Tag: Study

  • Meaning, Definition, Principles, and Functions of Insurance

    Meaning, Definition, Principles, and Functions of Insurance

    Meaning: Life is a roller coaster ride and is full of twist and turn. The insurance policy is a protection against the uncertainties of life. Insurance is defined as a cooperative tool which is meant to spread the damage caused by a particular risk, which comes in contact with it and who agrees to insure themselves against that risk. As in all insurance, the insured person pays the premium in risk, transfer, and exchange to the insurer. Do you study to learn: If Yes? Then read the lot. Let’s Study: Meaning, Definition, Principles, and Functions of Insurance. Read this in the Hindi language: अर्थ, परिभाषा, सिद्धांत, और बीमा के कार्य।

    The concept of Insurance Discussing the topic: Meaning, Definition, Principles, and Functions of Insurance.

    These risks are such that they can not be known in advance when they win and provision for them against any person is physically impossible. In the case of risk life insurance assumed by the insurer, there is the risk of death of the insured. Insurance policies cover the risk of life as well as other assets and valuables such as home, automobile, ornaments etc.

    Depending on the risk, they cover, insurance policies can be classified into life insurance and general insurance. Life insurance products include the risk against incidents such as death or disability for the insurer. General insurance products include risks against natural disasters, theft, etc. Before this study, once read this article: Features, Types, and Importance of Insurance.

    How do you understand insurance? Meaning.

    Insurance is a system through which some people are harmed, who are aware of many risks. With the help of insurance, a large number of people aware of similar risks contribute to a common fund, in which it is good to face losses by some unfortunate people due to unfortunate incidents.

    Insurance is a protection against financial loss arising out of an unexpected event. The insurance policy not only helps in reducing risk but also provides financial cushions against unfavorable financial burdens. Insurance is defined as a cooperative tool which is meant to spread the damage caused by a particular risk, which comes in contact with it and who agrees to insure themselves against that risk.

    The risk is the uncertainty of financial loss. Insurance is also defined as a social tool to deposit the money in order to meet the risk of uncertain loss through a certain risk for the injured person against the risk. Insurance provides financial protection against the loss arising from an indefinite event.

    One person can take advantage of this protection by paying the premium to the insurance company. Generally, a pool is created through contributions made by those wishing to save from common risk. In the case of indeterminate incidence from this pool, any damage to the insured is paid. 

    Life insurance has come a long way from earlier days when it was originally considered as a risk-cover medium from time to time, which included temporary risk situations like ocean voyages. Since life insurance became more established, it was felt that this was a useful tool for many situations, including temporary needs, hazards, savings, investment, retirement etc.

    Insurance is a contract between two parties, so that a party agrees to take risk in exchange for ideas that go in the form of premium and to any other party in the event of an indefinite event (death) or termination of a certain term in the case of life insurance After compensating for the latter or the other party, any other party is promised to pay a certain amount. In the case of general insurance, there is an uncertain event. The risk side is known as ‘insurer’ or ‘assurance’ and the party whose risk is covered is known as ‘insured’ or ‘assured’.

    Definition of Insurance:

    The definition of insurance can be seen from two viewpoints:

    Functional Definition:

    Insurance is a co-operative device of distributing losses, falling on an individual or his family over a large number of persons each bearing a nominal expenditure and feeling secure against heavy loss. Insurance is a co-operative device to spread the loss caused by a particular risk over a number of persons, who are exposed to it and who agree to insure themselves against the risk.

    Thus, the insurance is;

    • A co-operative device to spread the risk.
    • The system to spread the risk over a number of persons who are insured against the risk.
    • The principle to share the loss of each member of the society on the basis of the probability of loss to their risk, and.
    • The method to provide security against losses to the insured.

    Similarly, another definition can be given. Insurance is a co-operative device of distributing losses, falling on an individual or his family over a large number of persons, each bearing a nominal expenditure and feeling secure against heavy loss.

    Contractual Definition:

    Insurance may be defined as a contract consisting of one party (the insurer) who agrees to pay to other parties (the insured) or his beneficiary, a certain sum upon a given contingency against which insurance is sought. Insurance has been defined to be that in which a sum of money as a premium is paid in consideration of the insurance incurring the risk of paying a large sum upon a given contingency.

    The insurance, thus, is a contract whereby:

    • Certain sum, called premium, is charged in consideration.
    • Against the said consideration, a large sum is guaranteed to be paid by the insurer who received the premium.
    • The payment will be made in a certain definite sum, i.e., the loss or the policy amount whichever may be, and.
    • The payment is made only upon a contingency.

    The more specific definition can be given as follows,

    “Insurance may be defined as a consisting one party (the insurer) agrees to pay to the other party (the insurer) or his beneficiary, a certain sum upon a given contingency (the risk) against which insurance is sought.”

    So it is clear that every risk involves the loss of one or the other kind. The function of insurance is to spread this loss over a large number of persons through the mechanism of co-operation.

    The important Principles of Insurance:

    The main motive of insurance is cooperation. Insurance is defined as the equitable transfer of risk of loss from one entity to another, in exchange for a premium.

    Insurance is based upon two basic principles:

    Cooperation:

    Insurance is a co-operative device. If one person is providing for his own losses, it cannot be strictly insurance because in insurance the loss is shared by a group of persons who are willing to co-operate.

    Probability:

    The loss in the form of premium can be distributed only on the basis of the theory of probability. The chances of loss are estimated in advance to affix the amount of premium. Since the degree of loss depends upon various factors, the affecting factors are analyzed before determining the amount of loss.

    With the help of this principle, the uncertainty of loss is converted into certainty. The insurer will not have to suffer loss as well as the gain windfall. Therefore, the insurer has to charge only so much of amount which is adequate to meet the losses.

    The insurance, on the basis of past experience, present conditions and future prospects, fixes the amount of premium. Without premium, no co-operation is possible and the premium cannot be calculated without the help of the theory of probability, and consequently, no insurance is possible.

    The important principle of insurance are as follows:

    Nature of contract:

    Nature of contract is a fundamental principle of the insurance contract. An insurance contract comes into existence when one party makes an offer or proposal of a contract and the other party accepts the proposal. A contract should be simple to be a valid contract. The person entering into a contract should enter with his free consent.

    Utmost good faith:

    Under this insurance contract, both the parties should have faith over each other. As a client, it is the duty of the insured to disclose all the facts to the insurance company. Any fraud or misrepresentation of facts can result into the cancellation of the contract.

    Insurable interest:

    Under this principle of insurance, the insured must have an interest in the subject matter of the insurance. The absence of insurance makes the contract null and void. If there is no insurable interest, an insurance company will not issue a policy. Insurable interest must exist at the time of the purchase of the insurance. For example, a creditor has an insurable interest in the life of a debtor, A person is considered to have an unlimited interest in the life of their spouse etc.

    Indemnity:

    Indemnity means security or compensation against loss or damage. The principle of indemnity is such a principle of insurance stating that an insured may not be compensated by the insurance company in an amount exceeding the insured’s economic loss. In the type of insurance, the insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss.

    This is a regulatory principle. This principle is observed more strictly in property insurance than in life insurance. The purpose of this principle is to set back the insured to the same financial position that existed before the loss or damage occurred.

    Subrogation:

    The principle of subrogation enables the insured to claim the amount from the third party responsible for the loss. It allows the insurer to pursue legal methods to recover the amount of loss, For example, if you get injured in a road accident, due to reckless driving of a third party, the insurance company will compensate your loss and will also sue the third party to recover the money paid as the claim.

    Double insurance:

    Double insurance denotes insurance of same subject matter with two different companies or with the same company under two different policies. Insurance is possible in case of indemnity contracts like fire, marine and property insurance. The double insurance policy is adopted where the financial position of the insurer is doubtful. The insured cannot recover more than the actual loss and cannot claim the whole amount from both the insurers.

    Proximate cause:

    Proximate cause literally means the ‘nearest cause’ or ‘direct cause’. This principle is applicable when the loss is the result of two or more causes. The proximate cause means; the most dominant and most effective cause of loss is considered. This principle is applicable when there are series of causes of damage or loss.

    Functions of Insurance:

    The functions of Insurance can be bifurcated into Primary functions and Secondary functions.

    Primary Functions of Insurance:

    The primary functions of insurance include the following:

    • Provide Protection: The primary function of insurance is to provide protection against future risk, accidents, and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.
    • Assessment of risk: Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. The risk is the basis for determining the premium rate also.
    • The collective bearing of risk: Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among the larger number of people. All the insured contribute premiums towards a fund, out of which the persons exposed to a particular risk are paid.
    • Savings and investment: Insurance serve as a tool for savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured. For the purpose of availing income-tax exemptions, people invest in insurance also.

    Secondary Functions of Insurance:

    The secondary functions of insurance include the following:

    • Prevention of Losses: Insurance cautions individuals and businessmen to adopt a suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of the automatic sparkler or alarm systems, etc. Reduced rate of premiums stimulates more business and better protection to the insured.
    • Small capital to cover large risks: Insurance relieves the businessmen from security investments, by paying the small amount of premium against larger risks and uncertainty.
    • Contributes to the development of large industries: Insurance provides a development opportunity for large industries having more risks. Even the financial institutions may be prepared to give credit to sick industrial units which have ensured their assets including plant and machinery.
    • Source of Earning Foreign Exchange: Insurance is an international business. The country can earn foreign exchange by way of issue of insurance policies.
      Risk Free Trade: Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.

    In past years, tariff associations or mutual fire insurance associations were found to share the loss at a cheaper rate. In order to function successfully, the insurance should be joined by a large number of persons. Insurance is a form of risk management primarily used to hedge against the risk of potential financial loss. Again insurance is defined as the equitable transfers of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care. Read this in the Hindi language: अर्थ, परिभाषा, सिद्धांत, और बीमा के कार्य।

    Meaning Definition Principles and Functions of Insurance

  • Meaning, Definition, Benefits, and Objectives of Career Planning

    Meaning, Definition, Benefits, and Objectives of Career Planning

    Career Planning; Career planning encourages individuals to explore and gather information, which enables them to syn­thesize, gain competencies, make decisions, set goals and take action. Meaning: Career is seen as a collection of bunch or jobs or posts. Generally, it describes an applies career path within the organization’s structure. It shows the development path of key personnel within the organization. The derivation of the word derived from the Latin word carrier, which means running. Do you study to learn: If Yes? Then read the lot. Let’s Study: Meaning, Definition, Benefits, and Objectives of Career Planning. Read this in the Hindi language: करियर योजना का अर्थ, परिभाषा, लाभ, और उद्देश्य। 

    The concept of Career Planning Discussing the topic: Meaning, Definition, Benefits, Process, Features, and Objectives of Career Planning.

