs:

    For accounting, they are classified into;

    1. Direct, and.
    2. Indirect.
    Direct Labor Cost:

    This cost incurs on the employees who engage directly in making the product. Their work can identify clearly in the process of converting. The raw materials into the finished product called direct labor costs. For example, wages paid to the workers engaged in the machining department, fabrication department, assembling department, etc.

    Construction Labor!
    Construction Labor; Direct and Indirect work! #Pixabay.

    Indirect Labor Cost:

    Indirect employees not directly associated with the conversion process. But assist in the process by way of supervision, maintenance, transportation of materials, material handling, etc. Their work benefits all the items being produced and cannot specifically identify with the individual products. Hence, the indirect labor cost should treat as production overhead. These costs will accumulate and apportion to different cost centers on an equitable basis and absorbed into product cost by applying the overhead absorption rates.

    Items of Labour Cost:

    They can analyze into the following:

    • Monetary benefits are payable immediately; Salaries and Wages, Dearness and other allowances, production incentive or bonus.
    • Monetary benefits after some time in the future; Employer’s contribution to P.F., E.S.I., Pension, Gratuity, Profit linked bonus, etc.
    • Non-monetary benefits (Fringe benefits); Free or subsidized food, free medical or hospital facilities, free or subsidized education to the employee’s children, free or subsidized housing, etc.
  • Cash Flow Statement: Explanation, Classification, and Objectives

    Cash Flow Statement: Explanation, Classification, and Objectives

    What does Cash Flow Statement mean? A cash flow statement counters the ambiguity regarding a company’s solvency that various accrual accounting measures create. We are studying Cash Flow Statement: Explanation, Classification, and Objectives; In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

    Here explains the Concept of Cash Flow Statement with their Explanation, Classification, Objectives, and Limitations.

    The following concept is; Explanation of Cash Flow Statement, Classification of Cash Flow Statement, Objectives of Cash Flow Statement, and Limitations of the Cash Flow Statement. Meaning: A Cash Flow Statement is a statement which is prepared by acquiring Cash from different sources and the application of the same for different payments throughout the year. It is prepared from analysis of cash transactions, or it converts the financial transactions prepared under accrual basis to cash basis.

    The information about the number of resources provided by operating activities or net income after the adjustment of certain other charges can also obtain from it. The changes in Cash both at the beginning and at the end can also know with the help of this statement and that is why it is called Cash Flow Statement.

    #Explanation of Cash Flow Statement:

    A cash flow statement is an important indicator of financial health because a company can show profits while not having enough cash to sustain operations. It is a financial report that shows to the user the source of a company’s cash and how it was spent over a specific period. A cash flow statement counters the ambiguity regarding a company’s solvency that various accrual accounting measures create.

    It also categorizes the sources and uses of cash to provide the reader with an understanding of the amount of cash a company generates and uses in its operations. As opposed to the amount of cash provided by sources outside the company. Such as borrowed funds or funds from stockholders. They also tell the reader how much money was spent on items that do not appear on the income statement. Such as loan repayments, long-term asset purchases, and payment of cash dividends.

    The cash flow statement was previously known as the flow of funds statement. The cash flow statement reflects a firm’s liquidity. The balance sheet is a snapshot of a firm’s financial resources and obligations at a single point in time, and the income statement summarizes a firm’s financial transactions over an interval of time. These two financial statements reflect the accrual basis accounting used by firms to match revenues with the expenses associated with generating those revenues.

    Extra Knowledge:

    They include only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments. These non-cash transactions include depreciation or write-offs on bad debts or credit losses to name a few. It is a cash basis report on three types of financial activities: operating activities, investing activities, and financing activities. Non-cash activities are usually reported in footnotes.

    It is intended to provide information on a firm’s liquidity and solvency and its ability to change cash flows in future circumstances provide additional information for evaluating changes in assets, liabilities, and equity improve the comparability of different firms’ operating performance by eliminating the effects of different accounting methods indicate the amount, timing and probability of future cash flows. The cash flow statement has been adopting as a standard financial statement because it eliminates allocations, which might derive from different accounting methods, such as various time-frames for depreciating fixed assets.

    #Classification of Cash Flow Statement:

    The cash flow statement should report cash flows during the period classification by operating, investing and financing activities.

    Thus, cash flows are classifying into three main categories:

    1. Operating activities.
    2. Investing activities.
    3. Financing activities.

    Now, explain;

    Operating Activities:

    Operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. The amount of cash flows arising from operating activities is a key indicator of the extent to which the operations of the enterprise have generated sufficient cash flows to maintain the operating capability of the enterprise, pay dividends, repay loans, and make new investments without recourse to external sources of financing.

    Information about the specific components of historical operating cash flows is useful, in conjunction with other information, in forecasting future operating cash flows. Cash flows from operating activities are primarily derived from the principal revenue-producing activities of the enterprise. Therefore, they generally result from the transactions and other events that enter into the determination of net profit or loss.

    Explanations:

    Examples of cash flows from operating activities are:

    • A cash receipts and cash payments of an insurance enterprise for premiums and claims, annuities and other policy benefits.
    • Cash receipts from the sale of goods and the rendering of services.
    • Cash receipts from royalties, fees, commissions, and other revenue.
    • The cash payments to suppliers of goods and services.
    • Cash payments to and on behalf of employees.
    • Refunds or cash payments of income taxes unless they can specifically identify with financing and investing activities, and.
    • Cash receipts and payments relating to futures contracts, forward contracts, option contracts, and swap contracts when the contracts are heling for dealing or trading purposes.

