Master Quick Recall — Complete Revision Sheet

Last-mile revision condensing all 92 topics of UGC NET-JRF Commerce Paper 2 into one document. Use this in the final 48 hours before the exam — each chapter’s Quick Recall callouts pulled together in syllabus order.

Chapter 1 — Business Environment and International Business

1. Concepts and elements of business environment: Economic environment — Economic systems, Economic policies (Monetary and fiscal policies); Political environment — Role of government in business; Legal environment — Consumer Protection Act, FEMA; Socio-cultural factors and their influence on business; Corporate Social Responsibility (CSR)

Topic 1 Quick Recall

Concept. Business environment = aggregate of external forces with direct/indirect bearing — Cherunilam; holistic, dynamic, interactive, largely uncontrollable.
Layers. Internal (controllable) · Micro/Task (Kotler’s six actors) · Macro (PESTEL = Political-Economic-Socio-Tech-Environmental-Legal).
Tools. SWOT, PESTEL, Porter’s Five Forces, ETOP, QUEST, Scenario planning. Glueck’s process: Scan → Monitor → Forecast → Assess (SMFA).
Economic system. Capitalism (market) · Socialism (command) · Mixed (India, post-1991 LPG) · Communism. India is constitutionally socialist (Preamble, 42nd Amend.) but economically mixed.
Monetary policy (RBI). Repo (policy rate), Reverse Repo (now SDF), MSF, Bank Rate, CRR, SLR, OMO, LAF. MPC = 6 members, 3 RBI + 3 external. CPI 4 % ± 2 % (Finance Act 2016).
Qualitative monetary tools. Margin requirements, moral suasion, credit rationing, direct action, consumer-credit regulation, prior approval.
Fiscal policy. Union Budget (1 Feb). FRBM 2003 — fiscal deficit target 3 % of GDP. Primary deficit = Fiscal deficit − Interest payments.
Government’s seven roles. Regulator · Promoter · Entrepreneur · Planner · Custodian · Employer · Re-distributor.
Constitutional anchors. Art. 19(1)(g) — right to trade; Art. 301 — free intra-country commerce; Right to property moved from FR to Art. 300A (44th Amend. 1978).
CPA 2019 (effective 20 July 2020). Six rights — SICHRE. Three-tier: District ≤ ₹1 crore · State ₹1–10 crore · National > ₹10 crore. CCPA new regulator. Endorser personally liable (Sec. 21).
FEMA 1999 replaced FERA 1973. Offences: criminal → civil. Burden of proof: accused → enforcement. Current account convertibility full (1994); capital account gradual (Tarapore Committees 1997, 2006).
PMLA 2002 ≠ FEMA. Money laundering = criminal; FEMA = civil. Distinct.
Socio-cultural. Hofstede’s six dimensions: PDI, IDV, MAS, UAI, LTO, IVR. India: high PDI, high LTO, restrained.
CSR. Carroll’s pyramid (1991): Economic → Legal → Ethical → Philanthropic. Elkington (1997) Triple Bottom Line — People, Planet, Profit.
Section 135 Companies Act 2013. India is first country to legislate CSR. 2 % of preceding-3-years’ average net profit. Thresholds: NW ≥ ₹500 cr OR TO ≥ ₹1,000 cr OR NP ≥ ₹5 cr. Schedule VII lists eligible activities.
BRSR under SEBI — top 1,000 listed firms; BRSR Core assured for top 150 (expanding).

2. Scope and importance of international business; Globalization and its drivers; Modes of entry into international busines

Topic 2 Quick Recall

International business = trade and investment that crosses national borders.
Three defining differences from domestic business: multiple currencies, multiple legal systems, restricted factor mobility.
Six components in scope: merchandise, services, FDI, FPI, licensing/franchising, management/turnkey contracts.
Visible trade = goods; Invisible trade = services.
Globalization (Theodore Levitt 1983) — four dimensions: markets, production, investment, technology.
Drivers: falling barriers (GATT/WTO, RTAs, capital-account liberalisation), technology (containerisation 1956, jet travel, internet, SWIFT), converging tastes, emerging-market consumers, MNCs, alliances.
India globalised through LPG 1991 — trade/GDP rose from 15 % → 45 %; FDI from < USD 100 m → > USD 70 bn.
Six entry modes (low → high commitment): Export → Licensing → Franchising → Contract manufacturing → Joint venture → Wholly-Owned Subsidiary.
WOS: Greenfield (new build, Hyundai Sriperumbudur) vs Brownfield/Acquisition (Walmart-Flipkart, Tata-Corus).
Uppsala model (Johanson-Vahlne 1977) — gradual, experiential, psychic distance.
Perlmutter’s EPRG (1969): Ethnocentric (home) → Polycentric (host) → Regiocentric (region) → Geocentric (world).
Reasons to go international: profit, growth, saturation, government incentives, product-cycle extension, prestige, R&D amortisation, risk diversification, resource access.
Globalization drawbacks: job displacement, inequality, cultural homogenisation, environmental cost, pandemic vulnerability, race to the bottom, loss of policy autonomy.

3. Theories of international trade; Government intervention in international trade; Tariff and non-tariff barriers; India’s

Topic 3 Quick Recall

Mercantilism — wealth = bullion; zero-sum; demolished by Hume’s price-specie flow.
Smith (1776) Absolute Advantage — specialise where absolutely more productive.
Ricardo (1817) Comparative Advantage — specialise where opportunity cost is lower; trade pays even if one country is better at everything.
Haberler (1936) Opportunity Cost — Ricardo without labour theory of value.
Heckscher-Ohlin (1919/1933) — export the good that uses the abundant factor intensively.
Stolper-Samuelson, Factor Price Equalisation — H-O corollaries.
Leontief Paradox (1953) — US exports were labour-intensive, against H-O prediction.
Linder (1961) — similar-income countries trade most (intra-industry).
Vernon (1966) IPLC — production migrates innovator → other advanced → developing.
Krugman (1979) New Trade Theory — economies of scale + product differentiation; case for strategic trade policy.
Porter (1990) Diamond — Factor, Demand, Related industries, Firm strategy/rivalry + Government, Chance.
Tariffs: revenue/protective; ad valorem/specific/compound; anti-dumping, CVD, safeguard.
NTBs: quotas, VERs, TRQs, subsidies, local-content, customs procedures, technical / SPS standards, government procurement, currency controls.
Infant industry — Friedrich List (1841).
India: Foreign Trade (Development and Regulation) Act 1992; DGFT announces FTP; FTP 2023 — RoDTEP, EPCG, AAS, SEZ Act 2005, EOU, PLI (since 2020), Districts as Export Hubs.
India in FTAs: ASEAN, Japan, Korea, UAE (2022), Australia (2022), EFTA (2024). Opted out of RCEP (2019).

4. Foreign direct investment (FDI) and Foreign portfolio investment (FPI); Types of FDI, Costs and benefits of FDI to home

Topic 4 Quick Recall

FDI = lasting interest + management control; IMF threshold ≥ 10 % voting equity. FPI = pure financial return; no control; < 10 %.
Forms of FDI: Greenfield, Brownfield, Cross-border M&A, Joint venture, Reinvested earnings; Horizontal / Vertical / Conglomerate.
Routes in India: Automatic (no prior approval) vs Government (prior approval). Press Note 3 of 2020 — land-border countries → Government route.
Prohibited FDI: lottery, gambling, atomic energy, chit funds, Nidhi, tobacco, real-estate trading, railways (with exceptions).
Theories: Hymer (monopolistic advantage), Vernon (product cycle), Buckley & Casson (internalisation), Aliber (currency areas), Dunning (OLI eclectic).
Dunning’s OLI: O + L + I. Only O → license; O + I → export; O + L + I → FDI.
Dunning’s four motives: Market, Resource, Efficiency, Strategic asset — mnemonic MRES.
FPI = “hot money” — fast reversal.
Indian regulators: DPIIT + sectoral ministry + RBI for FDI; SEBI + RBI for FPI.
FEMA 1999 + Non-Debt Instruments Rules 2019 + Consolidated FDI Policy.
Sectoral caps (selected): Insurance 74 % (since 2021), Defence 74 % automatic, Telecom 100 %, Single-brand retail 100 % automatic, Multi-brand 51 % Government.
Top FDI sources: Singapore (since 2017), Mauritius, USA, Netherlands, Japan.
2008 — Tata Motors acquires JLR = textbook strategic-asset-seeking FDI.

5. Balance of payments (BOP): Importance and components of BOP

Topic 5 Quick Recall

BoP = systematic record of all transactions between residents and non-residents over a period; double-entry book-keeping; always balances as an identity.
BoT is only merchandise trade — a sub-component of the current account.
BPM6 structure: Current → Capital → Financial → Errors and Omissions.
Current Account = Goods + Services + Primary Income + Secondary Income.
Financial Account = FDI + FPI + Other Investment + Reserve Assets.
Credits bring in forex (exports, inflows); Debits take it out (imports, outflows).
BoP “deficit” or “surplus” judged on autonomous transactions; accommodating items close the gap.
Three policy families: Monetary, Fiscal, Trade-and-Exchange-rate.
Marshall-Lerner: $|\eta_x| + |\eta_m| > 1$ for devaluation to work.
J-curve: trade balance dips first, recovers later.
Hume’s price-specie flow (1752) — automatic adjustment under fixed/gold-standard regimes.
India: persistent BoT deficit, modest CAD, financial-account surplus financed by FDI + FPI; forex reserves > USD 650 bn.
1991 BoP crisis → IMF bailout → LPG reforms.

6. Regional Economic Integration: Levels of Regional Economic Integration; Trade creation and diversion effects; Regional Trade Agreements

Topic 6 Quick Recall

Regional integration removes barriers to flow of goods, services and factors among members.
Balassa’s six stages: PTA → FTA → Customs Union → Common Market → Economic Union → Political Union.
Each stage adds a layer: FTA frees goods; CU adds common external tariff; CM adds factor mobility; EU adds policy coordination; PU adds institutional unification.
Viner (1950): trade creation (welfare-improving) vs trade diversion (welfare-reducing).
Dynamic effects: scale economies, competition, investment attraction, technology transfer.
Major blocs: EU (Economic Union, Eurozone subset of 20), USMCA (FTA — replaced NAFTA in 2020), ASEAN (FTA → AEC 2015), SAARC/SAFTA (2006), Mercosur (CU 1991), APEC (forum 1989), AfCFTA (2018), RCEP (2020/2022 — India out), GCC (CU/CM 1981), EFTA (FTA 1960), BIMSTEC (1997).
India’s deals: SAFTA, BIMSTEC, ASEAN-India FTA (2010), CEPAs/CECAs with Japan, Korea, Singapore (2005, India’s first), UAE (2022), Australia (2022), EFTA (2024). India opted out of RCEP in November 2019.
Bhagwati’s spaghetti-bowl describes the rule-of-origin complexity of overlapping FTAs.
WTO records over 350 RTAs in force.
EU milestones: ECSC 1951 → EEC 1957 → Maastricht 1992 → Euro 1999/2002 → Lisbon 2009 → Brexit 2020.
SAARC founded Dhaka 8 December 1985; secretariat Kathmandu.
ASEAN founded 8 August 1967 (Bangkok Declaration); secretariat Jakarta; AEC 2015.

7. International Economic institutions: IMF, World Bank, UNCTAD

Topic 7 Quick Recall

Bretton Woods (July 1944) spawned the IMF and the World Bank (IBRD). UNCTAD came later, in 1964, under the UN General Assembly.
IMF — Washington, 190 members; stabilises monetary system, lends short-term, runs surveillance. Run by Managing Director (traditionally European). SDR basket: USD, EUR, RMB (added 2016), JPY, GBP.
World Bank Group: IBRD (1944), IFC (1956), IDA (1960), ICSID (1966), MIGA (1988). President traditionally American. “World Bank” usually = IBRD + IDA.
UNCTAD — Geneva, founded by Raúl Prebisch (Prebisch-Singer hypothesis); three pillars: consensus-building, research, technical cooperation; flagship initiative GSP since 1968.
One-line memory: IMF stabilises, World Bank develops, UNCTAD advocates.
Allied bodies: BIS (Basel) — central bankers’ bank; OECD (Paris); ADB (Manila, 1966); AIIB (Beijing, 2016); NDB (Shanghai, 2014).
India rescued by IMF in 1991; became a creditor after 2003. India graduated from regular IDA borrowing in 2014. India hosted UNCTAD II (New Delhi, 1968) that produced the GSP.
IMF flagship publications: WEO, GFSR. World Bank: WDR. UNCTAD: TDR, WIR.