    All the jobs, which are organized together during the working life of someone, make careers. It is also seen as a sequence of posts organized by a person during his employment. Edwin B. Flipo defined a career as a sequence of different but related work activities that provides continuity, order, and meaning in a person’s life. As well as, a career can be seen as the amalgamation of change in value, attitude, and motivation because it gets old. This concept constitutes the subjective element of “careers”.

    Definition of Career Planning:

    Career planning is the process of enhancing an employee’s future value. A career plan is an individual’s choice of occupation, organization and career path.

    A career may define as,

    “A sequence of jobs that constitute what a person does for a living.”

    According to Schermerborn, Hunt, and Osborn,

    “Career planning is a process of systematically matching career goals and individual capabilities with opportunities for their fulfillment.”

    Career planning encourages individuals to explore and gather information, which enables them to syn­thesize, gain competencies, make decisions, set goals and take action. It is a crucial phase of human resource development that helps the employees in making a strategy for work-life balance.

    Below described several themes underlying different definition of a career as:

    1] The property of occupation or organization:

    In this way, the career describes the occupation itself or an employee’s tenure within an organization.
    Advancement: It denotes the progression and increase in success an individual receives within an occupation or organization.

    2] Status of a profession:

    In this sense, a career uses to distinguish different professions. Such as engineering, the medical profession is different from other occupations like plumbing carpentry, etc. The former says to have a career where the latter does not have.

    3] Involvement in one’s work:

    Sometimes the career use in a negative sense to describe being extremely involved in the task or job one is doing.

    4] Stability of a person’s work pattern:

    Career describes a sequence of related jobs. While a sequence of unrelated jobs does not describe career.

    Career is often defined as both an external career and an internal career. External career is defined as objective categories used by a given society and different organizations to describe the progression of steps of the different occupations. Whereas an internal career involves the set of steps and stages that make up an individual’s concept of career progression in a given occupation.

    Due to two different approaches, in the organizational context, career is considered as an integrated pace of both vertical and lateral movements of an individual in occupation during the span of his employment. Such an integrated approach is intended to minimize diversity of hopes and expectations of employees by obtaining a match between individually perceived careers with that of organizational centered careers.

    Benefits of career planning:

    The following benefits are given below:

    • The career plan ensures the continuous supply of promotional employees.
    • It helps in improving employee loyalty.
    • Career planning encourages the development and development of the employee.
    • Discourages the negative attitude of senior officials who interest in suppressing the development of subordinates.
    • This ensures that senior management knows the capacity and capacity of those employees who can move upwards.
    • It can always make a team of employees ready to meet any contingency.
    • Career planning reduces the labor business.
    • Each organization prepares the successor plan on which the career plan is the first step.

    The process of career planning:

    Career plans involve different activities for successful organizations and generally include the following steps.

    1] Identifying personal needs and aspirations:

    Most individuals do not have a clear-cut about their career aspirations, anchors and goals. Therefore, human resources professionals should help an employee in this direction and provide as much information as possible. Keeping in mind their skills, experience, and ability, they are shown such work, which will make them the most suitable. Workshops, seminars can also arrange to enhance such support with psychological testing, simulation exercises. Such a practice is basically to help create a clear view of the career of a chosen business within a company.

    Workshops and seminars promote employee interest in career planning, as it helps employees to determine their career goals, identify career paths and highlight specific career development activities. Printed and other types of information can also provide to complement individual efforts. Also, helping employees better, organizations create data banks or skills and talent lists, which include career history, skill evaluation, and information about their employees’ career priorities.

    2] Analyzing career opportunities:

    Once you know the career requirements and the aspirations of the employees, the organization determines the career path for each situation, which clearly shows career progression prospects. It points to different situations, a good artist can catch in a period. Career paths change over time, according to the needs of the employee and organizational needs.

    3] Aligning needs and opportunities:

    After identifying the needs of the employees and their career opportunities, the next step is to align the former with the former. This process involves identifying the ability of employees and then starting a career development program. The efficiency of the staff can demonstrate a thorough evaluation.

    This will know the employees who need further training, who can take additional responsibilities, etc. Some development techniques are used to consider employee’s information and skills in an employee capacity. It includes special assignments, schematic position rotation, supervisory coaching, job enhancement, weak program, etc.

    4] Action plans and periodic reviews:

    After starting the above steps, it is necessary to review the whole items from time to time to highlight the gap. These intervals have to be a bridge through personal career development efforts and from time to time supported organizations.

    Periodic review will help employees know the direction in which it is moving, whether the change is sought, what kind of skills required to face new and emerging organizational challenges. Organizations also find out how employees are doing, their goals and aspirations, and what career paths are in line with personal needs and serve the whole corporate.

    Features of Career Planning:

    The following features of career planning are below:

    1] Process:

    Career planning is an ongoing process of developing human resources. It is neither an event nor a program.

    2] Upward movement:

    It involves upward movement in the organizational hierarchy. It could also be special assignments, completing a project that requires better skills and abilities to handle recurring problems.

    3] Mutuality of Interest:

    Career plans serve a mutuality of interest. It serves the individual’s interest by taking care of his needs and aspirations to the required extent. Simultaneously it serves the organization’s interest as the human resources of an organization provide the opportunity to develop and contribute to the organization’s goals for the fulfillment of its objectives to the best of their ability and confidence.

    4] Dynamic:

    The dynamic nature of career planning is to cope and adjust to the ever-changing environment.

    Objectives of Career Planning:

    Career planning aims at matching individual potential for promotion and individuals aspirations with organizational needs and opportunities. Career planning is making sure that the organization has the right people with the right skills at the right time. It opens avenues for growth to higher levels of responsibilities for every employee of the organization through the hierarchy of position, and training and development activities to equip the individuals with the requisites for succession.

    Generally, Career Planning aims at fulfilling the following objectives:

    • It provides and maintains appropriate human resources in an organization by offering careers, not jobs.
    • It creates an able environment of effectiveness, efficiency, and growth.
    • Maps out careers of different categories of employees, following their ability and willingness to “train and develop” to take the responsibility of higher positions.
    • It seeks to maintain a stable workforce within an organization by controlling absenteeism and reducing employee turnover.
    • Caters to the immediate and future human resource needs of the organization at the appropriate time.
    • Increases the proper utilization of managerial reserves within the organization.

    The major objectives of career planning are as follows:

    • To identify the positive characteristics of the employees.
    • Develop awareness about each employee’s uniqueness.
    • To respect the feelings of other employees.
    • To attract talented employees to the organization.
    • Train employees towards team-building skills.
    • To create healthy ways of dealing with conflicts, emotions, and stress.

    Understand career planning:

    Since both the person and the organization interest in one’s career, the career plan itself is an intentional process to be aware of the current obstacles with available opportunities, alternative options, and sequences. As well as, it involves identifying targets related to careers to provide the right direction, appropriate time and sequence for achieving a specific career goal and doing work education and related development practice.

    Essentially, career planning helps employees plan for their careers in terms of their capabilities and competencies in terms of organizational needs. It is related to developing the organizational system of career movement and development. This gives opportunities for any person to progressive and continuously from an entry point of his employment at the point of his retirement. It has also been described as the process of synthesizing and reconcile the organization’s needs with the innate aspirations of the employees so that afterward, realize the self-fulfillment and improve the effectiveness of the former.

    Extra Things:

    Career planning is an ongoing process by which a person determines their career goals and identifies the means and methods of achieving them. The way people plan their life’s work, they consider a career plan. It inspires someone to explore, choose and endeavor to achieve satisfaction with the purpose of a person’s career. Therefore a person’s life is important.

    The effective career plan is about finding a suitable job that corresponds to the life of a person. The Career Plan answers the question, where are the possibilities of going forward and growing in the organization for a person to be in the organization after five years or ten years or to build the realm of someone’s career. Career planning is neither an event nor an end. Also, it is a continuous process for human resources development and an essential aspect of managing people to achieve optimal results.

    Why is the need for Career planning for employees?

    The need to plan for employee careers is due to both economic and social power. In an ever-changing environment, the human resources of the organization should be in a constant state of development and should be there. A planned program of internal human resources development pays more than relieving external recruitment for recruitment. At the top, many employees retire at the job when there is no managerial concern for proper career progression.

    Apart from this, employees of Millennium Day insist and hope that their work expects to integrate effectively with human needs for personal development, together with family expectations, meet the ethical requirements of the society. However, it is most ironic that, as far as the work is concerned, what is the most valuable for the person, the career is, the organization gets the least attention. As well as, most organizations do not pay enough attention to this important aspect of actual practice for various reasons. As a result, the demand for employees does not match adequately with systematic arrangements.

    More knowledge:

    Career planning is an indispensable condition for effective human management to achieve optimum productivity, for organizational development and development, keeping in mind the increasing expectations and aspirations of changing scenarios of the social and economic environment and employees. Generally, a person applies for the job in the organization after making necessary inquiries about job prospects and after taking a job, he starts inquiring about job prospects and future potential situation.

    Disadvantaged of satisfactory answers, a person feels motivated and frustrated and starts looking out of the organization in search of any other possible job. Generally, this is a normal situation for individuals with senior supervisory, executive and managerial positions. As well as, employees holding such a position are curious to know that they can grow in their current positions, organization and when. To attract and maintain competent personnel for senior positions in an organization, they must be assured of a progressive career.

    Thus, career planning has become necessary to prevent such personnel from managing the organization with skilled supervisors, high technical and managerial personnel to manage an organization and the lack of promotional routes. Productive employees want to seek careers instead of short-term jobs. Also, a career scheme, if properly designed and implemented, benefits management and employees and its absence makes a big difference for both the employees and the organization. Read this in the Hindi language: करियर योजना का अर्थ, परिभाषा, लाभ, और उद्देश्य। 

    Meaning Definition Benefits and Objectives of Career Planning
    Meaning, Definition, Benefits, and Objectives of Career Planning.
  • Meaning, Definition, Services, and Functions of Financial System

    Meaning, Definition, Services, and Functions of Financial System

    A financial system is a network of financial institutions, financial markets, financial instruments, and financial services that facilitate money transfer. This system includes end users of saver, arbitrator, device, and money. The level of economic development depends largely on the basis and it facilitates the economy of the prevailing financial system. Proper circulation of funds is necessary for the economic development of the country. Do you study to learn: If Yes? Then read the lot. Let’s Study Meaning, Definition, Services, and Functions of Financial System. Read this in the Hindi language: वित्तीय प्रणाली का अर्थ, परिभाषा, सेवाएं, और कार्य। 

    The concept of Financial System Discussing the topic: Meaning, Definition, Services, and Functions of Financial System.