    Some transactions, such as the sale of an item of plant, may give rise to a gain or loss which includes in the determination of net profit or loss. However, the cash flows relating to such transactions are cash flows from investing activities.

    Investing Activities:

    Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been making for resources intended to generate future income and cash flows.

    Explanations:

    Examples of cash flows arising from investing activities are:

    • The cash payments to acquire fixed assets. These payments include those relating to capitalized research & development costs and self-constructed fixed assets.
    • Cash receipts from the disposal of shares, warrants, or debt instruments of other enterprises and interests in the joint venture.
    • Cash advances and loans made to third parties, other than advances and loans made by a financial enterprise.
    • The cash receipts from disposal of fixed assets.
    • Cash receipts from the repayment of advances and loans made to third parties, other than advances and loans of a financial enterprise.
    • Cash payments to acquire shares, warrants, or debt instruments of other enterprises and interests in joint ventures. Other than payments for those instruments considering to be cash equivalents and those held for dealing or trading purposes.
    • The cash payments for futures contracts, forward contracts, option contracts, and swap contracts except when the contracts are heling for dealing or trading purposes, or the payments are classifying as financing activities, and.
    • Cash receipts from futures contracts, forward contracts, option contracts, and swap contracts except when the contracts are heling for dealing or trading purposes or the receipts are classifying as financing activities.
    Financing Activities:

    Financing activities are activities that result in changes in the size and composition of the owner’s capital and borrowings of the enterprise. The separate disclosure of cash flows arising from financing activities is important because .it is useful in predicting claims on future cash flows by providers of funds (both capital and borrowings) to the enterprise.

    Explanations:

    Examples of cash flows arising from financing activities are:

    • Cash proceeds from issuing shares or other similar instruments.
    • Cash proceeds from issuing debentures, loans, notes, bonds, and other short-or long-term borrowings, and.
    • The cash repayments of amounts borrowed such as redemption of debentures, bonds, preference shares.

    Cash Flow Statement Explanation Classification and Objectives
    Cash Flow Statement: Explanation, Classification, and Objectives, #Pixabay.

    #Objectives of Cash Flow Statement:

    The primary objectives of the cash flow statement are to supply the necessary information relating to the generation of cash to the users of the financial statement. It also highlights the future or prospective cash positions i.e. cash or cash equivalent. The inflows and outflows of cash can represent with the help of this statement.

    The main objectives of the cash flow statement are:

    Measurement of Cash:

    Inflows of cash and outflows of cash can measure annually. Which arise from operating activities, investing activities and financing activities.

    Generating inflow of Cash:

    Timing and certainty of generating the inflow of cash can know. Which directly helps the management to take financing decisions in the future.

    Classification of activities:

    All the activities are classifying into operating activities, investing activities and financing activities. Which help a firm to analyze and interpret its various inflows and outflows of cash.

    Prediction of the future:

    A cash flow statement, no doubt, forecasts the future cash flows. Which help the management to take various financing decisions since synchronization of cash is possible.

    Supply necessary information to the users:

    A cash flow statement supplies various information relating to inflows and outflows of cash to the users of accounting information in the following ways:

    • Assess the ability of a firm to pay its obligations as soon as it becomes due.
    • Analyze and interpret the various transactions for future courses of action.
    • To see the cash generation ability of a firm, and.
    • Ascertain the cash and cash equivalent at the end of the period.
    Helps the management to ascertain cash planning:

    No doubt, a cash flow statement helps the management to prepare. Its cash planning for the future and thereby avoid any unnecessary trouble.

    Evaluation of future cash flows:

    Whether the cash flow from operating activities is quite sufficient in the future to meet the various payments e.g. payment of expense/debts/dividends/taxes.

    Assessing liquidity and solvency position:

    Both the inflows and outflows of cash and cash equivalent can know, and as such, liquidity and solvency position of a firm can also maintain as timing and certainty of cash generation knows i.e. It helps to assess the ability of a firm to generate cash.

    #Limitations of the Cash Flow Statement:

    Despite several uses, the cash flow statement suffers from the following limitations:

    • As the cash flow statements based on the cash basis of accounting. It ignores the basic accounting concept of accrual basis.
    • A cash flow statements, not a substitute for an income statement it is complementary to an income statement. Net cash flow does not mean the net income of a firm.
    • A cash flow statement is also not a substitute of funds flow statement which. Provides information relating to the causes that lead to an increase or decrease in working capital.
    • The comparative study of cash flow statements may give misleading results.
    • Some people feel that as working capital is a wider concept of funds. A funds flow statement provides a more complete picture than the cash flow statement, and.
    • Cash flow statements not suitable for judging the profitability of a firm as non-cash charges are ignored while calculating cash flows from operating activities.
  • Public Revenue: Introduction, Meaning, Definition, Sources, and Classification

    Public Revenue: Introduction, Meaning, Definition, Sources, and Classification

    What does Public Revenue mean? Public revenue money receives by a Public. The article on Public Revenue: Introduction, Meaning, Definition, Sources, and Classification. Each explains as, Introduction to Public Revenue, Meaning of Public Revenue, Definition of Public Revenue, Sources of Public Revenue, and Classification of Public Revenue. It is an important tool for the fiscal policy of the Public and is the opposite factor of Public Spending.

    Here are explain the Concept of Public Revenue; their key points – Introduction, Meaning, Definition, Sources, and Classification.