8. World Trade Organisation (WTO): Functions and objectives of WTO; Agriculture Agreement; GATS; TRIPS; TRIMS

Topic 8 Quick Recall

GATT entered into force 1 January 1948; the WTO began on 1 January 1995 after the Uruguay Round (1986-94) / Marrakesh Agreement (15 April 1994). HQ Geneva. 164 members. DG since 2021: Ngozi Okonjo-Iweala.
Five WTO functions: administer agreements; forum for negotiations; DSU; TPRM; cooperation with IMF/WB.
Five core principles: MFN, National Treatment, tariff binding, fair competition, S&DT.
Structure: Ministerial Conference (every 2 yrs) → General Council → Councils for Goods, Services, TRIPS; DSB; TPRB.
Key ministerials: Singapore 1996, Doha 2001 (DDA), Cancún 2003 (collapsed), Bali 2013 (TFA + Peace Clause), Nairobi 2015 (export-subsidy abolition), Geneva 2022 (fisheries; TRIPS waiver), Abu Dhabi 2024.
AoA three pillars: market access, domestic support (Amber/Blue/Green), export subsidies. De minimis — developed 5 %, developing 10 %. Peace Clause for food stockholding.
GATS four modes: 1 cross-border, 2 consumption abroad, 3 commercial presence, 4 movement of natural persons. India’s offensive — Modes 1 & 4.
TRIPS: 20-year patent minimum; covers copyright, trademarks, GIs, designs, patents, layouts of ICs, trade secrets; compulsory licensing allowed; Doha Declaration 2001 on Public Health.
TRIMS bans: local content, trade balancing, forex restrictions, domestic sales, export restrictions inconsistent with GATT.
DSU “crown jewel”; Appellate Body non-functional since December 2019 (US block).
India: founding member; Patents Act 2005; Peace Clause Bali 2013; G-33 leader; Natco-Bayer Nexavar compulsory licence 2012; TFA ratified 2017.

Chapter 2 — Accounting and Auditing

9. Basic accounting principles; concepts and postulates

Topic 9 Quick Recall

Accounting = identifying + measuring + recording + classifying + summarising + interpreting + communicating financial info (AICPA 1941; AAA 1966).
Branches: Financial, Cost, Management, Tax, Social/Environmental, Forensic.
GAAP = Concepts + Conventions.
Nine concepts: Business entity, Going concern, Money measurement, Cost, Dual aspect, Accrual, Revenue recognition (realisation), Accounting period, Matching.
Four conventions (CCMF): Consistency, Conservatism (prudence), Materiality, Full disclosure.
Accounting equation: Assets = Liabilities + Capital (Pacioli, 1494).
Bases: Cash / Accrual / Hybrid. Companies Act 2013 mandates accrual basis.
Conservatism → stock at lower of cost or NRV; provision for doubtful debts; no contingent gain.
Fundamental qualitative characteristics — relevance + faithful representation; enhancing — comparability, verifiability, timeliness, understandability.
Revenue recognition: at delivery / transfer of risks and rewards (Ind AS 115 — five-step model).
Distinguish: Accrual = when to recognise; Matching = what to associate.

10. Partnership Accounts: Admission, Retirement, Death, Dissolution and Insolvency of partnership firms

Topic 10 Quick Recall

Partnership §4 of Indian Partnership Act 1932: agreement, business, share profits, mutual agency. Maximum 50 partners in general partnership; LLP Act 2008 — no upper limit.
Default rules without deed: equal profit sharing; no interest on capital; no salary; 6 % p.a. interest on partner’s loan.
Final accounts: Trading + P&L + P&L Appropriation A/c. Capital methods: Fixed (Capital + Current) or Fluctuating (single).
Goodwill methods: average profit; super profit (= actual − capital × NRR) × years; capitalisation of avg / super profit.
Admission: new ratio, sacrificing ratio = Old − New, goodwill in sacrificing ratio, revaluation in old ratio, reserves to old partners in old ratio.
Retirement / Death: gaining ratio = New − Old, goodwill in gaining ratio, JLP in old ratio, executor’s account.
Dissolution modes (§40-44): agreement, compulsory (§41), contingencies (§42), notice (§43), court (§44).
Realisation A/c: all assets (except cash) debited; all liabilities credited; profit/loss in profit-sharing ratio.
Garner v. Murray (1904): insolvent partner’s deficit borne by solvent partners in ratio of last-agreed capitals.
§48 order: 1️⃣ third-party debts → 2️⃣ partner’s loan → 3️⃣ partner’s capital → 4️⃣ surplus in profit-sharing ratio.
LLP — separate legal entity, limited liability, perpetual succession; Form 8 (Solvency) + Form 11 (Annual Return) with MCA.

11. Corporate Accounting: Issue, forfeiture and reissue of shares; Liquidation of companies; Acquisition, merger, amalgamation and reconstruction of companies

Topic 11 Quick Recall

Share capital categories: Authorised → Issued → Subscribed → Called-up → Paid-up; Reserve capital for winding-up only.
Modes of issue: Public, Private placement (§42, 200 cap), Rights (§62), Bonus (§63), Preferential, ESOP/Sweat.
Securities premium (§52) — uses: bonus shares, write off preliminary expenses, write off issue expenses, premium on redemption, buy-back. Cannot be used for dividend.
Forfeiture: Dr Share Capital (called-up), Cr Calls in Arrears + Forfeited Shares. Reissue: discount ≤ amount forfeited; balance → Capital Reserve.
Buy-back (§68) — max 25 % of paid-up + free reserves; post-buy-back D:E ≤ 2:1; CRR = face value out of free reserves.
Preference share redemption (§55) — max 20 years (infra 30); CRR = face value.
DRR — 10 % of outstanding debentures for most companies.
Liquidation under IBC 2016, NCLT adjudicates. §53 waterfall: Costs → Workmen+Secured (pari passu) → Employees → Unsecured financial → Govt+Secured shortfall → Other dues → Preference → Equity.
Amalgamation (AS 14): Pooling (nature of merger; 5 conditions; ≥ 90 % shareholders) vs Purchase (fair value; goodwill/capital reserve). Ind AS 103 — acquisition method only.
Internal reconstruction (§66) — capital reduction with NCLT approval. External reconstruction — new company takes over.
Format: Schedule III to Companies Act 2013.

12. Holding company accounts

Topic 12 Quick Recall

Holding §2(46), Subsidiary §2(87): >50 % voting power or board control. Associate §2(6): 20-50 %. Wholly-owned = 100 %.
Standards: AS 21 (CFS), AS 23 (associates), AS 27 (JV) under Indian GAAP; Ind AS 110, 28, 111, 112 under Ind AS.
CFS mandatory under §129(3).
Cost of Control = Cost of investment − Holding’s share of (capital + capital reserves at acquisition). +ve = Goodwill; −ve = Capital Reserve / bargain purchase.
Capital profits (pre-acquisition) — reduce CoC. Revenue profits (post-acquisition) — to consolidated P&L (holding’s share) and NCI.
NCI = NCI % × (capital + all reserves + all profits). Ind AS 110: choice of fair value or proportionate net assets.
Pre-acquisition dividend → capital receipt (reduces investment). Post-acquisition dividend → revenue income.
Unrealised profit in stock = (closing stock from inter-co) × (margin / (100 + margin)).
Chain holding effective % = product of percentages.
Six consolidation steps: holding ratio → CoC → NCI → Reserves → Eliminations → Combine.

13. Cost and Management Accounting: Marginal costing and Break-even analysis; Standard costing; Budgetary control; Process costing; Activity Based Costing (ABC); Costing for decision-making; Life cycle costing, Target costing, Kaizen costing and JIT

Topic 13 Quick Recall

Marginal cost = variable cost; Contribution = Sales − VC = Fixed + Profit; P/V = Contrib / Sales.
BEP units = Fixed / Contribution per unit. BEP ₹ = Fixed / P/V. MoS = Actual sales − BEP.
Material Price Variance = (SP − AP) × AQ; Usage = (SQ − AQ) × SP.
Labour Rate = (SR − AR) × AH; Efficiency = (SH − AH) × SR.
Budget types: Fixed vs Flexible; Incremental vs ZBB (Peter Pyhrr, Texas Instruments).
Process costing: Normal loss absorbed; Abnormal loss/gain valued at normal cost — to P&L. Equivalent units for WIP.
ABC (Cooper & Kaplan 1988): activities → cost drivers → rates.
Decisions: Make/Buy, Special order, Shut-down, Product mix (rank by contribution/limiting factor), Drop product line.
Life-cycle (R&D-to-disposal), Target (price − profit = cost), Kaizen (continuous), JIT (Toyota, Ohno), Throughput (Goldratt 1984), Balanced Scorecard (Kaplan & Norton 1992).
Cost audit — Companies Act §148 + Cost Audit Rules 2014.

14. Financial Statements Analysis: Ratio analysis; Funds flow Analysis; Cash flow analysis

Topic 14 Quick Recall

Tools: Comparative, Common-size, Trend, Ratio, Funds Flow, Cash Flow.
Liquidity: Current Ratio (2:1), Quick (1:1), Cash (0.5:1).
Solvency: D/E (2:1), Proprietary, Interest Coverage = EBIT / Interest, DSCR.
Activity: Inventory T/O, Debtors T/O, Creditors T/O; CCC = Inventory days + Debtor days − Creditor days.
Profitability: GP, Operating, Net Profit, ROCE = EBIT/CE, ROE = PAT/Equity, ROA.
DuPont: ROE = Net margin × Asset turnover × Equity multiplier.
Market: EPS, P/E, P/B, Dividend payout, EV/EBITDA.
Funds Flow uses working-capital concept; Cash Flow uses cash concept.
Cash Flow (AS 3 / Ind AS 7) — three sections: CFO + CFI + CFF. Indirect method starts with PBT, adds back non-cash items, adjusts WC.
Dividend paid always Financing; Dividend received by non-financial firm — Investing.
Mandatory under §129(3) Companies Act 2013.

15. Human Resources Accounting; Inflation Accounting; Environmental Accounting

Topic 15 Quick Recall

HRA (AAA 1973): measure and report value of people. Cost-based — Hermanson (historical); Flamholtz (replacement); Hekimian-Jones (opportunity); Value-based — Lev & Schwartz (1971) PV of future earnings (used by Indian PSUs).
First Indian HRA reporter — BHEL; followed by SAIL, MMTC, ONGC, Infosys.
AS 26 / Ind AS 38 exclude internally generated workforce from asset recognition.
Inflation accounting: CPP (general index; Sweeney 1936) vs CCA (specific current cost; Sandilands 1975, UK SSAP 16). Monetary items not restated under CPP; gain on net monetary liability, loss on net monetary asset.
Restated value = HC × (Closing CPI / Acquisition-date CPI).
Environmental accounting: 3 levels — national (Green GDP), corporate, reporting. Hansen-Mowen 4 categories — Prevention, Detection, Internal failure, External failure.
Frameworks: GRI Standards (voluntary global), TCFD (climate, FSB), ISSB IFRS S1/S2 (2023), 6 capitals, UN SEEA.
India: §135 CSR (2 %), SEBI BRSR mandatory for top 1,000 listed companies since FY 2022-23.