    Use of effective circulation and wealth promotes industrial development of the country, which supports economic development. If money is not transmitted effectively in the economy, money will be seized, which will negatively affect economic development, in which the establishment and development of industries can be blocked.

    Effective circulation, effective use of money is equally important. Economic development cannot be possible if the circulated wealth is not used properly in the producing areas. The financial system helps in spreading the wealth in the economy.

    #Meaning of Financial System:

    The financial system refers to set of complex and interconnected components consisting specialized and non-specialized financial institutions, organized and unorganized financial markets, financial instruments and financial services. The aim of the financial system is to facilitate the circulation of funds in an economy.

    It is concerned about money, credit, and finance. Money refers to the medium of exchange or mode of payment. Credit refers to the amount of debt which is returned along with the interest. And the finance refers to the monetary resources comprising the own funds and debts of the state, company or a person.

    The efficient financial system and sustainable economic growth are corollaries. The financial system mobilizes the savings and channelizes them into productive activity and thus influences the pace of economic development. Economic growth is hampered for want of an effective financial system. Broadly speaking, financial system deals with three inter-related and interdependent variables, i.e., money, credit, and finance.

    #Definition of Financial System:

    According to Amit Chaudhary,

    “Financial system is the integrated form of financial institutions, financial markets, financial securities, and financial services which aim is to circulate the funds in an economy for economic growth.”

    According to Dhanilal,

    “Financial system is the set of interrelated and interconnected components consisting of financial institutions, markets, and securities.”

    The financial system provides channels to transfer funds from individuals and groups who have saved money to individuals and group who want to borrow money. Saver (refer to the lender) are suppliers of funds to borrowers in return with promises of repayment of even more funds in the future.

    Borrowers are demanders of funds for consumer durables, house, or business plant and equipment, promising to repay borrower funds based on their expectation of having higher incomes in the future. These promises are financial liabilities for the borrower-that is, both a source of funds and a claim against the borrower’s future income.

    #Services Provided by the Financial System:

    The following Services from Financial System is given below:

    Risk Sharing: 

    The Financial system provides risk sharing by allowing savers to hold many assets. It also means the financial system enables individuals to transfer risk.

    Financial markets can create instruments to transfer risk from savers to borrowers who do not like uncertainty in returns or payments to savers or investors who are willing to bear the risk.

    The ability of the financial system to provide risk-sharing makes savers more willing to buy borrowers’ IOUs. This willingness, in turn, increases borrowers’ ability to raise funds in the financial system.

    Liquidity:

    The second service that financial system provides for savers and borrowers is liquidity, which is the ease with which an asset can be exchanged for money to purchase other assets or exchanges for goods and services. Most of the savers view the liquidity as a benefit.

    If an individual needs their assets for their own consumption and investment, they can just exchange it. Liquid assets allow an individual or firm to respond quickly to new opportunities or unexpected events. Bonds, stocks, or checking accounts are created by financial assets, which have more liquid than cars, machinery, and real estate.

    Information:

    The third service of the financial system is the collection and communication of information or we can say that it is the facts about borrowers an expectation about returns on financial assets. The first informational role the financial system plays is to gather information. That includes finding out about prospective borrowers and what they will do with borrowed funds.

    Another problem that exists in most transactions is asymmetric information. This means that borrowers possess information about their opportunities or activities that they don’t disclose to lenders or creditors and can take advantage of this information. The second informational role that financial system plays is communication of information.

    Financial markets do that job by incorporating information into the prices of stocks, bonds, and other financial assets. Savers and borrowers receive the benefits of information from the financial system by looking at asset returns. As long as financial market participants are informed, the information works its way into asset returns and prices.

    #Functions of Financial System:

    Functions and Role of the financial system, market are given below.

    • Pooling of Funds.
    • Capital Formation.
    • Facilitates Payment.
    • Provides Liquidity.
    • Short and Long-Term Needs.
    • Risk Function.
    • Better Decisions.
    • Finances Government Needs, and.
    • Economic Development.

    Now each one Functions of the financial system are discussing on brief:

    Pooling of Funds:

    In a financial system, the Savings of people are transferred from households to business organizations. With these production increases and better goods are manufactured, which increases the standard of living of people.

    Capital Formation:

    Business requires finance. These are made available through banks, households and different financial institutions. They mobilize savings which leads to Capital Formation.

    Facilitates Payment:

    The financial system offers convenient modes of payment for goods and services. New methods of payments like credit cards, debit cards, cheques, etc. facilitate quick and easy transactions.

    Provides Liquidity:

    In the financial system, liquidity means the ability to convert into cash. The financial market provides the investors the opportunity to liquidate their investments, which are in instruments like shares, debentures, bonds, etc. Price is determined on the daily basis according to the operations of the market forces of demand and supply.

    Short and Long-Term Needs:

    The financial market takes into account the various needs of different individuals and organizations. This facilitates optimum use of finances for productive purposes.

    Risk Function:

    The financial markets provide protection against life, health, and income risks. Risk Management is an essential component of a growing economy.

    Better Decisions:

    Financial Markets provide information about the market and various financial assets. This helps the investors to compare different investment options and choose the best one. It helps in decision making in choosing portfolio allocations of their wealth.

    Finances Government Needs:

    The government needs a huge amount of money for the development of defense infrastructure. It also requires finance for social welfare activities, public health, education, etc. This is supplied to them by financial markets.

    Economic Development:

    India is a mixed economy. The Government intervenes in the financial system to influence macroeconomic variables like interest rate or inflation. Thus, credits can be made available to corporate at a cheaper rate. This leads to the economic development of the nation.

    #Main Functions of Financial System:

    The functions of the financial system can be enumerated as follows:

    • The financial system acts as an effective conduit for optimal allocation of financial resources in an economy.
    • It helps in establishing a link between savers and investors.
    • The financial system allows ‘asset-liability change’. When they accept deposits from customers, banks make claims against themselves, but they also make assets when providing loans to customers.
    • Economic resources (i.e., money) are transferred from one party to another through the financial system.
    • The financial system ensures the efficient functioning of the payment mechanism in the economy. All transactions between buyers and sellers of goods and services are easily affected due to the financial system.
    • In the case of mutual funds, the financial system helps in risk change by diversification.
    • The financial system increases the liquidity of financial claims.
    • The financial system helps in finding the prices of financial assets from the
    • contact of buyers and sellers. For example, the value of the securities is determined by capital market demand and supply forces.
    • The financial system helps reduce the cost of transactions.

    As discussed above, financial markets play an important role in economic development through the role of capital allocation capital, supervising managers, saving savings and promoting technological change among others. Economists had thought that the development of the financial sector is an important element to encourage financial growth.

    Financial development can be defined as the ability to obtain information effectively in the financial sector, implement contracts, facilitate transactions, and promote special types of financial contracts, markets, and arbitrators. Should be at a lower cost.

    Financial development occurs when financial tools, markets, and intermediaries improve on the basis of information, enforcement and transaction costs, and therefore provide better financial services. Financial work or services can affect the economy’s savings and investment decisions through capital accumulation and technical innovation and therefore economic growth.

    Capital accumulation can be modeled either through capital peripherals or capital goods, which are produced using constant returns, but without the use of any reproduction factors to stabilize static per-state growth.

    Through capital accumulation, the steady growth rate in the work done by the financial system affects the rate of capital formation. The financial system affects capital accumulation either by either changing the savings rate or by reallocating the savings between capital production levels. Through technological innovation, focus on innovation of new production processes and inventions.

    Because friction of the market and laws, rules and policies are quite different with the economies and the times, the impact of financial development on development can have different effects for the economy allocation and welfare in the economy. Read this in the Hindi language: वित्तीय प्रणाली का अर्थ, परिभाषा, सेवाएं, और कार्य। 

    Meaning Definition Services and Functions of Financial System
    Meaning, Definition, Services, and Functions of Financial System.
  • Meaning, Definition, and Objectives of Career Management

    Meaning, Definition, and Objectives of Career Management

    Career Management; A common way of career action is by choosing a person to proceed through the life of his employment. It can represent as a person whom a person has organized for so many years. Career management is the engagement plan of someone’s activities and attachments in the work done during his life for better fulfillment, development and financial stability. This is a sequential process that starts with understanding itself and involves business awareness. Do you study to learn: If Yes? Then read the lot. Let’s Study Meaning, Definition, and Objectives of Career Management. Read this in the Hindi language: करियर प्रबंधन का अर्थ, परिभाषा, और उद्देश्य। 

    The concept of Career Management Discussing the topic: Meaning, Definition, Benefits, Objectives, and Elements of Career Development.

    Many people feel satisfied by achieving their career goals. Also, others have a strong sense that their career, their life, and their abilities have become incomplete. Employers’ employees also have a profound impact on their careers. Some organizations have formal career management procedures, while others worry very little about it. Career management is defined as the ongoing process of preparation, implementation, and monitoring of career plans. It can do either by a person alone or there may a consolidate activity with the organization’s career system.

    Meaning and Critical Concept of Career Management:

    Career management is a process that enables employees to better understand, develop and give direction to their career skills and to effectively utilize those skills and interests both within and outside the organization. Specialized career management activities provide realistic career-oriented assessment, post open jobs and offer formal career development activities.

    Career development involves the lifespan series of activities that contribute to a person’s career exploration, establishment, development, success, and fulfillment. Career planning is a deliberate process by which a person becomes aware of his skills, interests, motivation, knowledge and other such characteristics. He also receives and receives information about opportunities and options, identifies career goals and establishes action plans to achieve specific goals.

    Career management and career planning activities are complementary and can strengthen each other. Career management can also consider a lifelong, self-monitoring process of a career plan. It involves choosing and setting individual goals and preparing strategies for achieving them.

    The Concept of Career Management:

    However, in an organizational context, the focus is on taking action to meet the estimated human resources requirements.

    • A person’s career is the only source of natural expression of self. A school of thought describes the purpose of life and the work of someone’s manifestation and the purpose of existence or existence. Still, others believe that there is a big difference between a person’s career and his life. In any case, careers are an integral part of one’s life and hence its management is needed.
    • Career management is more or less like organizational management; There is no classification of individuals after all organizations! The process of career management starts with the construction of goals and objectives, which are short-lived or for short-term achievement.
    • This is a difficult task compared to a long-term career goal, which is more or far-sighted. Since the objective is short-term or immediate, it is verb-oriented. Second, it demands every moment, every moment of achievement. Then this step can be very difficult for those who are not aware of available opportunities or are not fully aware of their talents. However, more specific, measurable and achievable goals are likely to have more and more fruit plan management plans.
    • A well-prepared strategy is needed to achieve the goal, which means the action plan to achieve the goal. After this, it will have to draft or establish rules that govern procedures/policies/norms or rules or procedures.
    • The final step in the career management process is to evaluate the career management plan to ensure that progress is being made or if there is a need for some changes later.