    By Wikipedia; Revenues earned by the government are received from sources such as taxes levied on the incomes and wealth accumulation of individuals and corporations and the goods and services produced, exports and imports, non-taxable sources such as government-owned corporation’s incomes, central bank revenue and capital receipts in the form of external loans and debts from international financial institutions. It is used to benefit the country.

    Governments use the revenue to better develop the country, to fix roads, build homes, fix schools, etc. The money that the government collects pays for the services that are provided for the people. The public sector in three concepts very important, Public Finance, Public Expenditure, and Public Revenue.

    Introduction to Public Revenue:

    Governments (Public) need to perform various functions in the field of political, social & economic activities to maximize social and economic welfare. To perform these duties and functions, the government requires a large number of resources. The revenues from different sources received by the government call public revenues. Some regularly collect whereas some irregularly collect.

    These resources call Public Revenues. Public revenue consists of taxes, revenue from administrative activities like fines, fees, gifts & grants. Revenues are not repayable. Some of them are obtained from the sale of public utilities whereas some are obligatory payments to the government.

    Meaning and Definition of Public Revenue:

    The income of the government through all sources calls public income or public revenue.

    According to Dalton, however, the term “Public Income” has two senses — wide and narrow. In its wider sense, it includes all the incomes or receipts which a public authority may secure during any period. In its narrow sense, however, it includes only those sources of income of the public authority which are ordinarily known as “revenue resources.” To avoid ambiguity, thus, the former is termed “public receipts” and the latter “public revenue.”

    As such, receipts from public borrowings (or public debt) and the sale of public assets are mainly excluded from public revenue. For instance, the budget of the Government of India is classified into “revenue” and “capital.” “Heads of Revenue” include the heads of income under the capital budget are termed as “receipts.” Thus, the term “receipts” includes sources of public income that are excluded from “revenue.”

    There are both rev­enue receipts and capital receipts. Revenue receipts are derived from taxes of different forms. Capital receipts include primary inter­nal market borrowing and also external loans. However, the bulk of state revenue comes from internal sources. The major point of dis­tinction between the two is that while the former has the receipts or earnings of the people as the source, the later has the public prop­erty as the source.

    Sources of Public Revenue:

    The following key points highlight the two main sources of public revenue from India.

    • Tax Revenue, and.
    • Non-Tax Revenue.

    Now, explain;

    A] Tax Revenue:

    Taxes are the first and foremost sources of public revenue. It is compulsory payments to the government without expecting direct benefit or return by the taxpayer. Taxes collected by Government are used to provide common benefits to all mostly in the form of public welfare services. They do not guarantee any direct benefit for the person who pays the tax. It is not based on a direct quid pro quo principle.

    Features of Tax Revenue:

    The main characteristic features of a tax are as follows:

    • A tax is a compulsory payment to pay by the citizens who are liable to pay it. Hence, the refusal to pay a tax is a punishable offense.
    • There is no direct, quid pro quo between the tax-payers and the public authority. In other words, the taxpayer cannot claim reciprocal benefits against the taxes paid. However, as Seligman points out, the state has to do something for the community as a whole for what the taxpayers have contributed in the form of taxes. “But this reciprocal obligation on the part of the government is not towards the individual as such, but towards the individual as part of a greater whole.”
    • A tax is levied to meet public spending incurred by the government in the general interest of the nation. It is a payment for an indirect service to make by the government to the community as a whole.
    • A tax is payable regularly and periodically as determined by the taxing authority.

    Taxes constitute a significant part of public revenue in modern public finance. Taxes have macro-economic effects. Taxation can affect the size and mode of consumption, the pattern of production and distribution of income and wealth. Progressive taxes can help in reducing inequalities of income and wealth by lowering the high-income group’s disposable income.

    Disposable income is meant the income left in the hands of the taxpayer for disbursement after-tax payment. Taxes imply a forced saving in a developing economy. Thus, taxes constitute an important source of development finance.

    Types of Tax Revenue:

    The following types below are;

    1] Union Excise Duties:

    They are, presently, by far the leading source of revenue for the Central Government and are levied on commo­dities produced within the country, but exclu­ding those commodities on which State excise is levied (viz., liquors and narcotic drugs). The most important commodities from the revenue point of view are sugar, cotton, mill cloth, tobacco, motor spirit, matches, and cement.

    2] Customs:

    Customs duties include both import and export duties. These are the second-most important source of revenue for the Central Government.

    3] GST Tax:

    Goods and Services Tax is an indirect tax levied in India on the supply of goods and services. GST levies at every step in the production process but is meant to refund to all parties in the various stages of production other than the final consumer.

    India’s biggest indirect tax reform in the form of Goods and Services Tax (GST) has completed plus 1 year. A comprehensive dual GST was introduced in India from 1 July 2017.

    4] Income Tax:

    Income tax is at present another important source of revenue for the Central Government. It levies on the incomes of individuals, Hindu undivided families, and unregistered firms.

    5] Corporation Tax:

    The income-tax on the net profits of joint-stock companies calls corporation tax.

    6] Wealth Tax:

    It is an annual tax on the net wealth of individuals and Hindu undivided families. It is a progressive tax.

    7] Gift Tax:

    It is a tax on gifts of property by an individual in his lifetime to future succe­ssors.

    8] Capital Gains Tax:

    It applies to capital gains resulting from the sale, exchange or transfer of capital assets.

    9] Hotel Expenditure Tax:

    Recently, a new tax has been levied on those who patronize high-class hotels.

    10] Tax on Foreign Travel:

    Another new tax levied on foreign travel for conserving foreign exchange as well as to raise revenue.