16. Indian Accounting Standards and IFRS

Topic 16 Quick Recall

Standard-setters: ICAI ASB (drafts), NFRA (§132), MCA (notifies); globally IASB (London) under IFRS Foundation; ISSB for sustainability.
India has two streams: older AS (27 standards under Companies (AS) Rules) and Ind AS (Companies (Ind AS) Rules 2015).
Ind AS roadmap: Phase I FY 2016-17 for net worth ≥ ₹500 crore; Phase II FY 2017-18 for net worth ≥ ₹250 crore.
Key standards: AS 1 — accounting policies; AS 2 — inventory; AS 3 — cash flow; AS 9 — revenue (Ind AS 115); AS 10 — PPE (Ind AS 16); AS 14 — amalgamation; AS 21 — CFS (Ind AS 110); AS 26 — intangibles (Ind AS 38).
Key Ind AS / IFRS: 115 Revenue (five-step), 116 Leases (right-of-use), 109 Financial Instruments (ECL), 113 Fair Value, 103 Business Combinations.
IASC (1973) → IASB (2001); EU adoption 2005; USA stays on US GAAP (FASB).
India is converged, not fully adopted — carve-outs include Ind AS 21 forex option and Ind AS 103 common-control pooling.
Conceptual Framework: fundamental QC = relevance + faithful representation; enhancing = comparability, verifiability, timeliness, understandability.
ISSB issued IFRS S1 and S2 in 2023.

17. Auditing: Independent financial audit; Vouching; Verification and valuation of assets and liabilities; Audit of financial statements and audit report; Cost audit

Topic 17 Quick Recall

Audit — independent examination → opinion on truth and fairness. From Latin audire “to hear”.
Companies Act 2013 sections: §139 appointment, §140 removal, §141 eligibility (CA only), §143 powers/duties, §144 prohibited services, §148 cost audit. §139(2) rotation — individual 5 yrs, firm 10 yrs.
Vouching — examine transactions (R.B. Bose’s “essence”); Verification — examine assets/liabilities for existence, ownership, valuation.
SA framework — issued by ICAI’s AASB, aligned with ISA. Key: SA 200, 240, 300, 315, 320, 500, 700, 701, 705, 706.
Opinions (SA 705): Unmodified / Qualified / Adverse / Disclaimer. Pervasive misstatement → adverse; pervasive scope limitation → disclaimer.
KAM under SA 701 — listed entities.
CARO 2020 — additional reporting matters.
COSO internal control — five components (control environment, risk assessment, control activities, info & communication, monitoring).
Other audits: Tax — §44AB IT Act, Cost — §148 + Cost Audit Rules 2014 by CMA, Bank — §30 BR Act, CAG — Articles 148-151 Constitution, GST — CGST Act 2017 (GSTR-9C), Internal — §138.
Errors — omission, commission, principle (capital vs revenue mix-up), compensating. Fraud — intentional (SA 240).

18. Recent Trends in Auditing: Management audit; Energy audit; Environment audit; Systems audit; Safety audit

Topic 18 Quick Recall

Management audit — constructive, future-oriented review of managerial effectiveness (William P. Leonard, 1962).
Operational audit — three E’s: Economy, Efficiency, Effectiveness.
Energy audit — Energy Conservation Act 2001 → BEE (Ministry of Power); Designated Consumers; PAT scheme with ESCerts. Three levels: walk-through → general → investment-grade.
Environment audit — ISO 14001 EMS, GRI, TCFD, ISSB IFRS S2, EMAS; in India — CAG Environmental Audit Wing (2009), SEBI BRSR, Env Protection Act 1986.
Systems / IT audit — COBIT (ISACA), ISO 27001, ITIL, CISA, SOC 1/2, NIST CSF; CAATs: ACL, IDEA, SQL.
Safety audit — Factories Act 1948, OSH Code 2020, ISO 45001 (replaced OHSAS 18001 in 2018), NSC, DGFASLI.
Other modern audits: forensic (fraud), social (MGNREGA mandate), compliance, performance / VFM (CAG), risk-based, continuous, concurrent (banks).
Frame: ISO management systems follow PDCA — Plan-Do-Check-Act.
ISO mnemonic — 9001 Quality, 14001 Environment, 27001 Information Security, 45001 OHS.

Chapter 3 — Business Economics

19. Meaning and scope of business economics

Topic 19 Quick Recall

Business economics = integration of economic theory with business practice for decision-making (Spencer & Siegelman, 1959; Joel Dean 1951; Mansfield; Brigham & Pappas; Hague).
Nature: micro, normative, pragmatic, multidisciplinary, future-oriented; both science and art.
Scope: Operational (demand, cost, pricing, profit, capital, inventory, resources) + Environmental (cycles, policy, international, public sector).
Six fundamental concepts: Incremental, Time perspective, Discounting, Opportunity cost, Equi-marginal, Contribution / break-even.
Role of business economist: forecast, advise, analyse, communicate, liaise.
Distinguishing feature: business economics is prescriptive (what should be); pure economics often positive (what is).

20. Objectives of business firms

Topic 20 Quick Recall

Profit maximisation — neoclassical; MR = MC. Limits: ignores risk, time, stakeholders.
Shareholder wealth maximisation — modern finance; market value of equity; NPV-positive.
Baumol (1959) — sales-revenue maximisation s.t. min profit.
Marris (1964) — balanced growth s.t. takeover-induced security (valuation) constraint.
Williamson (1963) — managerial utility U = f(Staff, Managerial emoluments, Discretionary investment) s.t. profit constraint.
Simon (1959) + Cyert & March (1963) — bounded rationality, satisficing; coalition with side payments, SOPs, organisational slack.
Freeman (1984) — stakeholder theory; vs Friedman (1970) — shareholder primacy. Business Roundtable 2019 endorsed stakeholders.
Jensen & Meckling (1976) — agency theory; agency cost = monitoring + bonding + residual loss.
Other goals: survival (Rothschild, Galbraith), market share, customer satisfaction, CSR, risk minimisation.

21. Demand analysis: Law of demand; Elasticity of demand and its measurement; Relationship between AR and MR

Topic 21 Quick Recall

Demand = desire + ability + willingness to pay over a period.
Law of Demand (Marshall 1890): own-price ↑ → Q ↓ (ceteris paribus).
Exceptions: Giffen (inferior + dominant income effect), Veblen (conspicuous), speculative, expectations, necessities, ignorance.
Elasticities: Price ($E_d = \%\Delta Q / \%\Delta P$), Income ($E_y$), Cross ($E_{xy}$), Advertising.
Degrees: perfectly inelastic (vertical, 0), inelastic, unit elastic (rect. hyperbola, 1), elastic, perfectly elastic (horizontal, ∞).
Methods: Total Outlay, Percentage, Geometric (lower/upper), Arc.
AR–MR–E: $MR = AR(1 − 1/|E|)$. Linear demand → MR slope = 2 × AR slope; AR is unit-elastic at mid-point; MR = 0 → TR maximum, E = 1.
Engel’s Law (1857) — food share declines with income.
Income types: normal ($E_y > 0$), luxury ($E_y > 1$), necessity ($0 < E_y < 1$), inferior ($E_y < 0$).
Cross: substitutes (+), complements (−), unrelated (0).
Tax inelastic-demand goods (sin taxes); tax elastic-demand goods discourages consumption.

22. Consumer behavior: Utility analysis; Indifference curve analysis

Topic 22 Quick Recall

Cardinal utility (Marshall 1890; Jevons; Walras) — utility in utils; assumes constant MU of money.
Gossen’s First Law — diminishing MU; Gossen’s Second Law — equi-marginal utility: MU_x/P_x = MU_y/P_y.
Ordinal utility / Indifference curves (Hicks & Allen 1934; Edgeworth; Pareto) — preferences just need to be ranked.
IC properties: downward sloping, convex (diminishing MRS), higher = better, non-intersecting (transitivity).
Consumer equilibrium: MRS_xy = P_x/P_y AND IC convex.
Budget line: P_x X + P_y Y = M; slope = −P_x/P_y. Income change → parallel shift; price change → rotation.
Special ICs: perfect substitutes — straight line; perfect complements — L-shaped.
Decomposition of price effect: Hicks (same utility) vs Slutsky (same purchasing power); each yields substitution + income effects.
ICC → Engel curve; PCC → demand curve.
Samuelson’s Revealed Preference (1938) — WARP and SARP.
Marshallian consumer surplus = willingness to pay − actual price.

23. Law of Variable Proportions: Law of Returns to Scale

Topic 23 Quick Recall

Law of Variable Proportions (short run; one input fixed): three stages — Increasing → Diminishing → Negative returns.
Relations: AP rises if MP > AP; AP peaks when MP = AP; TP peaks when MP = 0; MP negative ⇒ TP falls.
Rational producer operates in Stage II.
Returns to Scale (long run; all inputs scaled): IRS, CRS, DRS.
Cobb-Douglas (1928): $Q = AL^\alpha K^\beta$; α+β > 1 IRS; α+β = 1 CRS (linearly homogeneous); α+β < 1 DRS.
MRTS_LK = MP_L/MP_K = w/r at producer equilibrium.
Iso-quants: convex, downward-sloping, do not intersect; iso-cost slope = −w/r.
U-shaped LRAC = IRS → CRS → DRS.
Economies of scale: technical, managerial, marketing, financial, risk-bearing; internal vs external; diseconomies — communication, bureaucracy, resource scarcity.

24. Theory of cost: Short-run and long-run cost curves

Topic 24 Quick Recall

Cost concepts: explicit, implicit, opportunity, sunk, fixed, variable, marginal, average, replacement, incremental, private vs social.
Accounting profit = TR − Explicit cost; Economic profit = TR − (Explicit + Implicit). Normal profit = zero economic profit.
Short-run curves: TFC horizontal; TVC rises (S-shape); TC = TFC + TVC. AFC rectangular hyperbola; AVC, ATC U-shaped; MC U-shaped and cuts AVC, ATC at minima.
Relationships: MC < AC ⇒ AC falling; MC = AC ⇒ AC minimum; MC > AC ⇒ AC rising. ATC − AVC = AFC (narrows with Q).
Cause of SR U-shape: Law of Variable Proportions. MC minimum at MP maximum; AVC minimum at AP maximum.
LRAC: envelope of SRACs; U-shaped due to economies → constant → diseconomies of scale; empirically often L-shaped (Bain 1956, Modigliani).
Minimum Efficient Scale (MES) — smallest output at minimum LRAC.
Economies of scope (product mix); learning / experience curve (cumulative output).

25. Price determination under different market forms: Perfect competition; Monopolistic competition; Oligopoly- Price leadership model; Monopoly; Price discrimination

Topic 25 Quick Recall

Four market forms: Perfect competition, Monopolistic competition, Oligopoly, Monopoly. Plus monopsony (one buyer).
Perfect competition: many sellers, homogeneous product, free entry, perfect info; firm is price-taker; AR = MR = P. SR: shutdown if P < min AVC; break-even at min ATC. LR: P = MR = MC = AC at min LRAC.
Monopoly: single seller, blocked entry; MR < AR; profit max where MR = MC; lower output, higher price, deadweight loss.
Price discrimination (Pigou 1920): First (unit), Second (block/quantity), Third (group/segment). Conditions: monopoly power, market separation, different elasticities. Higher price in less-elastic market.
Monopolistic competition (Chamberlin 1933; Joan Robinson 1933 parallel): many firms, product differentiation, free entry; LR — zero profit at tangency of D and AC; excess capacity.
Oligopoly: few firms, mutual interdependence. Models: Cournot (1838 — output), Bertrand (1883 — price), Stackelberg (1934 — leader/follower), Sweezy 1939 kinked demand (price rigidity), Cartel (OPEC).
Price leadership: dominant-firm, barometric, collusive, low-cost.

26. Pricing strategies: Price skimming; Price penetration; Peak load pricing

Topic 26 Quick Recall

Pricing families: Cost-based (cost-plus, target-return, break-even), Demand-based (skimming, penetration, perceived-value, dynamic), Competition-based (going-rate, sealed-bid, predatory, limit), Product-mix (line, captive, two-part, bundling), Geographic (FOB, zone, freight-absorption), Promotional / Psychological (odd, prestige, loss-leader), Special (peak-load, transfer, price discrimination).
Skimming — high initial; works under patents, inelastic demand, prestige image (iPhone, Tesla, patented drugs).
Penetration — low initial; works under elastic demand, scale economies, mass-market threat-of-entry deterrence (Jio 2016, Kindle).
Peak-load — higher price at peak, lower off-peak; for non-storable goods (electricity ToD, airlines, hotels, Uber surge, Indian Railways flexi-fare).
Indian regulation: Competition Act 2002 — predatory pricing; DPCO 2013 / NPPA — drug ceilings; Electricity Act 2003; Income-tax §92 — transfer pricing arm’s-length; Legal Metrology Rules 2011 — MRP.