    Benefits of Career Management:

    The following benefits below are;

    1] Staffing List:

    Effective Career Management ensures the continuous supply of professional, technical and managerial talent to meet an organizational goal.

    2] Staffing from within:

    Most organizations prefer to promote employees from within the available positions due to many potential benefits. To recruit from within, it requires a strong career management program, which ensures effective performance in the effective new job of employees.

    3] Resolving employees problems:

    Effective career management can act as a measure of some employees’ problems. Employee business rates can reduce due to the sense of the existence of opportunity within the organization. It may be easy to go for recruits because the company develops its employees and provides better career opportunities.

    4] The satisfactory employee needs:

    The present generation of employees is very different from those of the previous generation who are in the set of their needs. Then higher levels of education have raised expectations of their career and many employees are directly responsible for providing better opportunities to achieve their career expectations.

    5] Advanced Motivation:

    As progress with career path is directly related to job performance, one employee can motivate and can perform at the top level to meet career goals.

    6] Employment Equity:

    Effective Career Management Demands Try to eliminate fair and equitable recruitment, selection and appointment and discrimination against publicity and career mobility. Such positive programs have formal provisions which help in increasing the career mobility of women and other minority groups, which emphasize job equity.

    Objectives of Career Management:

    Career management programs include a large number of these human resource management practices with the following objectives:

    1] Assisting employees to improve their performance:

    Career management programs try to involve employees in setting their goals and identifying their strengths and weaknesses. It helps with the identification and convenience of the training needs and opportunities of the employees. This is achieving primarily by building the process of reaction and discussion in the performance management system of the institutions.

    2] Explain the available career options:

    Through career management programs, employees are informing about career options available within the institute. It helps the employees with the recognition of the skills and other qualities required for current and future jobs.

    Most Career Management programs want to focus on the employees’ career plans at the institute, thereby increasing their commitment to the organization. In doing so, career paths are developing which indicates the mobility in the various directions in the Institute for the employees.

    3] Align the aspirations of employees with organizational objectives:

    Many organizations strive to help employees in their career plans through career management programs. Career management programs now want to improve the job matching with the right staff. Evaluating the skills and competencies of the employees can help them adjust to those positions which make them better suited.

    Through the application of practices such as transfer and rotation, the operational effectiveness of an institution can improve. As a result of career management programs, the need for external recruitment can also reduce as the employees with the necessary abilities have come to know through their career planning activities.

    From the perspective of the employer, the objective of your Career Management program should be to ensure the availability of capable and skilled employees within your organization.

    Elements of Career Management:

    The following three elements are common to most career management programs:

    1] Career Planning:

    Career planning is a deliberate process to be aware of the opportunities, obstacles, options, and goals related to careers and the identification of programming work, education and related development experiences, to achieve specificity, direction, time and Sequence can provide.

    The goal of becoming something in life. Career planning is also a process done by employees and their supervisors. The employee is responsible for self-assessment, identifies career interests and needs for development. As part of the self-assessment process, the employee analyzes his skills and weaknesses, along with his strengths and weaknesses.

    Career planning is also more effective when done by an individual and organization jointly. There is a stake in the organization’s successful career plan. Because of the continuous supply of adequate training people are required to do jobs at every level of the organization.

    2] Career Path:

    Based on the career expectations identified in the career planning process, potential career paths are mapping to employees. Career path sets a sequence of posts for which employees can promote, moved and rotated. However, it should note that each employee may have a crowd of career pathing options.

    The career path should establish an organization’s career development system. The existence of such career paths communicates employees with specific step-by-step objectives and identifies the potential role model in the organization. In establishing a career path, employees and their supervisors should be realistic in terms of their ability and time limits. In which career goals can achieve in career paths.

    3] Career Development:

    Career Development refers to a planned effort to connect the person’s career needs with the workforce requirements of the organization. It can see as a process to help in organizing a career in musicians with business needs and strategic direction of the organization. It is also important to note that, with the concept of alignment between the person and the organization, career development is a continuous process. One of the roles of the organization is to provide training and development opportunities to meet the needs of the movement with the career path.

    While these three elements are identifying as different practices, they complement each other during the career management process and inform. Also, to choose any career path, you can use the services of different career evaluation tests at different stages. Which are in line with the likes and dislikes, strengths and weaknesses. These tests are from those people who are small and short, providing complete details of minutes. Some tests have multiple intelligence between MBTY (Myers and Briggs Type Indicator), SDI (Strength Deployment List) and others.

    The job of career management is more on the personal self than the employer. Ensuring personal development in terms of skills, competencies, changes in attitude over time, things may need to take care of someone. There is a need to complete and evaluate short-term goals. There is a need to revise long-term career goals with changes in employment scenario and self; Organizations cannot or may not worry on a large scale or combine your priorities with careers and lives. Often counseling is helpful to evaluate the job and prospects and to establish the clarity of values because they make changes with time. Read this in the Hindi language: करियर प्रबंधन का अर्थ, परिभाषा, और उद्देश्य। 

    Meaning Definition and Objectives of Career Management

  • Meaning, Definition, and Importance of Career Development PDF

    Meaning, Definition, and Importance of Career Development PDF

    Importance of Career Development PDF with its Meaning, and Definition; The process of organizational career development is important for both employees and employers. There may many unexpected and unwanted changes, as well as results that can change the whole scenario. The concept of career development is a matter of growing concern for organizations; as, it corresponds to the needs of a business with the career goals of the employees. Preparing a career development plan can help employees make their jobs more efficient. In addition, these plans can be beneficial for employees; who want to move forward in a company or look for other jobs in the future. Do you study to learn: If Yes? Then read the lot. Let’s Study Meaning, Definition, and the Importance of Career Development PDF. This Also, read in the Hindi language: करियर विकास का अर्थ, परिभाषा, और महत्व।

    The concept of career development Discussing the topic – Meaning, Definition, Benefits, Importance, and Stages of Career Development PDF.

    Today, challenging organizations have developed new concerns regarding the development of their employee’s careers. He emphasized “Career” with consistent induction, training, and development with an accumulation of valuable experiences and qualifications in the labor market.

    Importance of Career Development PDF download; In such a situation, employees and employers should prepare to maintain the changing environment and work accordingly. To meet existing demands, employees are required to constantly upgrade their skills and competencies; while the organization should prepare with those employees who may be able to handle the pressure and the risk of fall prey to the changed scenario close; can do.

    Definition of career development:

    Career development defines as an organized, planned endeavor; which involves structured activities or processes, resulting in a mutual career conspiracy effort between the employees and the organization. It is an ongoing process by which individuals progress through a series of steps, each of which characterizes by a relatively unique set of issues, themes, and actions.

    They include two sets of activities: Career Planning and Career Management. Career planning defines the activities undertaken by a person; while being able to establish a realistic career plan to assess the skills and potential of employees with the help of consultants and other individuals,

    There are activities that help in developing a personal and make career plans. Career management focuses more on what the organization can do to take the necessary steps to achieve that plan and generally to promote employee career development.

    Since a large majority of workers turn their careers into medieval life; it becomes clear that career development programs require throughout the life cycle.

    Other major reasons for this concern are:

    • The growth and productivity of organizations depend on the effectiveness of the employee’s performance.
    • A change in social values where employees do not work as the most important thing in life; but, choose suitable businesses and careers for individuals.

    Although the business environment is facing negative changes such as economic downsizing and restructuring, resulting in the need for improving productivity as a result of less hierarchical conditions; it is increasing synergy with constantly changing technology.

    The organization, therefore, instead of recruiting a new person from the market, prefers to promote its already existing employee in a specific position as it is already aware of organizational culture and there is no need to train it. For this, there is a need to develop and prepare the employees’ carefully planned successor and to fill the top positions in the future.

    Purpose and Benefits of Career Development:

    Career development is a very important aspect of a person’s life, its importance on pdf download above link. Rewards and benefits are obtained only when a person can develop a career. Career development helps individuals to develop their capabilities and improve their performance. It is a challenge for organizations to respond to the development initiatives that individuals are engaged in and to make career investments to enjoy quicker returns in terms of career growth and progression.

    Various benefits of career development which are as follows:

    Reduces attrition of employees:

    A career development program helps to increase the level of satisfaction of the employees and therefore reduce the number of people who intend to leave the organization.

    Provides equal opportunity employment:

    There is the chance for equal opportunity employment when one considers the career development program since these programs identify each person for the merits. Highly effective people and the results that are shown by the individual are taken as a criterion for their development and not other criteria; which therefore demonstrate equal opportunity.

    Improves the use of the employees:

    Career development enables employees to learn better aspects of their work and improve their capabilities. It also helps them to manage their time efficiently and ensure that the use of employees increases over time.

    Improves the quality of the work-life of employees:

    Career Development helps employees learn better methods of working, work ethics and other important aspects of work.

    Improves the organization itself:

    Through a career development program, employees have increased knowledge of the various activities of the firm. Therefore the sharing of knowledge and work ethics tends to make the organization improve.

    Increases the skill of the employees:

    An employee’s skill improves if he/she goes through a career development program. These programs aim at increasing various facets of a worker’s life which makes the latter perform better at work.

    Importance of Career Development:

    Understanding the importance of career development is very necessary for both parties, it’s a pdf download above links. Business Environment Factors that can Bring Undesired Changes;

    Cost Reduction Strategies of the Organization:

    Cost-reduction strategies of the organizations are again very dangerous for those individuals; who are not prepared to move on to the next level. If organizations have to cut down their operating costs; the employment of those individuals is at stake; who are not employable or who have not performed up to the mark in the past. Employees continuously need to upgrade themselves and show their talent to remain in the organization for a long.

    Economic Downsizing:

    The biggest of all the factors that have badly affected the careers of millions of individuals is economic downsizing. The jobs are cut from the organizations and the fittest of all employees survive. If employees continuously learn new and better skills, chances are that economic conditions won’t hurt them that badly as compared to other individuals.

    IT Innovations:

    Continuous changes and up-gradation in technology are also some of the major factors that bring change. Some individuals can keep pace with the changing technology and are always ready to learn and adopt new IT applications; while some show immense resistance which is not acceptable to the organizations. Employees need to keep themselves updated and show the willingness to accept changes as and when they occur and mold themselves accordingly.