    B] Non-Tax Revenue:

    The revenue obtained by the government from sources other than the tax calls Non-Tax Revenue. Public income received through the administration, commercial enterprises, gifts, and grants is the source of non-tax revenues of the government.

    The following sources of non-tax revenue below are:

    1] Interest Receipts:

    This largest non-tax source of Central Government’s revenue receipts is the interest it earns mainly on the loans it has advanced to State Governments, to financial and industrial enterprises in the public sector.

    2] Surplus Profits of the Reserve Bank of India (RBI):

    The surplus profits of the RBI is also a part of the revenues of the Central Government. In recent years, these have been quite substantial because of the large borro­wing by the Government from the RBI against Treasury Bills for financing the Five-Year Plans.

    3] Currency, Coinage, and Mint:

    The Govern­ment also derives income from running the Currency Note Printing Presses. Moreover, profits are made from the circulation of coins — this profit is the difference between the face value of the coins and their manu­facturing cost.

    4] Railways:

    The railways in India are owned and run by the Government of India. Accor­dingly, they pay a fixed dividend to general revenues, i.e., to the Central Government, on the capital invested in the railways. Besides, a part of the net profits made by the railways is also payable to the Central Government.

    5] Profits of Public Enterprises:

    Public enter­prises owned by the Central Government, e.g., the Steel Authority of India (SAIL), Hindustan Machine Tools (HMT), Bharat Heavy Electricals Ltd. (BHEL), State Trading Corporation (STC). The profits of such Public Sector Units (PSUs) are another source of revenue for the Government of India.

    6] Other Non-Tax Sources of Revenue:

    The main source among them is the Departmental Receipts of the various ministries of the Cen­tral Government by way of fees, penalties, etc.

    Public Revenue Introduction Meaning Definition Sources and Classification
    Public Revenue: Introduction, Meaning, Definition, Sources, and Classification, #Pixabay.

    Classification of Public Revenue:

    A scientific classification enables us to know in what respects these various sources resemble one another and in what ways they differ. Different economists have classified the sources of public revenue differently. Of the various classifications of public revenue available in economic literature, we shall review a few important ones.

    1. Taylor’s Classification:

    The most logical and scientifically based classification of public revenue is however provided by Taylor. He divides public revenue into four categories:

    • Grants and gifts.
    • Taxes.
    • Administrative revenues, and.
    • Commercial revenues.

    Now, explain;

    Grants and gifts:

    Grants-in-aid are how one government provides financial assistance to another to enable it to perform certain specified functions, for example, education and health grants made to the states by the central government.

    Grants-in-aid are the cost payments made by the grantor government and revenue receipts to the grantee, and no obligation of repayment involves. Gifts are voluntary contributions from individuals or institutions for specific purposes. Grants and gifts are voluntary and there is the absence of quid pro quo to the donor.

    Taxes:

    These are compulsory payments made to the government without expecting a direct return of benefits. The taxes involve varying degrees of coercive powers.

    Administrative Revenues:

    Under this group, fees, licenses, fines, and special assessments include. Most of these are voluntary and based upon the direct benefits accruing to the payer. They generally arise as a by-product of the administrative or control function of the government.

    Commercial Revenues:

    These are the receipts by way of prices paid for government-produced goods and services. Under this group, postal charges, tolls, interest on loans of state financial institutions or nationalized banks, tuition fees of public educational institutions include.

    2. Dalton’s Classifications:

    Dalton provides a very systematic, comprehensive and instructive classification of public revenue. In this opinion, there are two main sources of public revenue — taxes and prices. Taxes pay compulsorily whereas prices pay voluntarily by individuals, who enter into contracts with the public authority. Thus, prices are contractual payments.

    Taxes are sub-divided into:
    • Taxes in the ordinary sense.
    • Tributes and indemnities.
    • Compulsory loans, and.
    • Pecuniary penalties for offenses.
    Prices are sub-divided into:
    • Receipts from public property passively held such as rents received from the tenants of public lands.
    • Receipts from public enterprises charging competitive rates.
    • Fees or payments charged for rendering administration services, such as birth and death registration fees, and.
    • Voluntary public debt.

    These two groups must add to another group to make the classification exhaustive. Under this group, the following items include:

    • Receipts from public monopolies, charging higher prices.
    • Special assessments.
    • The issue of new paper money or deficit financing, and.
    • Voluntary gifts.

    3. Seligman’s Classification:

    Seligman classifies public revenue into three groups:

    • Gratuitous revenue.
    • Contractual revenue, and.
    • Compulsory revenue.

    Now, explain;

    Gratuitous revenue; comprises all revenues such as gifts, donations, and grants received by the public authorities free of cost. They are entire of a voluntary nature. Further, these are very insignificant in the total revenue.

    Contractual revenue; includes all those types of revenue which arise from the contractual relations between the public authority and the people. Fees and prices fall into this category. A direct quid pro quo is usually present in these types of revenue.

    Compulsory revenue; includes the income derived by the state from administration, justice, and taxation. Taxes, fines, and special assessments regard as compulsory revenue. These revenues express an element of state sovereignty. It is the most significant type of public revenue in modern times.

  • How to Public expenditure is classified in 12 Criteria?

    How to Public expenditure is classified in 12 Criteria?

    What is meant by Public Expenditure? Of the two main branches of public finance, namely, public revenue and public expenditure, we shall first study the public expenditure. How to Public expenditure is classified into 12 Criteria? The classical economists did not analyze in-depth the effects of public expenditure, for public expenditure throughout the nineteenth century was very small owing to the very restricted Government activities.