Chapter 4 — Business Finance

27. Scope and sources of finance; Lease financing

Topic 27 Quick Recall

Finance function — three classical decisions: Investment, Financing, Dividend; modern fourth: Liquidity / WC.
Normative goal — shareholder wealth maximisation; vs profit maximisation (vague, ignores risk and time).
Long-term sources: equity, preference, debentures, term loans, retained earnings, ECB, FCCB, GDR/ADR, VC/PE.
Medium-term: term loans, lease, hire-purchase, public deposits.
Short-term: trade credit, bank credit, commercial paper, certificate of deposit, factoring, forfaiting, accruals, ICDs.
Lease types: operating, finance (capital), sale-and-leaseback, leveraged, direct, wet/dry.
Ind AS 116 / IFRS 16 — all leases on lessee balance sheet as right-of-use asset + lease liability.
Owner vs borrowed: residual vs fixed claim; perpetual vs limited; risk to firm low vs high; tax-shield on interest only.
Indian regulators: SEBI (public issues, ICDR), RBI (ECB/FCCB/NBFC, CP), MCA (Companies Act), FEMA (forex).

28. Cost of capital and time value of money

Topic 28 Quick Recall

Time Value of Money — FV = P(1+r)^n; PV = FV/(1+r)^n; continuous FV = Pe^(rn).
Annuity: PV = A × [1 − (1+r)^−n]/r; FV = A × [(1+r)^n − 1]/r.
Perpetuity PV = A/r; growing perpetuity PV = A/(r − g) (r > g — Gordon).
EAR = (1 + r/m)^m − 1.
Cost of Debt post-tax = K_d (1 − T) — interest is tax-shield.
Cost of Equity: Dividend yield (D/P), Gordon (D_1/P_0 + g), CAPM K_e = R_f + β(R_m − R_f) — Sharpe 1964; Bond yield + risk premium.
WACC = w_e K_e + w_p K_p + w_d K_d(1−T); use market-value weights; for projects of same risk class.
MCC rises in steps as cheaper sources exhausted.
Definitional: Solomon Ezra — cost of capital as minimum rate to maintain market value of equity.
EVA = NOPAT − (WACC × Capital Employed).
Rule of 72: doubling time ≈ 72 / interest rate %.

29. Capital structure

Topic 29 Quick Recall

Capital structure = mix of long-term sources (equity, preference, debt). Financial structure includes short-term.
Four classical theories: NI (Durand 1952; 100 % debt optimal), NOI (Durand; value independent), Traditional (Solomon; U-shaped WACC with optimum), MM 1958 (value independent via arbitrage; Prop II — K_e rises linearly with D/E).
MM 1963 with corporate tax: V_L = V_U + T × D — tax shield.
Trade-off theory — balance tax shield against distress and agency costs.
Pecking order (Myers-Majluf 1984) — Internal → Debt → External equity.
Other theories: Signalling (Ross 1977), Agency (Jensen-Meckling 1976), Market-timing.
Leverages: DOL = Contribution/EBIT; DFL = EBIT/EBT; DCL = DOL × DFL = Contribution/EBT.
EBIT-EPS analysis — find indifference EBIT where two financing plans yield equal EPS.
Practical determinants — business risk, tax, flexibility, asset structure, growth, profitability, size, industry norms, control, cash-flow stability, market conditions.

30. Capital budgeting decisions: Conventional and scientific techniques of capital budgeting analysis

Topic 30 Quick Recall

Capital budgeting — evaluate long-term investment projects; large, irreversible, long-horizon.
Cash-flow rules: after-tax incremental flows; add back depreciation; include opportunity cost; exclude sunk cost; include side-effects; treat WC; include terminal value.
Conventional / non-discounted: Payback (= Investment/Annual CF), ARR (= Avg PAT/Avg Investment).
Scientific / discounted: NPV (= PV inflows − Investment), IRR (NPV = 0), MIRR, PI (= PV inflows/Investment), Discounted Payback.
Decision rules: NPV > 0; IRR > cost of capital; PI > 1.
NPV vs IRR: NPV is theoretically superior; IRR can yield multiple roots and unrealistic reinvestment.
Risk techniques: RADR, CE, Sensitivity, Scenario, Simulation, Decision trees, Real options.
Capital rationing — rank by PI.

31. Working capital management; Dividend decision: Theories and policies

Topic 31 Quick Recall

Working capital: gross (CA) vs net (CA − CL). Permanent + temporary.
Operating cycle = R + W + F + D − C; CCC = Inventory + Debtor − Creditor days.
Financing approaches: Conservative (LT-heavy, safe), Aggressive (ST-heavy, risky), Hedging/Matching (asset-source maturity match).
Tools: Baumol (1952) EOQ-analogue, Miller-Orr (1966) stochastic with upper/lower limits; EOQ (Wilson 1934); ABC, VED, FSN, SDE, JIT, MRP.
Dividend Theories: Walter (1956) r vs K_e (0 % payout if r > K_e); Gordon (1963) bird-in-hand; MM (1961) dividend irrelevance under perfect markets. Also signalling, agency, clientele.
Policies: stable DPS, constant payout ratio, stable plus extra, residual, zero.
Indian rules: §123 declaration; §124 transfer to IEPF after 7 yrs; §127 penalty within 30 days. DDT abolished in Budget 2020-21 — taxed in recipient’s hands.

32. Risk and return analysis; Asset securitization

Topic 32 Quick Recall

Return components: yield + capital gain; expected return = Σ p_i R_i.
Risk = σ of returns; systematic (β, non-diversifiable) + unsystematic (firm-specific, diversifiable).
Markowitz (1952) — modern portfolio theory; efficient frontier; Nobel 1990.
CAPM (Sharpe 1964; Lintner; Mossin): E(R) = R_f + β(R_m − R_f). SML uses β; CML uses σ.
APT (Ross 1976) — multi-factor model.
Performance measures: Sharpe (excess/σ), Treynor (excess/β), Jensen’s α (R_p − CAPM expected).
Diversification maximum at ρ = −1; minimum at ρ = +1.
Asset securitization — Originator → SPV → tradable securities (MBS, ABS, PTC, CDO, CLO).
Benefits: liquidity, off-balance sheet, risk transfer.
India: SARFAESI Act 2002, ARCs (RBI-regulated), RBI Master Direction on Securitization 2021, SEBI SDI Regulations 2008.
2008 GFC — triggered by US subprime mortgage securitization.

33. International monetary system

Topic 33 Quick Recall

Five phases: Bimetallism (pre-1875), Classical Gold Standard (1875-1914), Inter-war Gold Exchange (1918-39), Bretton Woods (1944-71), Floating / Managed Float (1973+).
Classical Gold Standard — Hume’s price-specie flow mechanism.
Bretton Woods: USD pegged at $35/oz; others to USD ±1 %; created IMF + IBRD; architects Keynes (Bancor) + White; collapsed with Nixon Shock 15 Aug 1971; Smithsonian Dec 1971 failed by 1973.
SDR (1969) — IMF reserve asset; basket = USD, EUR, RMB, JPY, GBP.
Euro — electronic 1999, physical 2002; ECB in Frankfurt.
Mundell-Fleming trilemma — only two of {fixed FX, free capital, monetary independence}.
India: pegged GBP (1947-71), basket (1971-92), LERMS 1992, unified 1993, current convertibility 1994 (Article VIII); Tarapore I/II — phased capital convertibility; currently managed float.

34. Foreign exchange market; Exchange rate risk and hedging techniques

Topic 34 Quick Recall

Forex market — largest, 24-hr OTC; > USD 7 trillion/day (BIS).
Three functions: transfer purchasing power, credit, hedging.
Segments: spot (T+2), forward, futures, options, swaps.
Quotation: direct (home/foreign), indirect, bid-ask, cross rate.
Forward premium/discount: F > S — premium; annualised = (F − S)/S × 12/n × 100.
Parity: PPP (Cassel 1918), IRP (no-arbitrage), International Fisher, Unbiased Forward Expectations.
Three exposures: Transaction (known FC cash flows), Translation (consolidation), Economic / Operating (long-run competitive).
Hedging: Internal (home-currency invoicing, leading/lagging, netting, matching) vs External (forward, futures, options, swap, money-market).
India: AD banks under FEMA; currency futures since 2008-09; options since 2010-11.

35. International financial markets and instruments: Euro currency; GDRs; ADRs

Topic 35 Quick Recall

Eurocurrency = currency deposited outside its country of origin (Eurodollar, Euroyen). London is the largest centre. LIBOR → SOFR / SONIA post-2021.
Eurobond = bond in currency different from country of issue. Foreign bond = bond in local currency of foreign country (Yankee, Samurai, Bulldog, Masala).
Depositary Receipt — negotiable certificate representing foreign shares.
ADR (1927 J.P. Morgan) — listed in US exchanges; Levels I, II, III, Rule 144A; USD-denominated.
GDR (1990 Samsung) — listed on non-US exchanges (LSE, Luxembourg); USD or EUR.
FCCB — foreign-currency debt convertible into equity; currency risk on Indian issuer.
Masala bond — INR bond issued outside India; currency risk on foreign investor; first IFC 2014; first Indian corporate HDFC 2016.
ECB — long-term foreign loans; RBI under FEMA; automatic + approval routes.
International institutions: BIS (Basel, 1930), IMF + WB (Washington, 1944), ADB (Manila 1966), AIIB (Beijing 2016), NDB (Shanghai 2014), EBRD (London 1991).

36. International arbitrage; Multinational capital budgeting

Topic 36 Quick Recall

Arbitrage — riskless, self-financing profit; restores law of one price.
Three types: Locational (same pair, different centres), Triangular (three cross-rates), Covered Interest (CIA, when IRP violated).
Triangular no-arbitrage: $S_{A/B} \times S_{B/C} \times S_{C/A} = 1$.
CIP — hedged with forwards; UIP — unhedged, based on expectations.
MNC capital budgeting — adds multi-currency, country risk, blocked funds, transfer pricing, tax layers.
Parent perspective is appropriate — shareholders are at parent.
Cash-flow steps: forecast in foreign currency → host tax → convert via forward → home tax/credit → adjust for blocked/transfer → discount at parent WACC + country premium.
APV = Base NPV (all-equity) + PV of side effects (tax shields, subsidies, etc.) — preferred for complex financing.
Repatriation tools: royalty/management fees, re-invoicing, transfer pricing, parallel loans.

Chapter 5 — Business Statistics and Research Methods

37. Measures of central tendency

Topic 37 Quick Recall

Central tendency = single representative value (Croxton & Cowden).
Mathematical: AM, GM, HM; Positional: Median, Mode (+ quartiles, deciles, percentiles).
AM = Σ X/N; properties — Σ(X − X̄) = 0; minimises Σ(X − X̄)²; sensitive to outliers.
Median — middle value; positional; not affected by outliers; usable for open-end / ordinal data.
Mode — most frequent; suitable for categorical/nominal.
Karl Pearson’s empirical relation: Mode = 3 Median − 2 Mean (moderately skewed).
GM — for ratios, growth rates, CAGR; log form for computation.
HM — for speeds / rates over equal distance/expenditure.
Inequality: AM ≥ GM ≥ HM, equality when all equal. GM² = AM × HM.
Skew: Right (positive) → Mean > Median > Mode; Left → reverse; Symmetric → all equal.