    De-layering:

    De-layering means reclassification of jobs. This is an organizational change initiative where a company decides to reclassify the jobs more broadly. However, old reporting lines do exist to maintain managerial control but some jobs may remove or cut down during the process. Again, those individuals have to leave the organization; who are not competent enough to be shifted to another job with a different nature.

    The business changes affect both organizations and employees. The need is to understand them and find a way to cope with them effectively.

    Stages of Career Development:

    The career stage approach is one way to look at career development. One way to characterize a person’s life or career is by identifying common experiences, challenges, or tasks most people go through as their life or career progress. As argued by psychologists like Freud and others, human nature such as personality, intelligence, and morality develop in a predictable common sequence closely tied to a person’s age.

    People grow through specific stages separated by transition periods. At each stage, a new and crucial activity and psychological adjustment may be completed. In this way, career stages can be and usually are based on chronological age. Careers also develop in stages. Again, unfolding career development with life stages reveals the commonalities of difficulties for all people when they experience difficulties in adjusting their first position, or face mid-career crisis.

    It also helps in understanding why both individuals and organizations predict likely crises and challenges and therefore plan ways to resolve or minimize them. As individuals have different career development needs at different stages in their careers; when an organization recruits an employee in any of the grades of its cadre for a fairly long tenure; the employer must take interest in and take constructive steps for building up the employee’s career from that point of time.

    Stage views of career development have their limitations. It applies to a typical individual. Since all individuals are unique, they may not have the same experiences. Therefore, career development stages differ from individual to individual due to the obvious difference in the perceived internal career.

    However, keeping in view of general requirements of people’s career development may group under the following four categories.

    Exploration:

    At this stage, induction training in the form of organizational work familiarization programs, technical or professional training, or on-the-job training at the institutions are imparted to the employees. Unfortunately, many organizations experience a high level of turnover at this trial and exploration stage.

    Employees in this stage need opportunities for self-exploration and experiment with a variety of job activities or assignments. This stage starts when a new employee joins an organization. This career exploration stage best describe as the “information gathering” phase. This is a kind of ‘budding’ stage for a new employee and considers as the formative phase of his/her career.

    Therefore, it is essential for an organization to sustain the behavioral as well as operational deficiencies of the new hire to help him to develop in the course of time. The organization’s responsibility at this stage is to ensure that, the employee’s concerns take care of. He/she is helped out to settle down and establish himself/herself.

    Establishment:

    This stage desires the employees to take the opportunities of higher responsibility and more challenging jobs for better use of special competencies. The employees strive hard for creativity and innovation by taking challenging job assignments. Organizations, at this stage, need to provide the required degree of autonomy to the employees; so that they can experience feelings of individual achievement and personal success.

    During this period, employees must Oriente in a manner that will create maximum learning opportunities and a favorable attitude towards the organization. It should also ensure that the assignments assigned to them are optimally challenging with a genuine test of their abilities and skill.

    The next phase is the establishment and the developmental stage. It also knows as the blooming’ stage or advancement stage. This involves growing and getting established in one’s career. In this stage, the individual concern with achievement, performance, and advancement.

    More things…

    This stage mark by high employee productivity and career growth, as the individual, motivates to proceed and succeed in the organization in his or her chosen occupation. Suitable training and developmental opportunities could provide to ensure an adequate and proper transition from technical work to management work particularly for those who possess all the management talent and want to occupy managerial positions.

    Usually, Management Development programs organize at this level to help those kinds of people. Some area-specialization input also imparts to enable them to update their specialist skills. Therefore, a successful career development process is important at the establishment stage; in order to retain more employees in the organization and to develop a sense of loyalty and commitment.

    Maintenance:

    This stage also views as a mid-career plateau in which very little new ground broke. This otherwise knows as the mid-career crisis. People at this stage, often make a major reassessment of their progress relative to their original career ambitions and goals. The individuals at this stage help out and provide some technical training to update; their skill sets in their respective fields.

    This is a mid-career stage for those employees, who strive hard to retain their established name and fame. The mid-career stage generally typifies and characterized by a sort of continuation of established patterns of work behavior. At this stage, the person seeks to maintain his or her established position in the organization.

    At this stage people are on a super time scale, holding senior management positions, involving high-level policy and programming assignments. The organization, at this stage, must help people to flourish to the maximum extent possible by providing them with a wider range of responsibilities and broader opportunities for better performance and to adjust with their changing role as their career shifts from the specialized to the generalized advisory role.

    More things…

    In order to avoid early stagnation and decline, the employees encouraged to develop and learn new job skills by renewing and updating their knowledge in the context of the changing environment. Only the stable and matured executives/managers from this point can progress and reach the higher career stage which knows as the “full bloom” stage.

    This career stage also reflects in a kind of spiritual attitude, dedicated to public service and a stronger inner urge to work for a larger cause than oneself. In this top-level stage of the policy-planning-advisory area, the organization must see that people’s career interests caterer for and self-actualization facilities provide.

    That encourages the employees to devote their full time, attention, energy to the organization. In this part of the career developmental strategy then Oriente towards policy making, program planning, and review and problem-solving. For which, the focus should on advance study and education for the enhancement of professionalized efficiency and total preparation for leadership.

    The decline is the Last stage:

    Retirement ritual management without destroying the employee’s sense of self-worth is the primary concern of the career development process at this stage. The retired employees can also provide new part-time roles both within and outside the parent organization so that people can use their knowledge, experience, and wisdom for the cause of society. This stage characterizes by lessening career importance and the employee’s plan for retirement and seek to develop a sense of identity outside the work environment.

    Employees at this stage get scared of the possible threat of reduced roles and responsibilities in the organization. Therefore, career development at this stage aims at helping the employees to get mentally prepared for retirement and to accept the reduced role and responsibilities so that they can accommodate themselves in their family and society after retirement. This Also, read in the Hindi language: करियर विकास का अर्थ, परिभाषा, और महत्व।

    Meaning Definition and Importance of Career Development
    Meaning, Definition, and Importance of Career Development.
  • Financial Accounting Importance, Nature, and Limitations

    Financial Accounting Importance, Nature, and Limitations

    Financial accounting Importance, Nature, and Limitations; It is a system that collects information, processes, and reports about changes in the performance, financial status, and financial status of an entity. A person’s ability to track the financial transactions of a person’s business, during which, he knows as financial accounting skills as a result of his operation. Do you study to learn: If Yes? Then read the lot. Let’s Study Financial Accounting Importance, Nature, and Limitations.

    Every Company Current year or the end of the year want to know the financial status of the business. Financial Accounting Importance, Nature, and Limitations.

    It is done by recording, summarizing, and presenting all such financial figures in the form of financial reports or statements using standardized guidelines. Such financial statements generally include balance sheets, income details, and cash flow details; which summarize a company’s performance over time. Financial accounting skills generally do not include the ability to report the value of a company but can provide enough information for the evaluation of others.

    Definition of Financial Accounting:

    Financial Accounting concerns with providing information to external users. It refers to the preparation of general-purpose reports for use by persons outside a business enterprise, such as shareholders (existing and potential), creditors, financial analysts, labor unions, government authori­ties, and the like. Financial accounting is oriented towards the preparation of financial statements which summarise the results of operations for selected periods of time and show the financial position of the business at particular dates.

    Every entity, whether for-profit or not-for-profit; aims at creating maximum value for its stakeholders. The goal of maximum value addition best achieves; when there is a mechanism to monitor the management and the board of directors. Financial accounting helps in such monitoring by providing relevant, reliable, and timely information to the stakeholders.

    Inputs to a financial accounting system include business transactions that are supported by source documents, such as invoices, board resolutions, management memos, etc. These inputs are processed using generally accepted accounting principles (GAAP). The processed information is reported through standardized financial statements.

    Importance of Financial Accounting:

    Financial accounting is integral to companies of all sizes because it helps in the following importance below are: They are three important points.

    1. Communication of information externally.
    2. Communicate information internally, and.
    3. Comparison through analysis.
    First Point:

    This point explains Communication on information externally. The statements and reports generated by financial accounting use to communicate information about the overall health and well-being of the company to external parties. Such external users may include suppliers, banks, and leasing companies, etc. who are not part of the company but require all this information to analyze the progress of the company and compare it with their expectations.

    Second Point:

    This point explains Communicate on information internally. A company’s finance team or its employees who are interested in stock-based compensation etc. constitute the internal users of the information generated by financial accounting practices. The reports generated with the help of financial accounting skills are helpful for this purpose as well.

    Last Point:

    This point explains Comparison through analysis. Since financial accounting requires the use of standardized guidelines, the financial statements generated by all companies are comparable, providing a standard method of analysis.

    Scope and Nature of Financial Accounting:

    The following points are important to understand the scope and nature of financial accounting:

    Contents:

    The end product of the financial accounting process is the financial statements that communicate useful information to decision-makers. The financial statements reflect a combination of recorded facts, accounting conventions, and personal judgments of the preparers. There are three primary financial statements for a profit-making entity in India, viz., the Income Statement (statement of revenues, expenses, and profit), and the Balance Sheet (like the statement of assets, liabilities, and owner’s equity) and cash flow statement. The accounting information generated by financial accounting is quantitative, formal, structured, numerical, and past-oriented material.

    Accounting System:

    The accounting system includes the various techniques and procedures used by the accountant (preparer) in measuring, describing, and communicating financial data to users. Journals, ledgers, and other accounting techniques used in processing financial accounting information depend upon the concept of the double-entry system. This technique includes generally accepted accounting princi­ples (GAAP). The standard of generally accepted accounting principles includes not only broad guidelines of general application but also detailed practices and procedures.

    Measurement Unit:

    Financial accounting primarily concerns with the measurement of economic resources and obligations and changes in them. Financial accounting measures in terms of monetary units of a society in which it operates. For example, the common denominator or yardstick used for accounting measurement is the rupee in India and the dollar in the U.S.A. The assumption is that the rupee or the dollar is a useful measuring unit.

    Users of Financial Accounting Information:

    Financial accounting information intends primarily to serve external users. Some users have a direct interest in the reported information. Examples of such users are owners, credi­tors, potential owners, suppliers, management, tax authorities, employees, customers. Some users need financial accounting information to help those who have a direct interest in a business enterprise.

    Examples of such users are financial analysts and advisers, stock exchanges, financial press and reporting agencies, trade associations, labor unions. These user groups having direct/indirect interests have different objectives and diverse informational needs. The emphasis in financial accounting has been on general-purpose information which, obviously, is not intended to satisfy any specialized needs of individual users or specific user groups.