    The best author gives Public expenditure is classified by the best 12 Criteria.

    The Governments followed laissez-faire, economic policies, and their functions were only confined to defend the country from foreign aggression and to maintain law and order within their territories. But now, the expen­diture of Government all the world over has greatly increased. Therefore, modern econo­mists have started analyzing the effects of public expenditure on production, distribution, and levels of income and employment in the economy.

    The following are the impor­tant classified or classification of public expenditure in the criteria made by different writers:

    Revenue Criteria:

    F.S. Nicholson classified public expenditure according to the amount of revenue the state realizes in return for the services which it per­forms through public expenditure.

    He gives the following four classes of public expenditure:

    • Firstly expenditure without any direct return of revenue, for example, poor relief and also the losses sustained in war.
    • Secondly, expenditure without any direct return of revenue, but indirectly beneficial to revenue. For example free education. Better educated persons are better taxpayers and less expensive citi­zen than paupers and criminals.
    • Thirdly, an expenditure with the partial direct return of revenue, for example, education for which fees are charged.
    • Fourthly expenditure with full return of revenue or even profit. For example investment in public undertakings, railways, posts, and telegraphs, etc.

    This classification is also subject to criticism. This classifica­tion is overlapping. The separation between the items is not clearly marked. This classification failed to bring out the essential differ­ences in kind between the several forms of expenditure.

    For ex­ample, defense and poor relief fall under the first category, however, they also confer an indirect benefit to revenue. By ensuring peace and tranquility defense ensures the smooth growth of productive activity and national income. This, in turn, will benefit public revenue consid­erably.

    Functional Criteria:

    Another classification of public expenditure is proposed by H.C. Adams. Functional classification is based on a classification of the various functions actually performed by public authorities.

    Adams classifies expenditure under three main functions of government:

    • Protective Functions: This includes expenditure on defense, police, judiciary, social disease, prisons, etc.
    • Commercial Functions: In this category include expenditure which helps the development of commerce and trade. Services sold to the citizens for a price (e.g., Post office, Railway, Insur­ance), subsidies and bounties granted, etc., are examples of com­mercial functions
    • Developmental Functions: In this category include expendi­ture that help to develop the resources of the country. Expendi­ture under this category includes expenditure on education, pro­vision of public recreation, public works, public health, etc.

    This division is not free from imperfections. There is no clear cut dividing line between institutions maintaining law and order and those that promote progress. Expenditure incurred for protection is also capable of promoting development Prof. Adams states that with the progress of society, the protective expenditure trend to decline. But this proposition is propositioned by historical facts.

    Benefit Criteria:

    Common classification of public expenditure adopted by the 19th-century writers is based on the principle of Benefits Conferred. Such as the division adopted by Cohn and Plehn.

    They divided public ex­penditure under the following four heads:

    • Firstly, expenditure which confers a common benefit on all citi­zens or taxpayers, for example, defense, universal education is given to the residents free of charge, etc.
    • Secondly, expenditure conferring a special benefit on some per­sons or in certain classes, for example; expenditure on poor relief.
    • Thirdly, that class of public expenditure which confers a special benefit on certain people and at the same time a common ben­efit on all the others, e.g., the administration of justice.
    • Fourthly, those items of expenditure which confer a special ben­efit only on some individuals; e.g., certain industries especially favored by the state (granting subsidy).

    An obvious objection to this classification is that all public ex­penditure is for the common and public interest. It is very difficult to distinguish between special benefits and common benefit con­ferred. The satisfaction of special benefit may lead to the generation of the conm­mon benefit. For example, expenditure on poor relief, which is specifically for the benefit of those immediately concerned, results in a common benefit such as prevention of crime, the satisfaction of the general sense of justice, etc.

    As Nicholson rightly observed “Public expen­diture which does not confer some common benefit or answer some public purpose ought not to exist in a modern state”, Hence Nicholson attempted to give a more scientific classification of expenditure.

    Productive and Unproductive Expenditure Criteria:

    Prof. Robinson classified public expenditure into productive and un­productive. Public expenditure is productive if it directly or indirectly helps to develop natural and human resources and help to increase national income.

    Whereas public expenditure is unproductive if it does not add to enhancing the productive capacity of the nation. Unproductive ex­penditure is one that is consumed in the process of rendering the service.

    Economic Criteria:

    In the social accounting sense, most of the countries have adopted economic classification. In this procedure, the expenditure and in­come of public bodies are classified into two heads.

    They are:

    • Revenue Account, and.
    • Capital Account.

    Revenue account includes an ordinary source of income and expenditure. Whereas capital ac­count includes the extraordinary source of income and expenditure. Revenue expenditure includes all current expenditures on administrators including defense and public commercial undertakings.

    Usually, expenditure does not result in the creation of assets treats as revenue expenditure. Whereas capital expenditure includes all capital transactions. These capital payments consist of capital expenditure on the acquisition of assets like land, buildings, machinery, equipment, etc.

    Investments in shares and loans and advances granted by the central government are part of this. This classification also knows as functional classification. This classi­fication provides a more detailed breakdown of revenue and capital expenditures of the government.

    Plan and Non-Plan Expenditure Criteria:

    Plan expenditure means the current development outlays as well as investment outlays. Whereas non-plan expenditure refers to the expenditure which the government is bound to incur and cannot do without it.

    It includes both development and non-development ex­penditure. A broad-based classification of public expenditure as detailed above. Each classification has its own defects and omissions.