38. Measures of dispersion

Topic 38 Quick Recall

Dispersion — spread of data around centre. Absolute vs Relative measures.
Range = Max − Min; coeff = (Max − Min)/(Max + Min).
Quartile Deviation = (Q₃ − Q₁)/2; IQR = Q₃ − Q₁.
Mean Deviation = Σ|X − X̄|/N.
Standard Deviation (Karl Pearson 1893) = √[Σ(X − X̄)²/N]; Variance = σ². Sample uses n−1 (Bessel’s correction).
SD properties: non-negative; independent of origin (add constant); proportional to scale (multiply by k).
Empirical rule for normal: 68/95/99.7 within 1/2/3σ.
CV = σ/X̄ × 100 — for unit-free comparison; lower CV = more consistent.
Lorenz curve — cumulative % of variable vs population; Gini ∈ [0,1] — 0 equality, 1 max inequality.
Σ(X − A)² minimum at A = mean.

39. Measures of skewness

Topic 39 Quick Recall

Skewness — departure from symmetry. Symmetric → Mean = Median = Mode. Positive → Mean > Median > Mode (right tail). Negative → Mean < Median < Mode (left tail).
Karl Pearson: (Mean − Mode)/SD; or 3(Mean − Median)/SD when mode ill-defined; range ≈ ±3.
Bowley: (Q₃ + Q₁ − 2 Median)/(Q₃ − Q₁); range ±1; outlier-robust.
Kelly: (P₉₀ + P₁₀ − 2 P₅₀)/(P₉₀ − P₁₀); range ±1.
Moment-based: γ₁ = μ₃/σ³; β₁ = μ₃²/μ₂³.
Kurtosis: β₂ = μ₄/μ₂². Normal → β₂ = 3 (mesokurtic). β₂ > 3 — leptokurtic; < 3 — platykurtic.
Stock returns — typically leptokurtic (fat tails).

40. Correlation and regression of two variables

Topic 40 Quick Recall

Correlation — degree of linear association; range [−1, +1]. Karl Pearson r = Cov(X,Y)/σ_x σ_y.
r² = Coefficient of Determination — fraction of Y variation explained by X.
Properties: symmetric, independent of origin/scale; measures linear only; doesn’t imply causation.
Spearman ρ = 1 − 6Σd²/n(n²−1) — for ranked / ordinal / monotonic data.
Regression: Y on X (b_yx = r σ_y/σ_x); X on Y (b_xy = r σ_x/σ_y).
r = ±√(b_yx · b_xy) (geometric mean of slopes; same sign).
Both regression lines intersect at (X̄, Ȳ); identical when r = ±1.
Standard error of estimate S_y.x = σ_y √(1 − r²).
OLS minimises Σ residuals squared.

41. Probability: Approaches to probability; Bayes’ theorem

Topic 41 Quick Recall

Probability ∈ [0, 1]; language of uncertainty. Origin: Pascal-Fermat 1654.
Four approaches: Classical (Laplace), Empirical (von Mises), Subjective (Bayes/Ramsey/de Finetti), Axiomatic (Kolmogorov 1933).
Three axioms: non-negativity, normalisation (P(S) = 1), additivity for mutually exclusive events.
Addition rule: P(A∪B) = P(A) + P(B) − P(A∩B); mutually exclusive ⇒ no overlap term.
Multiplication rule: P(A∩B) = P(A) × P(B|A); independent ⇒ P(A) × P(B).
Complement: P(A) + P(Aᶜ) = 1.
Bayes (1763): P(A|B) = P(B|A) × P(A) / P(B). Prior × Likelihood / Evidence = Posterior.
Base-rate fallacy — ignoring prior probability when interpreting test results.
Mutually exclusive ≠ Independent (with positive probabilities, M.E. implies dependence).

42. Probability distributions: Binomial, poisson and normal distributions

Topic 42 Quick Recall

Random variable: discrete (Binomial, Poisson) vs continuous (Normal).
Binomial(n, p): PMF $\binom{n}{k} p^k q^{n-k}$; Mean = np; Variance = npq.
Poisson(λ): PMF $e^{-\lambda} \lambda^k / k!$; Mean = Variance = λ.
Binomial → Poisson when n→∞, p→0, np = λ.
Normal(μ, σ²): bell-shaped, symmetric; Mean = Median = Mode = μ. Empirical Rule 68-95-99.7.
Standard normal Z = (X − μ)/σ ~ N(0,1).
Central Limit Theorem — sample mean → Normal(μ, σ/√n) for n ≥ 30.
t-distribution (Gosset 1908 “Student”); χ² (sum of squared standard normals); F (ratio of χ²s).
Exponential — time between Poisson events; memoryless.
Bernoulli — Binomial with n = 1.

43. Research: Concept and types; Research designs

Topic 43 Quick Recall

Research (Clifford Woody) — systematic problem-solving + hypothesis testing.
Types: Pure vs Applied; Descriptive vs Analytical vs Experimental; Quantitative vs Qualitative; Inductive vs Deductive; Cross-sectional vs Longitudinal.
Eight steps: Problem → Lit Review → Hypothesis → Design → Data Collection → Analysis → Interpretation → Generalisation.
Research Design = blueprint (Selltiz).
Four major designs: Exploratory (idea-gen), Descriptive (characteristics), Diagnostic (frequency / correlates), Experimental / Causal (cause-effect, RCT).
Experimental designs: CRD, RBD, Latin Square (controls 2 nuisance variables), factorial.
Internal validity — causation in sample; External validity — generalisability.
Threats to internal validity: history, maturation, testing, instrumentation, regression-to-mean, selection, mortality.
Hypothesis: testable, specific, theory-related. H₀ = no effect; H₁ = alternative.

44. Data: Collection and classification of data

Topic 44 Quick Recall

Data → Information → Knowledge → Wisdom.
Types: Primary vs Secondary; Quantitative vs Qualitative; Nominal/Ordinal/Interval/Ratio (Stevens 1946); Cross-sectional/Time-series/Panel; Discrete vs Continuous.
Stevens scales: Nominal (mode), Ordinal (median), Interval (mean; no true zero, e.g., °C), Ratio (all stats; true zero, e.g., weight).
Primary methods: Observation, Interview, Questionnaire, Schedule, Experiment, Panel, Projective.
Questionnaire (self-fill, low cost, low response) vs Schedule (enumerator-administered).
Secondary sources (India): RBI, NSO/MoSPI, SEBI, Ministry reports, CMIE Prowess, Capitaline. Check reliability, suitability, adequacy, timeliness.
Classification bases: Geographical, Chronological, Qualitative, Quantitative.
Sturges’ rule: k = 1 + 3.322 log₁₀ N; class width h = Range/k.
Graphs: Histogram, frequency polygon, Ogive (cumulative), Bar chart, Pie chart, Scatter plot.

45. Sampling and estimation: Concepts; Methods of sampling - probability and non-probability methods; Sampling distribution; Central limit theorem; Standard error; Statistical estimation

Topic 45 Quick Recall

Population vs Sample; Sampling vs Census. India — decennial census since 1872; last completed 2011.
Probability methods: SRS, Systematic (k = N/n), Stratified (homogeneous within strata), Cluster (heterogeneous within clusters), Multi-stage, PPS.
Non-probability methods: Convenience, Purposive, Quota, Snowball, Self-selection.
Errors: Sampling (chance, reduced by n) vs Non-sampling (measurement / response / processing).
CLT: x̄ ~ Normal(μ, σ/√n) for large n.
SE of mean = σ/√n; SE of proportion = √(p(1−p)/n).
Estimation: Point vs Interval (CI). BLUE properties — unbiasedness, consistency, efficiency, sufficiency. Gauss-Markov: OLS is BLUE.
Critical z: 90 % → 1.645; 95 % → 1.96; 99 % → 2.58.
Sample size: n = (z σ / E)² for mean; n = z² p(1−p)/E² for proportion.

46. Hypothesis testing: z-test; t-test; ANOVA; Chi-square test; Mann-Whitney test (U-test); Kruskal-Wallis test (H-test); Rank correlation test

Topic 46 Quick Recall

Hypothesis testing framework: Neyman-Pearson (1933) building on Fisher; H₀ (default no effect) vs H₁.
Errors: Type I (α, false +), Type II (β, false −). Power = 1 − β.
Procedure: H₀ → α → statistic → critical/p-value → decide.
Parametric tests: z (σ known or large n), t (Gosset 1908; σ unknown, small n), F/ANOVA (Fisher; 3+ means), χ² (Pearson 1900; categorical — goodness-of-fit, independence, homogeneity).
Non-parametric: Mann-Whitney U (vs indep t), Kruskal-Wallis H (vs ANOVA), Wilcoxon signed-rank (vs paired t), Friedman, Spearman ρ, sign, run, KS tests.
Decision: reject if p < α.
Power ↑ with effect size, n, α; ↓ with σ.
Failing to reject ≠ accepting H₀.

47. Report writing

Topic 47 Quick Recall

Research report — written record of process and findings (C.A. Brown).
Three qualities: completeness, objectivity, clarity.
Three parts: Preliminary, Main, End matter.
IMRaD academic format: Introduction, Methods, Results, Discussion.
Executive summary — 250-500 words; problem + methods + key findings + recommendations.
Types: technical vs popular; interim vs final; written vs oral; thesis vs article.
Citation styles: APA (social sciences), MLA (humanities), Chicago (history), Harvard (social), IEEE (engineering), Vancouver (medicine).
Bibliography = all sources consulted; References = only cited.
Plagiarism — UGC 2018 levels 0–3 (≤ 10 %; 10–40 %; 40–60 %; > 60 %). Tools: Turnitin, iThenticate, Urkund, DRILLBIT (INFLIBNET).
Footnotes — page bottom; Endnotes — chapter/report end.
Principles: Clarity, Conciseness, Completeness, Coherence, Correctness, Audience-appropriateness.

Chapter 6 — Business Management and HRM

48. Principles and functions of management

Topic 48 Quick Recall

Father of Scientific Management = F.W. Taylor (1911); Father of Modern Management = Henri Fayol (1916); Father of Modern Management (also) = Peter Drucker.
Fayol’s 14 Principles include division of work, unity of command, unity of direction, scalar chain, esprit de corps.
Fayol’s 5 functions → modern POSDC: Planning, Organising, Staffing, Directing, Controlling.
POSDCORB (Gulick-Urwick 1937): + COordinating, Reporting, Budgeting.
Taylor’s 4 principles — science for work, scientific selection/training, cooperation, division of work.
Schools: Scientific (Taylor), Administrative (Fayol), Bureaucratic (Weber), Human relations (Mayo Hawthorne), Behavioural (Maslow, McGregor), Quantitative, Systems, Contingency (no one best way), Modern (Drucker, Mintzberg, Porter).
Mintzberg (1973) — 10 roles in 3 categories (interpersonal, informational, decisional).
Other pioneers: Gilbreths (therbligs), Gantt (chart), Emerson (12 principles), Follett (conflict), Barnard (acceptance theory).
Levels: Top, Middle, Lower.
Management = both science and art.

49. Organization structure: Formal and informal organizations; Span of control

Topic 49 Quick Recall

Organisation — process (arranging) + entity (social unit, Etzioni).
Formal (deliberate, charted) vs Informal (spontaneous, grapevine).
Principles of organising: objective, specialisation, unity of command, scalar chain, span, authority-responsibility parity, delegation, coordination.
Span of control — narrow → tall; wide → flat. Graicunas (1933) formula: R = n[2ⁿ/2 + (n−1)].
Structures: Line, Functional (Taylor), Line-and-Staff, Divisional, Matrix (dual reporting), Project, Network/Virtual, Holacracy.
Mechanistic (stable, bureaucratic) vs Organic (dynamic, flexible) — Burns & Stalker 1961.
Centralised vs Decentralised — trade-off between control and speed.
Departmentation by: Function, Product, Geography, Customer, Process, Matrix.

50. Responsibility and authority: Delegation of authority and decentralization

Topic 50 Quick Recall

Triad: Authority (right, downward, delegable), Responsibility (obligation, upward, NOT delegable), Accountability (answerability).
Definitions: Fayol — right and power; Barnard’s Acceptance Theory — authority from subordinate’s acceptance; Weber — rational-legal, traditional, charismatic.
Types of authority: Line (command), Staff (advisory), Functional (across departments).
Delegation elements: (1) Assign duty, (2) Grant authority, (3) Create accountability.
Principle of Absoluteness of Responsibility — delegator remains responsible.
Authority-Responsibility parity.
Decentralisation = systematic, continuous delegation organisation-wide; vs delegation = operational, two-person.
Empowerment — Spreitzer’s four dimensions: meaning, competence, self-determination, impact.
Barriers: managerial (perfectionism, fear), subordinate (fear of failure), organisational (unclear roles).