    Users or Role in Financial Accounting:

    The most basic motives or objectives of financial accounting is the preparation of general-purpose financial statements; which are financial statements meant for use by stakeholders external to the entity; who do not have any other means of getting such information, i.e. people other than the management. These stakeholders include:

    Investors and Financial Analysts:

    Investors need the information to estimate the intrinsic value of the entity and to decide whether to buy, hold, or sell the entity’s shares. Equity research analysts use financial statements to conduct their research on earnings expectations and price targets.

    Working as Employee groups:

    Employees and their representative groups interest in information about the solvency and profitability of their employers to decide about their careers, assess their bargaining power and set a target wage for themselves.

    Lead as Lenders:

    Lender’s interest in the information enables them to determine whether their loans and the interest earned on them will pay when due.

    Suppliers and other trade creditors:

    Suppliers and other creditors interest in the information that enables them to determine whether amounts owing to them will pay when due and whether the demand from the company is going to increase, decrease, or stay constant.

    One of the Customers:

    Customers want to know whether their supplier is going to continue as an entity; especially when they have a long-term involvement with that supplier. For example, Apple interests in the long-term viability of Intel because Apple uses Intel processors in its computers and if Intel ceases operations at once; Apple will suffer difficulties in meeting its own demand and will lose revenue.

    His also Governments and their agencies:

    Governments and their agency’s interest in financial accounting information for a range of purposes. For example, the tax collecting authorities, such as IRS in the USA, interest in calculating the taxable income of the tax-paying entities and finding their tax payable. Antitrust authorities, such as the Federal Trade Commission, interest in finding out whether an entity engages in monopolization.

    The governments themselves interest in the efficient allocation of resources; and, they need financial accounting information of different sectors and industries to decide on federal and state budget allocation, etc. The bureaus of statistics are interested in calculating national income, employment, and other measures.

    Also Public:

    The public interests in an entity’s contribution to the communities in which it operates; its corporate social responsibility updates; its environmental track record, etc.

    Limitations of Financial Accounting:

    Financial accounting is significant for management as it helps them to direct and control the firm activities. It also helps business management in determining appropriate managerial policies in different areas, such as production, sales, administration, and finance.

    Financial accounting suffers from the following limitations which have been responsible for the emergence of cost and manage­ment accounting:

    • Financial accounting does not provide detailed cost information for different departments, processes, products, jobs in the production divisions. Management may need information about different products, sales territories; and, sales activities which are also not available in financial accounting.
    • Financial accounting does not set up a proper system of controlling materials and supplies. Undoubtedly, if material and supplies do not control in a manufacturing concern; they will lead to losses on account of misappropriation, misutilization, scrap, defectives, etc.
    • The recording and accounting for wages and labor are not done for different jobs, processes, products, departments. This creates problems in analyzing the costs associated with different activities.
    • It is difficult to know the behavior of costs in financial accounting as expenses not classify as direct; and, indirect and therefore cannot classify as controllable and uncontrol­lable. Cost management which is the most important objective of all business enterprises; cannot achieve with the aid of financial accounting alone.
    • Financial accounting does not possess an adequate system of standards to evaluate the per­formance of departments and employees working in departments. Standards need to develop for materials, labor, and overheads so that a firm can compare the work of workers, supervisors, and executives with what should have been done in an allotted period of time.
    Other limitations:
    • Financial accounting contains historical cost information that accumulates at the end of the accounting period. The historical cost is not reliable for predicting future earnings, solvency, or overall managerial effectiveness. Historical cost information is relevant but not adequate for all purposes.
    • Financial accounting does not provide information to analyze the losses due to various factors; such as idle plant and equipment, seasonal fluctuations in the volume of business, etc. It does not help management in taking important decisions about the expansion of business, dropping of a product, alternative methods of production, improvement in product, etc.
    • Also, Financial accounting does not provide the necessary cost data to determine the price of the product being manufactured or the service being rendered to the consumers.

    Despite the above limitations, financial accounting has utility and is an important and conceptually rich area. Because of growing business complexities and advances in knowledge of human behavior and decision processes; the scope and methods of financial accounting are chang­ing. Financial accounting theory and practice will probably broaden and improve considerably in the future.

    Financial Accounting Importance Nature and Limitations
    Financial Accounting Importance, Nature, and Limitations.
  • Marketing Management Meaning, Characteristics, and Objectives

    Marketing Management Meaning, Characteristics, and Objectives

    Meaning: Marketing management facilitates The activities and functions which are involved in the distribution of goods and services. Marketing Management Meaning, Characteristics, and Objectives. Their sales plan to a greater extent rest upon the requirements and motives of the consumers in the market. This objective, the organization has to pay heed to the right pricing, effective advertising and sales promotion, distribution and stimulating the consumers through the best services.

    You are one of a Seller or Buyer in Market, So let’s know Marketing Management of Meaning, Characteristics, and Objectives. With Meaning and Definition.

    What is Marketing Management? Marketing management signifies an important functional area of the business manager responsible for the flow of goods and services from the producers to the consumers. It is accountable for planning, organizing, directing, coordinating, motivating and controlling the marketing activities. The types of Product in Marketing Management! In effect, it is the demand management under customer-oriented marketing philosophy.

    Meaning of Marketing Management:

    Marketing management is the management of the crucial and creative task of delivering consumer satisfaction and thereby earning profits through consumer demand. It is the performance of managerial functions of planning, execution, coordination, and control in relation to the marketing functions of marketing research, product planning and development, pricing, advertising, selling and distribution with a view to satisfying the needs of the consumer, business and society. The above expressions bring home very clearly the very substance of marketing management as a matter of planning, implementing and controlling the marketing programmes.

    Marketing management is the marketing concept in action. It includes all activities which are necessary to determine and satisfy the needs of consumers. To be very simple, marketing management sets marketing objectives, develops marketing plans, organizes marketing functions, puts marketing plans and strategies in action and monitors the marketing programmes in the final analysis. Effective marketing management requires the ability and skill of the highest order.

    It warrants close appreciation of the consumer and an understanding of forces of change which are at work in the environment and which have the deep-rooted impact on consumer buying habits and motives. It calls for fertile imagination and creative skill in planning to meet the changing conditions of the marketplace; it also requires skills of coordinating and controlling the wide-spread and complex activities of a dynamic organization. The prime purpose of marketing management is to know the consumer so well that the firm is able to offer him or her products and services to which the consumer remains loyal and the new consumers keep on coming at increasing level.

    Definition of Marketing Management:

    According to Philip Kotler, “Marketing management is the analysis, planning, implementation and control of programmes designed to bring about desired exchanges with target markets for the purpose of achieving organizational objectives. It relies heavily on designing the organizations offering in terms of the target markets needs and desires and using effective pricing, communication, and distribution to inform, motivate and service the market.”

    Marketing management is concerned with the chalking out of a definite programme, after careful analysis and forecasting of the market situations and the ultimate execution of these plans to achieve the objectives of the organization. Marketing management is “The art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value” by Kotler and Keller.

    Features or Characteristics of Marketing Management:

    Some of the main points characteristics of marketing management are as follows:

    Customer-Orientation:

    All business activities should be directed to create and satisfy the customer. Emphasis on the needs and wants of consumers keeps the business on the right track. All marketing decisions should be made on the basis of their impact on the customer. The consumer becomes the guise of business. Also, learn Explaining Product Development in Production Management.

    Marketing Research:

    Under the marketing concept; knowledge and understanding of customer’s needs want and desires is very vital. Therefore, a regular and systematic marketing research programme is required to keep abreast of the market. In addition, innovation and creativity are necessary to match the products of requirements of customers.

    Marketing research is “the process or set of processes that link the producers, customers, and end users to the marketer through information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.” by Wikipedia.

    Up-to-date and adequate knowledge must be available to answer the following questions:

    • What business are we really in?
    • Who are our customers?
    • What do the customers want?
    • How should we distribute our products?
    • How can we communicate most effectively with our customers?’
    Marketing Planning:

    The marketing concept calls for a goal-oriented approach to marketing. The overall objectives of the firm should be the earning of profits through the satisfaction of customers. “A marketing plan may be part of an overall business plan. Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, without a sound strategic foundation, it is of little use to a business” by Wikipedia. On the basis of this goal, the objectives and policies of marketing and other departments should be defined precisely. Marketing planning helps to inject the philosophy of consumer-orientation into the total business systems and serves as a guide to the organization’s efforts.

    Integrated Marketing:

    Once the organizational and departmental goals are formulated, it becomes necessary to harmonize the organizational goals with the goals of the individuals working in the organization. The activities and operation of various organizational units should be properly coordinated to achieve the defined objectives. The marketing department should develop the marketing mix which is most appropriate for accomplishing the desired goals through the satisfaction of customers.

    Customer Satisfaction:

    “Customer satisfaction is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation” by Wikipedia. The aim should be to maximize profit over the long run through the satisfaction of customers wants.

    Aim or Objectives of Marketing Management:

    In the light of this statement, we can highlight the aim’s of marketing management as follows:

    • Creation of Demand: The marketing management’s first objective is to create demand through various means. A conscious attempt is made to find out the preferences and tastes of the consumers. Goods and services are produced to satisfy the needs of the customers. Demand is also created by informing the customers about the utility of various goods and services.
    • Customer Satisfaction: The marketing manager must study the demands of customers before offering them any goods or services. Selling the goods or services is not that important as the satisfaction of the customers’ needs. Modern marketing is customer- oriented. It begins and ends with the customer.
    • Market Share: Every business aims at increasing its market share, i.e., the ratio of its sales to the total sales in the economy. For instance, both Pepsi and Coke compete with each other to increase their market share. For this, they have adopted innovative advertising, innovative packaging, sales promotion activities, etc.
    • Generation of Profits: The marketing department is the only department which generates revenue for the business. Sufficient profits must be earned as a result of the sale of want-satisfying products. If the firm is not earning profits, it will not be able to survive in the market. Moreover, profits are also needed for the growth and diversification of the firm.
    • Creation of Goodwill and Public Image: To build up the public image of a firm over a period is another objective of marketing. The marketing department provides quality products to customers at reasonable prices and thus creates its impact on the customers.
    • Creating Customers: A business firm is established to sell a product or service to customers. Therefore, the customer is the foundation of a business. It is the customer who provides revenue to business and determines what an enterprise will sell. Creating customers means exploring and identifying the needs and requirements of customers. If a firm is to go and stay in business, it must create new customers. It should analyze and understand their wants.
    • Satisfying Customers Needs: Creating customer is not enough. Business should develop and distribute products and services which meet the requirements of customers to their satisfaction. If customers are not satisfied, the business will not be able to generate revenues to meet its costs and to earn a reasonable return on its capital. Satisfying customers does not simply mean matching products with customers’ needs. It also requires the regular supply of goods and services of reasonable quality at fair prices.