    How­ever, the sphere of state activity is dynamically changing in recent years. The nature and form of activities undertaken by the state are varying in length and attitude. Hence a perfect and systematic clas­sification of public expenditure is very difficult to achieve.

    How to Public expenditure is classified in 12 Criteria
    How to Public expenditure is classified into 12 Criteria? #Pixabay.

    According to J.S. Mills:

    J.S. Mill based his division on the wants of the state, which in turn is determined by the functions of the state. He divides expenditure between obligatory or necessary and optional. This classification takes into account the nature of expenditure.

    Expenditure incurred on defense, justice, and maintenance of economic institutions are obligatory. Owing to past contracts and other legal commitments, coupled with the concept of sovereignty, the state is not free to de­cide whether to incur this type of expenditure or not.

    It is mandatory on the part of the government to incur obligatory expenditure. Whereas expenditure on social security measures is optional. The state can postpone or incur this type of expenditure depending upon the availability of resources. It is not compulsory in nature. It can if time warrants can postpone to a future date.

    According to Shirra’s:

    Prof. Findlay Shirras classified public expenditure into;

    • Primary expenditure, and.
    • Secondary expenditure.

    Primary expenditure includes all those expenditures which governments are obliged to undertake, it is mandatory on the part of the government to incur these expenditures. It includes expenditure on defense, maintenance of law and order, civil administration, payment of the debt, etc.

    These types of expenditures are essential for the existence of the state. All other expenditures, other than those under the category of primary expenditure are grouped into secondary expenditure. It includes ex­penditure on education, public health, poor relief, unemployment re­lief, and other expenses on social security measures.

    According to Roscher’s:

    Prof. Roscher classified public expenditure into three groups namely:

    • Necessary.
    • Useful, and.
    • Superfluous.

    Necessary expendi­ture is that which the state has to incur and which cannot post­pone to a future date. The best example is the expenditure on administra­tion.

    Useful expenditure is that which desires but can post­pone.

    Superfluous expenditure is that which the state may or may not occur. It otherwise calls ornamental expenditure.

    According to Dalton’s:

    Instead of following some strictly logical methods, Prof. Dalton gives a practical or empirical classification. According to Dalton, a broad distinction may draw between public expenditure designed on the one hand to preserve the social life of the community against violent attack whether external or internal and on the other, to im­prove the quality of the social life.

    In other words, the object of public expenditure may be either to keep social life secure and ordered or to make that secure and ordered life better worth living whether from an economic or non-economic point of view.

    Hence Prof. Dalton clas­sifies public expenditure into two categories – grants and purchase price. When the state incurs expenditure and does not get any commodity or service in return, the expenditure classifies as a grant.

    For example, expenditure on poor relief, payments of old-age social insurance, etc. are grants. When the state acquires or gets some commodity or service in return the expenditure is a purchase price.

    Another example:

    The salaries of government employees, the price paid for purchasing a typewriter, etc., are the purchase price.

    To quote Dalton,

    “Payments by a public authority to any of its employees by way of salaries and wages or to contractors whom it employs, are pur­chase prices. On the other hand payments of old age, social insur­ance is granted.”

    Dalton says that some public expenditure may be partly a purchase price and partly a grant. This is so when the state pays a price higher than what a private buyer would pay. The differ­ence between the two is the element of grant at a purchase price.

    Dalton thinks that interest on public debts and pensions grant if looked at from the point of view of the present, as in the present the state secure no commodity or service by incurring this expenditure.

    However, if this expenditure looks at from a longer point of view then the state pays interest in return for the loans that secure in an earlier period. Similarly, pensions are a payment for service ren­dered in the past.

    Dalton also made a distinction between direct and indirect grants. Direct grants are those whose benefits accrue to the persons who secure the grants, for example, poor relief. On the other hand, indirect grants are those where part of the benefit accrues to a person other than the recipient of the grant, for example, subsidies. Part of the sub­sidy may pass on to the purchaser of the commodity in the form of lower prices.

    According to A.C. Pigou’s:

    Pigou has classified public expenditure into the transfer and non-transfer public expenditure. Pigou in the revised edition of his book on public finance emphasizes the distinction between Transfer Expen­diture which merely redistributes the money incomes of the mem­bers of the community and non-transfer expenditure which determines directly the uses to which part of the community’s productive resources shall be put.

    He says that expenditure of money by government authori­ties may conveniently separate under two heads, the expenditure that purchases current service of productive resources for the use of these authorities and expenditure which consist of payments made either gratuitously or in the purchase of existing property rights to pri­vate persons.

    The former group includes expenditure on navy-army, Civil service, educational service, judiciary, etc. The latter includes expenditure on the payment of interests on governmental debt, pen­sion, etc. In the first edition of his book, the former type of expenditure, he called, exhaustive, while in the second edition he called it real expenditure.

    In the third edition of he says,

    “It is perhaps better to call them simply non-transfer expenditures. The latter type must call transfer expenditures.”

    Non-transfer expenditure implies the actual using up of com­modities and services which would otherwise have been available for some other purpose. In the social accounting sense, non-transfer expenditure always gives rise to the creation of output and equivalent money income.

    For instance when the state pays salary to a sol­dier, then the soldier can utilize his service for no alternative pur­pose. In the absence of this expenditure, his service would have been available for some other purpose. Whereas transfer expenditure does not create any income or output.

    According to Pigou,

    “It implies only a transfer from the state to the recipients, of command over commodities and services.”

    For example, social expenditure on the old-age pension, poor relief, etc.