51. Motivation and leadership: Concept and theories

Topic 51 Quick Recall

Maslow’s hierarchy: Physiological → Safety → Social → Esteem → Self-actualisation.
Herzberg (1959): Hygiene (no dissatisfaction) vs Motivators (satisfaction).
McGregor: Theory X (pessimistic) vs Theory Y (optimistic). Ouchi Theory Z (Japanese).
McClelland: nAch, nAff, nPow.
Vroom Expectancy: M = E × I × V.
Adams Equity: outcome/input ratio comparison.
Locke Goal-Setting: specific, challenging goals + feedback.
Skinner Reinforcement: operant conditioning.
Leadership theories: Trait (born) → Behavioural (Ohio/Michigan/Blake-Mouton Grid 9,9 ideal/Likert) → Contingency (Fiedler, Hersey-Blanchard, House’s Path-Goal) → Modern (Transactional/Transformational — Bass’s 4 I’s/Servant Greenleaf 1970/Authentic/Distributed).
Manager vs Leader (Bennis): Manager administers, Leader innovates.

52. Corporate governance and business ethics

Topic 52 Quick Recall

Corporate Governance — system by which companies are directed and controlled (Cadbury 1992).
Four pillars: Transparency, Accountability, Fairness, Responsibility.
Indian committees: Kumar Mangalam Birla 1999 (Clause 49), Naresh Chandra 2002, Narayana Murthy 2003, Adi Godrej 2012, Kotak 2017.
Indian framework: Companies Act 2013, SEBI LODR 2015, PIT 2015, CARO 2020, BRSR (top 1,000 listed companies).
OECD Principles 1999 updated 2015 (G20/OECD).
Mandatory committees: Audit, NRC, Stakeholders Relationship, Risk Management, CSR.
Independent director — at least 1/3 board (non-exec chair) or 1/2 (exec chair).
Ethical theories: Utilitarianism (Bentham/Mill), Deontology (Kant), Virtue (Aristotle), Justice/Veil of Ignorance (Rawls), Stakeholder.
CSR — §135 Companies Act 2013, 2 % of average net profits.
Scandals: Enron 2001 → SOX 2002; Satyam 2009 → Companies Act 2013; IL&FS 2018.

53. Human resource management: Concept, role and functions of HRM; Human resource planning; Recruitment and selection; Training and development; Succession planning

Topic 53 Quick Recall

HRM (Armstrong) — strategic, integrated; vs PM — administrative.
Functions: Managerial (PODC) + Operative (Procurement, Development, Compensation, Maintenance, Integration, Separation).
HRP (Vetter) — forecast demand and supply; 6 steps.
Job analysis → Job description (duties) + Job specification (person requirements).
Recruitment (Flippo) — positive (attract); Selection — negative (reject).
Sources: Internal (promotion, transfer, referral) vs External (campus, portals, agencies, walk-in, acqui-hiring).
Selection steps: screening → application → tests → interview → references → medical → offer → induction.
T&D: Training (short, technical, operative) vs Development (long, conceptual, executive). Methods: OJT (apprenticeship, coaching, rotation) vs Off-job (lecture, case, simulation, vestibule, e-learning).
Kirkpatrick (1959) — 4-level eval: Reaction, Learning, Behaviour, Results.
Succession planning — identify high-potentials; 9-Box Grid (performance × potential).

54. Compensation management: Job evaluation; Incentives and fringe benefits

Topic 54 Quick Recall

Compensation = Direct (basic, allowances, incentives) + Indirect (PF, gratuity, insurance, perquisites).
Wage concepts (Fair Wages Committee 1949): Minimum < Fair < Living.
Theories: Subsistence (Ricardo), Wage Fund (Mill), Surplus Value (Marx), Marginal Productivity (J.B. Clark), Bargaining (Davidson).
Job evaluation methods: Ranking, Job classification (non-analytical); Point method (most popular), Factor comparison (analytical).
Incentive plans: Taylor DPR (2 rates), Merrick (3 rates), Halsey (time wage + 50 % time saved), Rowan (proportional), Gantt (task + bonus), Emerson efficiency, Bedaux; group — Scanlon, Rucker, Improshare; org-wide — profit-sharing, ESOPs.
India statutory: PF (12 %), Gratuity (15 days/year, 5 years min), ESI, Bonus (8.33 %–20 %), Maternity 26 weeks.
Four Indian Labour Codes (2019-20): Wages 2019, IR, Social Security, OSH 2020.

55. Performance appraisal including 360 degree performance appraisal

Topic 55 Quick Recall

PA process: Set standards → Communicate → Measure → Compare → Feedback → Action.
Traditional methods: Ranking, Paired, Forced distribution (Jack Welch GE), Graphic rating, Checklist, Critical incident (Flanagan), Essay, ACR (Govt), Field review.
Modern methods: MBO (Drucker 1954), BARS, BOS, Assessment Centre, Psychological, HR Accounting, 360°, 720°, Balanced Scorecard (Kaplan-Norton 1992), OKRs (Grove/Intel), CPM.
360° — sources: superior, peers, subordinates, self, customers. Best for development; not pay.
Rater errors: Halo (+) / Horn (−), Central tendency, Leniency / Strictness, Recency / Primacy, Stereotyping, Similar-to-me, Contrast, Personal bias.
SMART goals: Specific, Measurable, Achievable, Relevant, Time-bound.

56. Collective bargaining and workers’ participation in management

Topic 56 Quick Recall

Collective Bargaining — Beatrice Webb 1891; ILO defines as negotiations on work conditions.
Six stages: Preparation → Discussion → Proposing → Bargaining → Settlement → Implementation.
Forms: Distributive (win-lose), Integrative (win-win), Productivity, Composite, Concessionary, Continuous.
Indian IR laws: TU Act 1926, ID Act 1947, Standing Orders 1946, Factories 1948 → now in IR Code 2020.
ID Act authorities: Conciliation officer, Board of Conciliation, Court of Inquiry, Labour Court, Industrial Tribunal, National Tribunal.
Works Committee — units with 100+ workmen (Sec 3 ID Act).
JMC — 1958; Shop and Joint Councils — 1975 (500+); Worker directors in PSU banks.
Quality Circles — Japan, Ishikawa 1962.
Co-determination — Germany (Mitbestimmung).
Self-management — Yugoslavia.
IR theories (Fox 1966): Unitary, Pluralist, Marxist/Radical.
Central Indian unions: AITUC 1920 (oldest), INTUC 1947, HMS 1948, BMS 1955, CITU 1970; SEWA (Ela Bhatt 1972).

57. Personality; Perception; Attitudes; Emotions; Group dynamics; Power and politics; Conflict and negotiation; Stress manag

Topic 57 Quick Recall

Personality: Big Five OCEAN (Costa & McCrae); MBTI; Type A/B (Friedman & Rosenman); Locus of Control (Rotter); Self-monitoring (Snyder); Machiavellianism; DISC.
Perception errors: selective, halo, stereotyping, projection, fundamental attribution error, contrast, primacy, Pygmalion / self-fulfilling prophecy.
Attitudes — ABC components; cognitive dissonance (Festinger 1957).
Emotions (Ekman’s six); EI — Mayer-Salovey; Goleman 1995; Emotional labour — Hochschild 1983.
Tuckman 1965 — Forming → Storming → Norming → Performing → Adjourning.
Groupthink — Janis 1972.
Power — French & Raven 1959 five bases: Legitimate, Reward, Coercive, Expert, Referent (+ Informational).
Conflict views: Traditional / Human Relations / Interactionist; Thomas-Kilmann 5 modes: Competing, Collaborating, Compromising, Avoiding, Accommodating.
Negotiation: Distributive vs Integrative; BATNA (Fisher & Ury).
Stress: Eustress vs Distress (Selye); Burnout 3D — Maslach 1981.

58. Organizational Culture: Organizational development and organizational change

Topic 58 Quick Recall

Schein — three levels: Artefacts → Espoused values → Basic underlying assumptions.
Handy — Power (Zeus), Role (Apollo), Task (Athena), Person (Dionysus).
Cameron & Quinn CVF — Clan, Adhocracy, Market, Hierarchy.
Hofstede’s 6 dimensions — PDI, IDV, MAS, UAI, LTO, IVR.
Robbins’ 7 characteristics — innovation, attention to detail, outcome, people, team, aggressiveness, stability.
Lewin (1947) — Unfreezing → Change → Refreezing; Force Field Analysis.
Kotter (1996) — 8 steps starting with sense of urgency.
ADKAR — Awareness, Desire, Knowledge, Ability, Reinforcement.
Bridges — Ending, Neutral Zone, New Beginning. McKinsey 7-S — Strategy, Structure, Systems, Style, Staff, Skills, Shared Values.
Kotter & Schlesinger (1979) — six methods to deal with resistance.
OD — planned, long-range, system-wide; Lewin father.
Cooperrider’s Appreciative Inquiry — 4-D (Discovery, Dream, Design, Destiny).
Senge (1990) — five disciplines; Systems thinking is the fifth and integrating one.

Chapter 7 — Banking and Financial Institutions

59. Overview of Indian financial system

Topic 59 Quick Recall

Financial system = Institutions + Markets + Instruments + Services.
Functions: mobilisation, allocation, price discovery, liquidity, risk mgmt, payment, information.
Indian regulators: RBI (1935), SEBI (1988/statutory 1992), IRDAI (1999), PFRDA (2013), IBBI (2016), IFSCA (2019).
Markets: Money (< 1 yr, RBI-regulated) vs Capital (> 1 yr, SEBI-regulated).
Money-market instruments: Call money, T-bills, CP, CD, Repo/reverse repo, TREPS, CMB.
Stock exchanges: BSE 1875 (Sensex 30), NSE 1992-94 (Nifty 50); NSE IFSC at GIFT City.
AIFIs: NABARD 1982 (agri/rural), EXIM 1982 (trade), SIDBI 1990 (MSME), NHB (housing), NaBFID 2021 (infra).
RBI tools: CRR, SLR, Repo / Reverse repo, OMO, Bank rate, MSF.
Narasimham Committees: I (1991), II (1998) — reform blueprint.

60. Types of banks: Commercial banks; Regional Rural Banks (RRBs); Foreign banks; Cooperative banks

Topic 60 Quick Recall

Banking defined under BR Act 1949 Sec 5(b).
Scheduled banks — Second Schedule of RBI Act 1934.
Types: PSBs (12 post-2020), Private (HDFC, ICICI, Axis), Foreign, RRBs (1976; 50/35/15), SFBs (2015), Payments Banks (2015), Cooperative (SCB → DCCB → PACS; UCBs).
Nationalisation: SBI 1955; 19 July 1969 (14); 15 April 1980 (6).
First RRB: Prathama Bank, Moradabad (2 Oct 1975); RRBs supervised by NABARD.
Nachiket Mor Committee 2014 → SFBs and Payments Banks.
SFBs — 75 % PSL; loans ≤ ₹25 lakh.
PBs — cannot lend; deposit cap ₹2 lakh (since 2021); first Airtel PB.
BR (Amendment) Act 2020 — UCBs fully under RBI.
Money multiplier = 1/CRR (simplified).