    The marketing manager attempts to raise the goodwill of the business by initiating image-building activities such a sales promotion, publicity and advertisement, high quality, reasonable price, convenient distribution outlets, etc. The objectives of marketing management have been obtained from the overall objectives of the business. The overall aim of the business is to create, develop and serve society with other things. Marketing management can contribute to the achievement of these objectives by developing and distributing those objectives and services that meet the needs of the customers and benefit the business enterprise.

    Summary: Marketing Management Meaning, Characteristics, and Objectives.

    What is Marketing Management? Explains.

    1. Meaning of Marketing Management.

    2. Definition of Marketing Management.

    3. Features or Characteristics of Marketing Management, and:

    • Customer-Orientation.
    • Marketing Research.
    • Marketing Planning.
    • Integrated Marketing, and.
    • Customer Satisfaction.

    4. Objectives of Marketing Management:

    • Creation of Demand.
    • Customer Satisfaction.
    • Market Share.
    • Generation of Profits.
    • Creation of Goodwill and Public Image.
    • Creating Customers, and.
    • Satisfying Customers Needs.

    Marketing Management Meaning Characteristics and Objectives

  • Management Accounting of Functions, Advantages, and Limitations

    Management Accounting of Functions, Advantages, and Limitations

    The meaning of management accounting is Presentation of accounting information is to assist in the management of management accounting policy creation and to help in the day-to-day operation of an undertaking. Management Accounting of Functions, Advantages, and Limitations. Thus, it is related to the use of aggregated accounting data with the help of financial accounting and cost accounting with the objective of planning, planning, controlling and decision making by the management. Management accounting link management with accounting is the subject of management accounting as any accounting information required to make managerial decisions. In the Hindi language: प्रबंधन लेखांकन का कार्य, लाभ, और सीमाएं।

    Better Explanation of Management Accounting of Functions, Advantages, and Limitations. With Meaning and Definition.

    Management Accountancy is a composite mix together in all aspects of complete, financial accounting, cost accountancy, and financial management. This crystal becomes clear that management presents accounting management accounting information in the form of processed data collected from financial accounting, cost accounting so that it can be very useful in the management part to make appropriate decisions in management, Scientific methods, when necessary.

    Meaning of Management Accounting:

    Management Accounting is the presentation of accounting information in order to formulate the policies to be adopted by the management and assist its day-to-day activities. In other words, it helps the management to perform all its functions including planning, organizing, staffing, directing and controlling.

    Definitions of Management Accounting:

    In the words of J. Batty:

    “Management Accountancy is the term used to describe the accounting methods, systems, and techniques which, with special knowledge and ability, assist management in its task of maximizing profit or minimizing losses.”

    According to R. N. Anthony:

    “Management Accounting is concerned with accounting information that is useful to management.”

    According to ICWA of India:

    “Management accounting is a system of collection and presentation of relevant economic information relating to an enterprise for planning, controlling and decision-making.”

    According to CIMA London:

    “Management accounting is the provision of information required by management for such purposes as the formulation of policies, planning and controlling the activities of the enterprise, decision-making on the alternative courses of action, disclosure to those external to the entity (shareholders and others), disclosure to employees and safeguarding of assets.”

    According to the American Accounting Association:

    Management Accounting is “The application of appropriate techniques and concepts in processing historical and projected economic data of an entity to assist management in establishing plans for reasonable economic objectives and in the making of rational decisions with a view towards these objectives”.

    From the above it is clear that management accounting uses all techniques of financial accounting, cost accounting and statistics to collect and process data for making it available to management so that it can take decisions in a scientific manner.

    The Objects or Functions of Management Accounting:

    The primary object of Management Accounting is to present the accounting information to the management. The Following objects are:

    Planning:

    Management Accounting assists the management in planning as well as to formulate policies by making forecasts about the production, the selling, the inflow and outflow of cash, etc., i.e., in planning a very wide range of activities of the business. Not only that, but it may also forecast how much may be needed for alternative courses of action or the expected rate of return therefrom and, at the same time, decide upon the program of activities to be undertaken.

    Organizing:

    By preparing budgets and ascertaining specific cost center, it delivers the resources to each center and delegates the respective responsibilities to ensure their proper utilization. As a result, an inter-relationship grows among different parts of the enterprise.

    Motivating:

    By setting goals, planning the best and economical courses of action and also by measuring the performances of the employees, it tries to increase their efficiency and, ultimately, motivate the organization as a whole.

    Coordinate:

    It helps the management in coordinating the activities of the enterprise, firstly, by preparing the functional budgets, then coordinating the whole activity by integrating all functional budgets into one which goes by the name of “Master Budget”. In this way, it helps the management by coordinating the different parts of the enterprise. Besides, overall coordination is not at all possible without “Budgetary Control”.

    Control:

    The actual work done can be compared with ‘Standards’ to enable the management to control the performances effectively.

    Communicate:

    It helps the management in communicating the financial information about the enterprise. For taking decisions as well as for evaluating business performances, management needs information. Now, this information is available with the help of reports and statements which form an integral part of Management Accounting.

    Interpret Financial Information:

    It is not possible for all concerned to understand clearly the different treatments of accounting until and unless the users have acquired a piece of sufficient knowledge about the subject since accounting is a highly technical subject.

    And, for the same reason, management may not understand the implications of the accounting information in its raw form. But this problem does not arise in the case of Management Accounting as it presents the required information in an intelligible and non-technical way. This leads the management to interpret financial data, evaluate alternative courses of action and to take correct decisions.

    Miscellaneous:

    • While evaluating the efficiency and effectiveness of different policies.
    • Locating uneconomic as well as the inefficient place of business activities, and.
    • Solving business problems, e.g., to expand the existing business unit or not, etc.

    Advanced Advantages of Management Accounting:

    Management accounting has various advantages. Through an effective management accounting system, it is possible to enhance the overall performance of the company. Let us have a look at the advantages of management accounting.

    Advanced technique and features:

    The reasons because of which the management system seems reliable are the special tools and technique. To form an accurate and valid report special techniques like budget controlling, marginal costing, control accounting, etc are used. Use of the technique may differ according to the issue at hand. However, this technique makes it easier to make decisions in favor of the company.

    Cost transparency:

    In the corporate world, the majority of the costs come from the Information Technology (IT). The work of management accounting in the firm is to work with the IT department closely. This action ensures budget actions and provides cost transparency to the company.

    Flexibility and freedom:

    Management accounting systems of a flexible nature. These reports do not require to be made yearly, monthly, or weekly. Therefore, the accountant gets enough time to prepare a perfect report.

    Marginal costing:

    Marginal costing is possible with the aid of the management accountant. It fixes the selling price of the products created in the organization. Further, it also suggests several ways to use scarce materials and resources. It also recommends actions based on a fixed cost, contribution, and other extras.

    The efficiency of the company:

    Companies opt for Management accounting as it increases the efficiency of the company in performing operations. It contributes to striving for better performance by evaluating and comparing. Management accounting makes it easier to achieve various results. This indirectly motivates employees to strive for better performance. As a result, they receive rewards in the form of promotions. Thus, management accounting indirectly increases the efficiency of the company as a whole.

    The bar of Profitability:

    Management accounting includes budgetary control and capital budgeting. The use of this method makes it easier for the company to cut short the extra expenditure for performing vital operations. This indirectly increases the bars of profits for the company, as the company is able to reduce its pricing on the products.

    Simplifies the decision making in Financial Statements:

    Managerial decisions and other activities of management require a simplified report of the financial statement of the company. For this action, the management accountant creates a detailed technical report with simpler interpretations. Here, he represents the key facts of the financial statements. This enables the managing officers to take up appropriate decisions for the betterment of the company.

    Enables the fluctuation of business monetary fund:

    One of the essential factors in business is the monetary fund. Management accounting enables control over the fluctuation of this monetary fund. Management accounting studies the flow of the funds in detail. Moreover, it helps in maintaining the emergency fund in case of any urgency. Further, it also helps in eliminating any source within the company that misuses the fund. After all, emergency preparation should always be kept aside before setting up any business.

    Assist in goal completion:

    The objective of the report presented by the management accountant is to assist in achieving a long-term goal. It becomes possible to achieve the goal due to the detailed information of the management accountant, which highlights the strong and weak points of the company. In addition, this information helps to identify the weakness and takes measures to overcome them.

    Future prediction from the past result:

    Every new system that evolves for the corporate world has a single motive. It is to attain success in the competitive market. With similar intent, management accounting system also strives for betterment in performance. Thus, with the help of given data of the past (of the company), it provides a chance to prepare for better future results.

    Although management accounting does not promise perfect decisions, they do increase the chances of taking effective and efficient decisions.

    Key Advantages of Management Accounting:

    The following advantages maybe derive from Management Accounting:

    • The business activities are managing better by the application of both budgeting and planning.
    • No doubt it helps to increase the efficiency of the business.
    • Measures the actual performance in comparison with the budgets.
    • Also helps to improve the relationship between management and labor.
    • It helps the management to chalk-out future plans of action on the basis of past results.
    • Helps the management in such a way that the latter can maximize the rate of return on capital employed.

    Advanced Limitations of Management Accounting:

    The origin of management accounting can trace to overcome the limitations of financial accounting and cost accounting. Financial accounting is very useful to the different categories of persons but it suffers from the following limitations:

    Historical Nature:

    Financial accounting is of historical nature. It does not provide the necessary information to the management for planning, control, and decision-making. It does not tell how to increase the profit and maximize the return on the capital employed.

    Technical Subject:

    Financial accounting is highly technical in nature. Financial accounts can be prepared and interpreted only by those persons who possess adequate knowledge of accounting concepts and conventions and are well conversant to the practice of accounting.

    Recording of Actual Cost:

    In financial accounting assets and properties are recorded at their cost. No effect of changes in their value is recorded in the books after its acquisition. Thus, it has nothing to do with their realizable or replaceable value.

    Incomplete Knowledge of Costs:

    In financial accounting data relating to cost is not available according to different products or jobs or processes in order to judge the profitability of each. Information regarding wastages and losses is also not available from the financial accounts. It is also difficult to fix the prices of the products without the availability of a detailed analysis of costs which is not available in financial accounts.

    No-Provision for Cost Control:

    Costs cannot control through financial accounting as there is no provision for corrective action because of expenses being record after their incurrence. No technique to check the reasonableness of any expenditure or no system for fixing definite responsibility on any authority for wastage or excessive expenditure is available in financial accounting.

    No-Evaluation of Business Policies and Plans:

    There is no device in financial accounting by which the actual progress can measure against the targets in order to evaluate the business policies and plans, to know the reasons for deviations and how to correct them if need be.