    According to Mehta’s:

    Prof J.K. Mehta made a two-way classification of public expendi­ture. He categorized public expenditure into;

    • Constant expendi­ture, and.
    • Variable expenditure.

    Mehta says,

    “Constant expenditure is that, the amount of which does not depend upon the extent of the use by the people, in whose interest it is incurred and upon the service that is financed by it.”

    The expenditure on defense is a clear example of constant expenditure. Variable expenditure is that which increases with every increase in the uses of public services by the people, whose benefit it incurs. Expenditure on postal service is an example of variable expenditure.

    Variable expenditure varies with the number of people using the service provided by the state. The essential feature of Mehta’s classification is that he uses the element of cost and not benefits as the basis of classification.

    He also recognized the fact that every item of public expenditure cannot place wholly under one or another class and hence a clear-cut distinction cannot draw between them.

  • Public Expenditure: Meaning, Definition, Classification, Types, and Principles

    Public Expenditure: Meaning, Definition, Classification, Types, and Principles

    What does Public Expenditure mean? Expenditure is the action of spending funds. Public expenditure refers to the expenses which the Govern­ment incurs for its maintenance as also for the economy as a whole. The Concept of Public Expenditure: Meaning, Definition, Classification, Types, and Principles.

    Here are explained the Concept of Public Expenditure with their point of Meaning, Definition, Classification, Types, and Principles.

    Public expenditure can define as, “The expenditure incurred by public authorities like central, state and local governments to satisfy the collective social wants of the people is known as public expenditure.” Earlier it was thought that “Every tax is an evil” and public expenditure is “unproductive”.

    Such ideas are no more nowadays. It means that the least amount of tax is to collect to meet “Three duties of the sovereign”. The three duties are the maintenance of internal law and order, defense from foreign attack and issue of currency.

    Nowadays, public authorities have to incur expenditure on the protection of citizens as well as of public welfare and the promotion of socio-economic development. However, after the great depression of 1930 and war and post-war years, increasing attention was paid to the study of public expenditure. So, they refer to the expenses of public authorities like the central, state and local governments.

    Meaning of Public Expenditure:

    To carry on their functions, governments must obtain the services of labor and other factor units and (except in a completely socialist economy) acquire goods produced by private business firms.

    Public expen­diture consists of expenditure by the central government, state governments, and local authorities (such as municipalities and public corporations), with the central government accounting for the major portion of such expenditure.

    Thus, the state is required to maintain good roads, bridges, defense activi­ties, canals, and harbors, to protect trade, to maintain the coinage and to provide social security, education, and religious instruction.

    As well as, Government expenditure:

    They refer to the expenditure incurred by the central government. There are different types of such expenditure. The usual distinction is between consumption expenditure and investment expenditure. Another distinction is between revenue expendi­ture and capital expenditure.

    The main items of government spending are the following:

    Social services such as education, health and welfare and social security; defence, that is the cost of maintaining the armed forces; environmental services, that is, spending on roads, transport services, law and order, housing and the art; national debt interest, that is, interest payments on money borrowed by the government. At present, this is about one-third of India’s national income.

    Since national income is a fixed number, spending in one direction can achieve only at the expense of spending elsewhere. Thus, if the govern­ment spends a larger part of the national income on defense, less will remain with the people for their consumption, thereby leading to a reduction in their standard of living.

    Similarly, too large an expenditure on the social services at the expense of defense expenditure may put a threat to national security – and social security is meaningless if it is at the expenses of national security. As a result, the actual amount spent in each direction represents a compromise between competing desires. So, there is always a need for careful planning of public expenditure.

    Definition of Public Expenditure:

    The theory of public expenditure has been more or less confining to that of generalities in terms of the effects of public expenditure on employment and price level. Even though public expenditure has increased rapidly during the last two centuries, in almost every state the area of them re­mains relatively unexplored.

    Further, the level of public expenditure depends on government programs, which are the outcome of po­litical decisions.

    Gerhard Colm points out,

    “The determination of gov­ernment programmes is a political procedure and as such is carried on in a milieu, usually called ‘Politics’ which includes vote gathering, pressure by lobbies, log rolling and competition among political ri­vals.”

    Classification of Public Expenditure:

    It is conventional in every textbook of public finance to classify public expenditures into various economic categories. Also, The classification of public expenditure refers to the systematic arrangement of differ­ent items of state expenditure, on some specified economic basis.

    Classification is always done on some logical and rational economic basis. Classification of public expenditure is important to understand the nature and effect of public expenditure. Through this classifica­tion, the state executive maintains effective control over them and prevented public funds leakages and wastages, di­versions and misappropriations.

    Classification of public expenditure is good for auditing and public funds can better safeguard against misappropriation. Classification of expenditure helps us to understand the relative importance of each head of expenditure at different times.

    According to Prof. Shirras, the test of public expenditures not the aggregate expenditure but it is the relative amounts which are as­signed to different heads from time to time. Hence classification of expenditure is important for a clear understanding of the nature and effects of them.

    Economists have proposed various methods of classifying pub­lic expenditures. However, the methods differ widely from one an­other. This is because; there is little agreement between authorities of public finance regarding the best way of arranging the various kinds of state outlays.

    Hence a completely satisfactory method is yet to emerge. Hence Mill, Roscher, Plehn, Nicholson, and Bastable have their methods. In this context, Shulz observes “Nineteenth-century fiscal writers devoted considerable space to the subject of the proper classification of government expenditure, but no two even agreed upon the same classification”.