61. Reserve Bank of India: Functions; Role and monetary policy management

Topic 61 Quick Recall

RBI Act 1934; operational 1 April 1935; nationalised 1949; headquartered Mumbai.
Hilton Young Commission 1926 recommended its creation. First Indian Governor — C.D. Deshmukh.
Preamble: monetary stability + (since 2016) price stability with growth.
Functions: Traditional (note issue, banker to govt, banker’s bank, LoLR, credit control, forex), Promotional, Supervisory.
Inflation target: 4 % CPI ± 2 % (2-6 %) since 2015/16.
MPC — 6 members (3 RBI + 3 external); meets ≥ 6 times/year; Governor casting vote; Sec 45ZB RBI Act 2016.
Quantitative tools: CRR, SLR, Repo, Reverse repo/SDF, MSF, Bank rate, OMO, MSS, LAF.
Corridor: SDF (Repo − 0.25) — Repo — MSF (Repo + 0.25).
Qualitative: moral suasion, margin requirements, credit rationing, direct action.
Minimum Reserve System since 1957 — ₹200 cr (₹115 cr gold).
FSDC — chaired by FM, coordinates regulators.
Integrated Ombudsman Scheme 2021.

62. Banking sector reforms in India: Basel norms; Risk management; NPA management

Topic 62 Quick Recall

Reform waves: Narasimham I (1991), N-II (1998); SARFAESI 2002, IBC 2016, PSB consolidation 2017-20, NARCL 2021 (Bad Bank).
Basel I 1988 → Basel II 2004 (three pillars) → Basel III 2010 (post-GFC; LCR, NSFR, leverage) → Basel IV 2017+.
India Basel III floor: CAR 9 %, CET1 5.5 %, Tier 1 7 %, CCB 2.5 %.
D-SIBs: SBI, ICICI Bank, HDFC Bank.
Risks: Credit, Market, Operational, Liquidity, Reputational, Legal, Cyber.
NPA = 90 days overdue; IRAC: Standard, Sub-standard (≤ 12 m), Doubtful (> 12 m), Loss.
Recovery: Lok Adalat, DRT (RDB Act 1993), SARFAESI 2002, ARCs, IBC 2016 (180/330 days; CoC vote 66 %), NARCL 2021.
PCA framework — CRAR + Net NPA + ROA/leverage.

63. Financial markets: Money market; Capital market; Government securities market

Topic 63 Quick Recall

Markets: Money (< 1 year, RBI), Capital (> 1 year, SEBI), G-sec (RBI), Forex (RBI/FEMA), Derivatives (SEBI), Commodity (SEBI since 2015 FMC merger).
Money market: Call/notice, T-bills 91/182/364, CP, CD, repo/reverse repo, TREPS, CMB, commercial bills; CCIL 2001 clears.
Primary capital: IPO, FPO, rights (§62), bonus (§63), private placement (§42, 200 person cap), QIP, OFS, ESOP.
Secondary: BSE (1875) Sensex 30; NSE (1994) Nifty 50; GIFT IFSC.
Innovations: REITs (first Embassy 2019), InvITs, AIFs, SME exchange, IGP, SSE 2022.
G-sec: T-bills, dated G-sec, SDLs, IIBs, SGBs (gold-linked), FRBs, STRIPS. NDS-OM secondary.
Derivatives: Nifty index futures since 2000; currency since 2008; SEBI-regulated.
IPO allocation (profitable cos): QIB 50, NII 15, Retail 35.

64. Financial Institutions: Development Finance Institutions (DFIs); Non-Banking Financial Companies (NBFCs); Mutual Funds; Pension Funds

Topic 64 Quick Recall

DFIs — IFCI 1948, ICICI 1955 (→ bank 2002), IDBI 1964 (→ bank 2004), NABARD 1982, NHB 1988, EXIM 1982, SIDBI 1990, IIFCL 2006, MUDRA & NIIF 2015, NaBFID 2021.
NBFCs — Chapter III-B RBI Act 1934; cannot accept demand deposits; CRAR 15 %; SBR 1 Oct 2022 (Base/Middle/Upper/Top).
MFs — SEBI (MF) Regs 1996; UTI 1963; private entry 1993; direct plans 2013. ELSS — 3 yr lock-in, §80C.
Pensions — OASIS Report 2000; NPS govt 2004, all citizens 2009; PFRDA Act 2013; APY 2015; equity cap 75 %; §80CCD(1B) ₹50,000 extra; 60 % corpus tax-free at exit.
NPS architecture — PFRDA → NPS Trust → 11 pension fund managers; Tier I (pension), Tier II (voluntary).

65. Financial Regulators in India

Topic 65 Quick Recall

5 statutory regulators: RBI (1934/1935), SEBI (1992), IRDAI (1999), PFRDA (2013), IFSCA (2020).
RBI — banks, NBFCs, FX (FEMA 1999), payments, monetary policy; MPC CPI 4 ± 2.
SEBI — securities, MFs, derivatives, commodity (FMC merged 2015); penalty up to ₹25 cr / 3× profit; appeal → SAT → SC.
IRDAI — Hyderabad HQ; FDI cap 74 % (2021); File & Use.
PFRDA — NPS (2004/2009), APY 2015; PFRDA Act 2013.
IFSCA — 1 Oct 2020; unified at GIFT IFSC.
FSDC — Finance Minister-chaired apex coordinator (2010).
Related: NFRA §132 Co Act 2013; IBBI under IBC 2016; FIU-IND under PMLA; CCI 2003.

66. Financial sector reforms including financial inclusion

Topic 66 Quick Recall

Trigger: 1991 BoP crisis → Narasimham Committees.
Narasimham I (1991): CRAR 8 %, deregulate rates, 4-tier banks, private banks allowed.
Narasimham II (1998): ALM, NPA norms, mergers, ARC.
Reforms: 1993 DRTs, 2002 SARFAESI, 2014 JAM, 2016 IBC, 2019 PSB mega-merger, 2021 NaBFID & NARCL, 2022 e₹ pilot.
Mor Committee 2014 → Payments Banks & SFBs (2015).
FI = Access + Usage + Quality (RBI FI-Index).
Schemes: PMJDY 28-Aug-2014; PMJJBY ₹2 L life; PMSBY ₹2 L accident; APY ₹1k-5k pension; MUDRA Shishu/Kishor/Tarun (₹20 L since 2024); Stand-Up India ₹10 L-₹1 cr; PM Vishwakarma 2023.
Digital stack: Aadhaar, JAM, UPI 2016, BHIM, AEPS, AA 2021, ONDC 2022, e₹.
Differentiated banks: 6 PBs (deposit cap ₹2 L); 12 SFBs (75 % PSL).

67. Digitisation of banking and other financial services: Internet banking; mobile banking; Digital payments systems

Topic 67 Quick Recall

Net banking pioneers: ICICI Bank 1996; first ATM HSBC Mumbai 1987; WLA 2012.
NPCI 2008; PSS Act 2007.
Payment systems: RTGS 2004 (RBI), NEFT 2005 (RBI, 24×7 from Dec 2019), IMPS 2010 (NPCI), UPI 2016 (NPCI), AePS 2011, BBPS 2017, e-RUPI 2021, CBDC e₹ Dec 2022 retail.
UPI variants: UPI 2.0 (2018), 123Pay (2022), Lite (2022), Credit on UPI (2022), cross-border links.
India Stack: Aadhaar, eKYC, eSign, DigiLocker, AA, ONDC.
Customer protection: 2FA, zero-liability (3 days), Integrated Ombudsman 2021, DPDP Act 2023.
Emerging: Neo-banks, BaaS, DBUs (75 in 2022), regulatory sandboxes.

68. Insurance: Types of insurance — Life and Non-life insurance; Risk classification and management; Factors limiting the insurability of risk; Re-insurance; Regulatory framework of insurance — IRDA and its role

Topic 68 Quick Recall

6 pillars: Utmost good faith, Insurable interest, Indemnity, Subrogation, Contribution, Proximate cause.
Life vs Non-life: Life = value contract (no indemnity); Non-life = indemnity.
Statutes: Insurance Act 1938 (primary), LIC Act 1956, GIBNA 1972, Marine 1963, MV Act 1988, IRDA Act 1999, Insurance Amendment 2015 (FDI 49 %), 2021 (FDI 74 %).
IRDAI — Hyderabad; max 10 members; solvency 150 %; Use-and-File since 2021; Vision Insurance for All 2047.
Risk treatment — 4Ts: Tolerate, Treat, Transfer, Terminate.
Insurability — large numbers, definite, accidental, not catastrophic, calculable, economical, low moral hazard.
Reinsurance: Facultative vs Treaty; Proportional (QS, Surplus) vs Non-proportional (XL, Stop-loss); Retrocession. GIC Re 1972.
Schemes: PMFBY 2016 (crops); PMJJBY/PMSBY 2015; Ayushman Bharat 2018.

Chapter 8 — Marketing Management

69. Marketing: Concept and approaches; Marketing channels; Marketing mix; Strategic marketing planning; Market segmentation, targeting and positioning

Topic 69 Quick Recall

Definitions: Marketing — AMA (2017); Kotler — “deliver value at profit”.
Orientations: Production → Product → Selling → Marketing → Holistic (Kotler 4 components).
Mix: 4 Ps McCarthy 1960; 7 Ps Booms & Bitner 1981; 4 Cs Lauterborn 1990.
Channels: Zero (D2C) → Three-level; conflicts (horizontal/vertical/multichannel); intensive/selective/exclusive.
Planning: Mission → SWOT/PESTEL → BCG / GE / Ansoff / Porter → Implement → Control.
STP: Segmentation (geo/demo/psycho/behave; MADRA criteria) → Targeting (undiff/diff/niche/micro) → Positioning (attribute/benefit/user/competitor/quality).
Classics: Levitt 1960 “Marketing Myopia”; Drucker — “purpose of business is to create a customer”.

70. Product decisions: Concept; Product line; Product mix decisions; Product life cycle; New product development

Topic 70 Quick Recall

Five levels (Kotler): Core → Basic → Expected → Augmented → Potential.
Consumer products: Convenience, Shopping, Speciality, Unsought.
Mix: Width, Length, Depth, Consistency.
Brand strategies: Line ext., Brand ext., Multi-brand, New brand, Co-brand. Keller’s CBBE pyramid; Aaker — 5 brand-equity dimensions.
PLC: Intro → Growth → Maturity → Decline. Levitt 1965.
NPD 8 stages (Booz, Allen & Hamilton): Idea-gen, screening, concept test, marketing strategy, business analysis, product dev, market test, commercialisation.
Diffusion (Rogers 1962): Innovators 2.5, Early adopters 13.5, Early majority 34, Late majority 34, Laggards 16; 5 attributes — rel. advantage, compatibility, complexity, divisibility, communicability.
Launch strategies: Rapid/Slow Skimming, Rapid/Slow Penetration.

71. Pricing decisions: Factors affecting price determination; Pricing policies and strategies

Topic 71 Quick Recall

Pricing = only revenue-generating P.
Floor = cost; Ceiling = customer value perception.
Kotler 6 steps: Objective → Demand → Cost → Competitor → Method → Final price.
Methods: Cost-plus, Target return, Break-even, Perceived value, Going-rate, Sealed bid, Auction.
New-product strategies: Skimming (Apple) vs Penetration (Jio); Two-part (telecom); Captive (printer-ink).
Mix: Product-line, Optional, Captive, Two-part, By-product, Bundle.
Adjustments: Discount, Allowances, Segmented, Psychological, Promotional, Geographic, Dynamic, International.
India: MRP (Legal Metrology 2011), MSP (CACP), DPCO (NPPA), MSP for 22 crops, Predatory pricing → CCI.

72. Promotion decisions: Role of promotion in marketing; Promotion methods — Advertising; Personal selling; Publicity; Sales promotion tools and techniques; Promotion mix

Topic 72 Quick Recall

Promotion mix (5): Advertising, Sales Promotion, PR/Publicity, Personal Selling, Direct & Digital; Kotler 6 adds events/experiences.
Hierarchy of effects: AIDA (Attention, Interest, Desire, Action); DAGMAR (Colley 1961) — Aware, Comprehend, Conviction, Action.
5 Ms of advertising: Mission, Money, Message, Media, Measurement; Objective-and-Task = best budget method.
Personal selling — 7 steps; B2B’s strongest tool.
PR tools — PENCILS (Kotler).
Sales promotion — short-term; consumer / trade / sales-force.
Direct & Digital: SEM, SEO, social, programmatic, influencer, WhatsApp Business.
Push vs Pull: Push through channel (trade); Pull through consumer.
IMC — Don Schultz 1993.
India: ASCI 1985 (self-reg.); CPA 2019 / CCPA for misleading ads; BARC for TRP.