    Not Helpful in Decision-Making:

    As the data available is of historical nature, financial accounting is not of much help to the management in selecting a profitable alternative. There are many situations where management is requiring to take decisions but the information provided by financial accounting is not adequate.

    Though cost accounting came into existence to remove the limitations of financial accounting its scope as compared to management accounting is limited as it deals primarily with the cost data. In actual practice, cost accountants are doing the jobs of management accountants. Further, most of the techniques of management accounting are also being used by the cost accountants.

    That is why; management accounting is treating as the extension of cost accounting. But for our purpose of the study we treat the management accounting more broad as compared to cost accounting as management accounting, includes many more aspects of the study besides the cost accounting. Thus, the science of accounting is not in a finished state. It is in the process of evolution. The role of accounting has changed after the Second World War.

    Now, it is not a mere recording of business transactions in the books of original entry, then classifying them into the ledger and finally summarizing them by preparing the profit and loss account and balance sheet as is done in financial accounting or calculation and control of cost as is done in cost accounting.

    Rather accounting helps in forecasting, planning and controlling the business events and taking managerial decisions. Keeping this in view a new branch of accounting known as Management Accounting has been developing to cope with the limitations of financial accounting and cost accounting. In the Hindi language: प्रबंधन लेखांकन का कार्य, लाभ, और सीमाएं।

    Management Accounting of Functions Advantages and Limitations
    Management Accounting of Functions, Advantages, and Limitations. Image Credit from #Pixabay.

  • How to discuss the Characteristics of a Project?

    How to discuss the Characteristics of a Project?

    The project has been defined by Project Management Institute (USA) as “Any undertak­ing with a defined objective by which completion is identified. In practice, most projects depend on finite or limited resources by which objectives are to be accomplished.” —Project Management Body of Knowledge (PMBOK). How to discuss the Characteristics of a Project? A project is typically for a customer. The project is temporary in nature. It typically has a defined start and a defined end-point.

    The project will have a unique set of requirements that need to be delivered within the boundaries of this project. A project is defined as “A non-routine, non-repetitive one-off undertaking normally with discrete time, financial and technical performance goals.” The definition is descriptive and, because of the endless variety of projects, most of the definitions are of this nature.

    The Department of Project Management in the Business, How to discuss the Characteristics of a Project?

    Characteristics of a Project:

    Following Project characteristics include below:

    • The project has an owner, who, in the private sector, can be an individual or a company etc., in the public sector, a government undertaking or a joint sector organization, represent­ing a partnership between public and private sector.
    • The project has a set objective to achieve within a distinct time, cost and technical performance.
    • The project is planned, managed and controlled by an assigned team the project team planted within the owner’s organization to achieve the objectives as per specifications.
    • The project, in general, is an outcome in response to environments economies and opportunities. As an example, we find that considering the changing pattern of modern living the domestic appliances small e.g. grinders, mixers etc., and large, e.g. refrigerators, washing machines etc. are on ever-increasing demand. This generates responses to avail opportunity to produce such appliances.
    • The project is an undertaking involving future activities for completion of the project within estimates and, «s such, involves complex budgeting procedure with a mission.
    • Implementation of the project involves a coordination of works/supervisions by project team/manager.
    • The project involves activities to be carried out in the future. As such, it has some inherent risk and, in reality, the process of implementation may necessitate certain changes in the plan subject to limitations and concurrence of the project owner.
    • The project involves high-skilled forecasting with the sound basis for such forecasting.
    • Projects have a start and an end a characteristic of a life cycle. The organization of project changes as it passes through this cycle the activities starting from—conception stage, mounting up to the peak during implementation and, then, back to zero level on completion and delivery of the project.

    Some attributes that characterize projects

    Importance of a project:

    The most crucial attribute of a project is that it must be important enough in the eyes of senior management to justify setting up a special organizational unit outside the routine structure of the organization. If the rest of the organization senses, or even suspects, that it is not really that important, the project is generally doomed to fail. The symptoms of lack of importance are numerous and subtle: no mention of it by top management, assigning the project to someone of low stature or rank, adding the project to the responsibilities of someone who is already too overworked, failing to monitor its progress, failing to see to its resource needs, and so on.

    Performance of a project:

    A project is usually a one-time activity with a well-defi ned set of desired end results. (We discuss poorly defi ned, or “quasi-” projects a bit later.) It can be divided into subtasks that must be accomplished in order to achieve the project goals. The project is complex enough that the subtasks require careful coordination and control in terms of timing, precedence, cost, and performance. Often, the project itself must be coordinated with other projects being carried out by the same parent organization.

    Life Cycle with a Finite Due Date of a project:

    Like organic entities, projects have life cycles. From a slow beginning they progress to a buildup of size, then peak, begin a decline, and finally must be terminated by some due date. (Also like organic entities, they often resist termination.) Some projects end by being phased into the normal, ongoing operations of the parent organization. The life cycle is discussed, where an important exception to the usual description of the growth curve is mentioned. There are several different ways in which to view project life cycles. These will be discussed in more detail later.

    Interdependencies of a project:

    Projects often interact with other projects being carried out simultaneously by their parent organization. Typically, these interactions take the form of competition for scarce resources between projects, and much of Chapter 9 is devoted to dealing with these issues. While such interproject interactions are common, projects always interact with the parent organization’s standard, ongoing operations.

    Although the functional departments of an organization (marketing, fi nance, manufacturing, and the like) interact with one another in regular, patterned ways, the patterns of interaction between projects and these departments tend to be changeable. Marketing may be involved at the beginning and end of a project, but not in the middle. Manufacturing may have major involvement throughout. Finance is often involved at the beginning and accounting (the controller) at the end, as well as at periodic reporting times. The PM must keep all these interactions clear and maintain the appropriate interrelationships with all external groups.

    The uniqueness of a project:

    Though the desired end results may have been achieved elsewhere, they are at least unique to this organization. Moreover, every project has some elements that are unique. No two construction or R & D projects are precisely alike. Though it is clear that construction projects are usually more routine than R & D projects, some degree of customization is a characteristic of projects.

    In addition to the presence of risk, as noted earlier, this characteristic means that projects, by their nature, cannot be completely reduced to routine. The PM’s importance is emphasized because, as a devotee of management by exception, the PM will find there are a great many exceptions to manage by.

    Resources of a project:

    Projects have limited budgets, both for personal as well as other resources. Often the budget is implied rather than detailed, particularly concerning personnel, but it is strictly limited. The attempt to obtain additional resources (or any resources) leads to the next attribute—conflict.

    Conflict of a project:

    More than most managers, the PM lives in a world characterized by conflict. Projects compete with functional departments for resources and personnel. More serious, with the growing proliferation of projects, is the project-versus-project conflict for resources within multi-project organizations. The members of the project team are in almost constant conflict for the project’s resources and for leadership roles in solving project problems.

    The PM must be an expert in conflict resolution, but we will see later that there are helpful types of conflict. The PM must recognize the difference. The four parties-at-interest or “stakeholders” (client, parent organization, project team, and the public) in any project even define success and failure in different ways. The client wants changes, and the parent organization wants profi ts, which may be reduced if those changes are made. Individuals working on projects are often responsible for two bosses at the same time; these bosses may have different priorities and objectives. Project management is no place for the timid.

    Nonprojects and Quasi-Projects of a project:

    If the characteristics listed above define a project, it is appropriate to ask if there are non-projects. There are. The use of a manufacturing line to produce a flow of standard products is a non-project. The production of weekly employment reports, the preparation of school lunches, the delivery of mail, the flight of Delta-1288 from Dallas to Dulles, checking your e-mail, all are non-projects. While one might argue that each of these activities is, to some degree, unique, it is not their uniqueness that characterizes them.

    They are all routine. They are tasks that are performed over and over again. This is not true of projects. Each project is a one-time event. Even the construction of a section of interstate highway is a project. No two miles are alike and constructing them demands constant adaptation to the differences in terrain and substructure of the earth on which the roadbed is to be laid. Projects cannot be managed adequately by the managerial routines used for routine work.

    In addition to projects and non-projects, there are also quasi-projects: “Bill, would you look into this?” “Judy, we need to finish this by Friday’s meeting.” “Can you find out about this before we meet with the customer?” Most people would consider that they have just been assigned a project, depending on who “we” and “you’’ is supposed to include. Yet there may be no specific task identified, no specific budget given, and no specific deadline defined. Are they still project, and if so, can project management methods be used to manage them? Certainly!

    The performance, schedule, and budget have been implied rather than carefully delineated by the words “this,” “meet,” and “we” (meaning “you”) or “you” (which may mean a group or team). In such cases, it is best to try to quickly nail down the performance, schedule, and budget as precisely as possible, but without antagonizing the manager who assigned the project. You may need to ask for additional help or other resources if the work is needed soon—is it needed soon? How accurate/thorough/detailed does it need to be? And other such questions.

    One common quasi-project in the information systems area is where the project includes the discovery of the scope or requirements of the task itself (and possibly also the budget and deadline). How can you plan a project when you don’t know the performance requirements? In this case, the project is, in fact, determining the performance requirements (and possibly the budget and deadline also).

    If the entire set of work (including the discovery) has been assigned to you as a project, then the best approach is to set this determination as the first “milestone” in the project, at which point the resources, budget, deadline, capabilities, personnel, and any other matters will be reviewed to determine if they are sufficient to the new project requirements. Alternatively, the customer may be willing to pay for the project on a “cost-plus” basis and call a halt to the effort when the benefits no longer justify the cost.

    Characteristics of Project in Project Management

    Following are some of the important characteristics of the project.

    • The project is temporary with certain starting & ending date.
    • The opportunities and teams of the project are also for the temporary duration.
    • Projects are ended when the goals are accomplished or when the goals are not achieved.
    • Often projects continue for many years but still, their duration is finite.
    • Multiple resources are involved in the projects along with the close coordination.
    • Interdependent activities are involved in the project.
    • A unique product, service or result is developed at the end of the project. There is also some extent of customization in the project.
    • Complex activities are included the projects which need repetitive acts and are not simple.
    • There is also some sort of connection in the activities of the project. Some sequence or order is also required in the activities. The output of certain activity becomes the input of another activity.
    • There is the element of conflict in the project management. For resources & personnel, the management should compete with the functional departments.
    • Permanent conflict is associated with resources of the project and leadership roles which are important in solving the problems of the project.
    • Clients desire changes in every project and the parent organization desires to maximize its profits.
    • There is the possibility of two bosses in the project at the single time, each with different objectives and priorities.

    How to discuss the Characteristics of a Project
    Image Credit from #Pixabay.