    Extra Classifications:

    There are a variety of ways in which they can classify but broadly it is classifying under the following heads:

    According to the authority which spends the money viz;

    • Federal or Union or Central expenditure.
    • State or Provincial expenditure, and.
    • Local expenditure or expenditure of municipalities and other local bodies.

    According to the object of expenditure viz;

    • Development activities like providing subsidies, electric power, transport service, welfare activities, employment opportunities, and price stability, etc.
    • Non-developmental activities like money spent on administrative machinery, law and order, interest payment on public debt and defense, etc.

    According to the nature of expenditure via;

    • Revenue Expenditure, and.
    • Capital Expenditure.

    Revenue Expenditure is current expenditure e.g. administrative and maintenance expenditure. This expenditure is of a recurring type which Capital Expenditure is of capital nature and is incurred once for all. It is non-recurring expenditure e.g. expenditure for building multipurpose projects or a setting up big factories like steel plants, money spent on land, machinery, and equipment.

    Types of Public Expenditure:

    The main bases of Types of public expenditure are as follows:

    Capital And Revenue Expenditure:

    Capital Expenditure of the government refers to that expenditure that results in the creation of fixed assets. Also, They are in the form of investment. They add to the net productive assets of the economy. Capital Expenditure is also known as development expenditure as it increases the productive capacity of the economy. It is an investment expenditure and a non-recurring type of expenditure.

    For example; Expenditure, on agricultural and industrial development, irrigation dams, public -enterprises, etc, are all capital expenditures. Revenue expenditures are current or consumption expenditures incurred on civil administration, defense forces, public health and, education, maintenance of government machinery, etc.

    Development And Non–Developmental Expenditure/Productive And Non–Productive Expenditure:

    Expenditure on infrastructure development, public enterprises or development of agriculture increase productive capacity in the economy and bring income to the government. Thus they are classified as a productive expenditure. All expenditures that promote economic growth development are termed as development expenditure.

    Unproductive (known–development) expenditure refers to those expenditures which do not yield any income. Expenditure such as interest payments, expenditure on law and order, public administration, do not create any productive asset which brings income to the government such expenses are classified as unproductive expenditures.

    Transfer And Non-Transfer Expenditure:

    Transfer expenditure refers to those kinds of expenditures against there is no corresponding transfer of real resources i.e., goods or services. Such expenditure includes public expenditure on; National Old pension Scheme, Interest payments, subsidies, unemployment allowances, welfare benefits to weaker sections, etc. By incurring such expenditure, the government does not get anything in return, but it adds to the welfare of the people, especially to weaker sections of society. Such expenditure results in redistribution of money incomes within the society.

    The Non-transfer expenditure relates to that expenditure which results in the creation of income or output The Non-transfer expenditure includes development as well as Non-development expenditure that results in the creation of output directly or indirectly. Economic infrastructure (Power, Transport, Irrigation, etc.), Social infrastructure (Education, Health and Family Welfare), Internal law and order and defense, public administration, etc. By incurring such expenditure, the government creates a healthy environment for economic activities.

    Plan And Non-Plan Expenditure:

    The plan expenditure incurs on development activities outlined in the ongoing five-year plan. In 2009-10, the plan expenditure of the Central Government was 5.3% of GDP. Plan expenditure incurs on Transport, rural development, communication, agriculture, energy, social services, etc.

    The non-plan expenditure incurs on those activities, which are not included in the five-year plan. It includes development and Non-development expenditure. It includes; Defence, subsidies, interest payments, maintenance, etc.

    Other types of Public Expenditure:

    Mrs. Hicks classified the types of Public Expenditure based on duties of government. It is as follows:

    Defense Expenditure: It is expenditure on defense types of equipment, wages, and salaries of armed forces, navy, and air-force, etc. It incurs by the government to provide security to citizens of the country from external aggression.

    Civil Expenditure: Government/incurs this expenditure to maintain law and order and administration of justice.

    Development Expenditure: It is expenditure on the development of agriculture, industry, trade and commerce, transport and communication, etc.

    Public Expenditure Meaning Definition Classification Types and Principles
    Public Expenditure: Meaning, Definition, Classification, Types, and Principles, #Pixabay.

    Principles of Public Expenditure:

    As the public is an important part of fiscal policy, certain principles or canons are laid down to which public expenditure should conform.

    These principles of public expenditure or canons are as follows:

    The principle of Maximum Social Advantage:

    The government’s expenditure should so arrange as to secure the greatest possible net advantage, i.e., it should maximize the difference between the addition to welfare obtained by its expenditure and the social cost involved in obtaining the money. This principle has been calling by Dalton the Principle of Maximum Social Advantage.

    The principle of Economy:

    This principle says that the government should economies its expenditure and avoid wasteful and extravagant expenditure. The principle requires that the revenue collecting from the tax-payer should be judiciously spent. As too much they lead to inflation and adversely affects savings, the economy in government expenditure is cardinal.

    The principle of Sanction:

    According to this principle, expenditure should incur only if it has been sanction by a competent authority. It usually sees that unauthorizing spending leads to extravagance and overspending. But when a competent authority looks into the pros and cons and then gives its verdict to incur the expenditure it means that the expenditure incurred will provide genuine utility and serve its definite purpose.

    The principle of Elasticity:

    This principle states that it should be possible for public authorities to vary the expenditure according to need or circumstances. It means that they should be fairly elastic and flexible but not rigid. Rigidity proves to be a handicap in times of trouble alternation in the upward direction is not difficult but elasticity also needs in the downward direction.