73. Distribution decisions: Channels of distribution; Channel management

Topic 73 Quick Recall

Channel = interdependent organisations creating time, place, possession, info utilities.
Levels: 0 (D2C) → 3 (Agent → Wholesaler → Retailer → Consumer).
Functions: Information, Promotion, Contact, Matching, Negotiation, Physical distribution, Financing, Risk bearing.
Design (Kotler): Service-level needs → Objectives → Identify alternatives → Evaluate.
Intensity: Intensive (FMCG), Selective (electronics), Exclusive (luxury).
VMS: Corporate (Reliance), Administered (HUL), Contractual (Franchise / wholesaler / retailer-sponsored).
Retail formats: store (dept, super, hyper, specialty, discount, off-price), non-store (direct, online), Indian: kirana/mandi/haat.
Trends: Organised retail, E-com, Q-commerce (Blinkit/Zepto/Instamart), Omnichannel, D2C, ONDC 2022.
FDI: Single-brand 100 % automatic; multi-brand 51 % approval.

74. Consumer Behaviour; Consumer buying process; factors influencing consumer buying decisions

Topic 74 Quick Recall

S-O-R / Black box: stimuli + characteristics → response.
5-stage buying process: Need → Search → Evaluate → Purchase → Post-purchase.
Buying roles: Initiator, Influencer, Decider, Buyer, User (+ Gatekeeper in B2B).
Assael’s 4 types: Complex / Dissonance-reducing / Habitual / Variety-seeking.
4 influencers: Cultural / Social / Personal / Psychological.
Models: Marshall (Economic), Pavlov, Veblen (Sociological), EKB, Howard-Sheth, Nicosia, S-O-R; Webster-Wind for organisational buying.
Buy-class: New task / Modified rebuy / Straight rebuy.
Psychology: Maslow (motivation), Festinger 1957 (dissonance), Pavlov (CC), Skinner (OC), Fishbein (multi-attribute attitudes).

75. Service marketing

Topic 75 Quick Recall

Services in India: ~ 53 % of GDP; IT-ITES, Banking, Healthcare, Tourism.
IHIP characteristics: Intangibility, Heterogeneity, Inseparability, Perishability.
7 Ps: 4 Ps + People, Process, Physical evidence (Booms & Bitner 1981).
Services marketing triangle: External / Internal / Interactive.
SERVQUAL — RATER (PZB 1988); 5 dimensions + 5 Gaps; SERVPERF = performance only (Cronin & Taylor 1992).
Blueprinting — Lynn Shostack 1984; MOTs — Jan Carlzon (SAS).
Recovery paradox; yield management in airlines/hotels.
Lovelock 4 categories: People / Possession / Mental / Information processing.
NPS — Reichheld 2003.

77. Logistics management

Topic 77 Quick Recall

Logistics — CSCMP definition; 7 Rs of logistics.
Mix: Order processing + Warehousing + Inventory + Transport + Materials handling + Information.
Modes: Road (flexible), Rail (bulk), Water (cheapest), Air (fastest), Pipeline (liquid/gas), Intermodal.
Inventory: EOQ (Harris/Wilson 1913), ABC, VED, FSN, JIT (Toyota), VMI, Safety stock.
SCM: SCOR (Plan-Source-Make-Deliver-Return); Bullwhip effect; 3PL/4PL; Reverse logistics; CPFR; Postponement.
India: NLP 2022, GatiShakti 2021, ULIP, DFC (Eastern & Western), Sagarmala (ports), Bharatmala (highways), UDAN (air), MMLPs, LEADS Index, e-way bill under GST 2018.
KPIs: OTIF, fill rate, cycle time, cost-to-serve, perfect-order, carbon intensity.

Chapter 9 — Legal Aspects of Business

79. Special contracts: Contracts of indemnity and guarantee; contracts of bailment and pledge; Contracts of agency

Topic 79 Quick Recall

Indemnity §§ 124-125 — two parties, save from loss by human conduct.
Guarantee §§ 126-147 — three parties, surety secondary liability; continuing g’tee §129; subrogation §140.
Bailment §§ 148-171 — delivery of goods for a purpose; bailee’s care §151; finder §§168-169; lien §170 (particular) / §171 (general — banker, factor, attorney, wharfinger, policy broker).
Pledge §§ 172-181 — bailment as security; sell after notice §176; pledge by non-owners §178/§178A.
Agency §§ 182-238 — agent §182; minor as agent §184; sub-agent §191; substituted §194; ratification §§196-200; agency coupled with interest irrevocable §202.

80. Sale of Goods Act, 1930: Sale and agreement to sell; Doctrine of Caveat Emptor; Rights of unpaid seller and rights of buyer

Topic 80 Quick Recall

Act: SoGA 1 July 1930, 66 sections, carved out of Contract Act.
§4: Sale (executed, property passes) vs Agreement to sell (executory).
Goods: existing (specific §2(14)/ascertained/unascertained), future, contingent.
Condition vs Warranty: §12; conditions can be waived to warranties.
Implied conditions: §14(a) title, §15 description, §16(1) fitness, §16(2) merchantable, §17 sample.
Caveat emptor §16 — exceptions (fitness, merchantable, sample, custom, fraud).
Transfer: §§18-25; §26 — risk follows property.
Nemo dat §27; exceptions (mercantile agent, voidable contract, seller/buyer in possession, etc.).
Unpaid seller §45: lien §§47-49, stoppage §§50-52, resale §54, sue for price §55.
Buyer remedies: §§57-61.
Auction §64 — fall of hammer.

81. Negotiable Instruments Act, 1881: Types of negotiable instruments; Negotiation and assignment; Dishonour and discharge of negotiable instruments

Topic 81 Quick Recall

NIA 1881 — in force 1 March 1882; §13 — NI = PN/BoE/Cheque payable to order or bearer.
§4 PN, §5 BoE, §6 Cheque, §9 HDC, §14 Negotiation.
Parties: PN (2), BoE (3 — drawer, drawee/acceptor, payee), Cheque (3).
Days of grace: 3 (time bills only); none for cheque.
Endorsement: blank, full, restrictive, partial, conditional, sans recourse, facultative.
Crossing: §123 general, §124 special, §130 not negotiable, A/c Payee.
Dishonour: §§91-92; notice §§93-98; protest §§99-104A.
§138 cheque bounce: 30 days notice + 15 days to pay + 1 month to file; up to 2 yrs or 2× cheque amount; non-cognizable, bailable, compoundable; 2018 amendment — interim comp up to 20 %.
Discharge: §§82-90; §87 material alteration void.
§118 presumptions (consideration, date, time, HDC).

82. The Companies Act, 2013: Nature and kinds of companies; Company formation; Management, meetings and winding up of a joint stock company

Topic 82 Quick Recall

Act: 2013; assent 29 Aug 2013; 470 sections, 7 schedules, 29 chapters; admin by MCA.
Features: separate legal entity (Salomon 1897), perpetual succession, limited liability, transferable shares.
Kinds: Private (2-200), Public (≥7), OPC (1, §2(62)), Govt (≥51 %), Sec 8 (non-profit), Small (paid-up ≤₹4 cr & turnover ≤₹40 cr).
Formation: SPICe+ form; MoA §4, AoA §5; Cert of incorporation conclusive evidence; §10A INC-20A.
Doctrines: Ultra Vires (Ashbury 1875), Constructive Notice, Indoor Management (Turquand 1856).
Board: min 3 (pub), 2 (pvt), 1 (OPC); max 15; ≥1/3 IDs in listed cos; 4 meetings/yr, gap 120 days.
Meetings: AGM (§96) — 15 mo max gap; first within 9 months; EGM §100; Postal ballot §110; Statutory meeting abolished.
Resolutions: Ordinary > 50 %, Special ≥ 75 %.
CSR §135: NW ≥ ₹500 cr / TO ≥ ₹1000 cr / NP ≥ ₹5 cr; 2 % of avg NP (3 yrs).
Winding up: compulsory §§271-303 by NCLT; IBC waterfall §53.

83. Limited Liability Partnership: Structure and procedure of formation of LLP in India

Topic 83 Quick Recall

LLP Act 2008 — assent 7 Jan 2009; effective 31 March 2009; on Naresh Chandra 2003 & Irani 2005 Committees.
Hybrid form: limited liability + partnership flexibility.
Min 2 partners; no max; min 2 DPs; 1 resident DP (120 days).
No min capital.
Forms: FiLLiP (incorporation), Form 3 (agreement, 30 days), Form 8 (solvency), Form 11 (annual return), Form 24 (strike-off).
Audit: TO ≥ ₹40 L or contribution ≥ ₹25 L.
Tax: flat 30 % + surcharge & cess; no DDT.
Conversion: Sch II (firm), Sch III (pvt co), Sch IV (unlisted public co).
Winding-up: NCLT compulsory; IBC since 1 Apr 2017.

84. The Competition Act, 2002: Objectives and main provisions

Topic 84 Quick Recall

Replaced MRTP 1969; based on Raghavan Committee 2000.
4 pillars: §3 agreements; §4 abuse; §§5-6 combinations; §49 advocacy.
§3(3) horizontal: per se illegal — price-fix, output limit, market share, bid rig.
§3(4) vertical: rule of reason — tie-in, exclusive, refusal, RPM.
§4 abuse: unfair price, predatory pricing, denial of access, tying, leverage.
CCI — fully functional 20 May 2009; HQ New Delhi; DG investigator; penalty up to 10 % TO or 3× profit; §46 leniency.
Combinations — pre-notification with thresholds; 2023 Amendment — deal value > ₹2,000 cr; settlement/commitment; leniency-plus.
Appeals → NCLAT (since 2017) → Supreme Court.

85. The Information Technology Act, 2000: Objectives and main provisions; Cyber crimes and penalties

Topic 85 Quick Recall

IT Act 2000 — based on UNCITRAL 1996; in force 17 Oct 2000; major 2008 amendment (effective 27 Oct 2009).
Signatures: §3 digital, §3A electronic; CCA under § 17.
E-gov: §4 records, §5 signature, §10A e-contracts.
Penalties §43; §43A SPDI Rules 2011 — body-corporate data security.
Offences: §65 source code, §66 hacking, §66A struck down (Shreya Singhal 2015), 66B receiving, 66C ID theft, 66D phishing, 66E privacy, 66F cyber-terror (life), §67/A/B obscene/explicit/child, §70 CII attack (10 yrs), §72 breach of confidentiality, §72A disclosure.
§79 safe-harbour + IT Rules 2021/22/23.
Appeals — TDSAT since 2017.
Related: CERT-In 2004, NCIIPC, I4C 2018, DPDP Act 2023.

86. The RTI Act, 2005: Objectives and main provisions

Topic 86 Quick Recall

Assent 15 June 2005; effective 12 Oct 2005; replaced FOI 2002.
Suo-motu §4 — 17 items proactively published.
Application §6 — fee ₹10; written/electronic; in any official language.
Reply §7 — 30 days; 48 hrs life/liberty; 40 days for TP info.
Appeals: 1st (30 d) → 2nd to CIC/SIC (90 d). Penalty ₹250/day, max ₹25,000 (§20).
Exemptions — §8 (10 grounds); §9 copyright; §24 Second Schedule (26 security agencies; corruption/HR violations not exempt).
Public interest override §8(2).
CIC — PM + LoP + Cabinet Minister committee, appointed by President; RTI Amendment 2019 changed tenure/salary.
Roots: Art 19(1)(a); SP Gupta 1981, Raj Narain 1975, PUCL 2003, Subhash Chandra Agrawal 2019.

87. Intellectual Property Rights (IPRs): Patents, trademarks and copyrights; Emerging issues in intellectual property

Topic 87 Quick Recall

Statutes: Patents 1970 (TM 2005), Trade Marks 1999, Copyright 1957, Designs 2000, GI 1999, PPV&FR 2001, SICLD 2000.
Terms: Patent 20 yr, TM 10 yr renewable, Copyright life + 60, Design 10+5, GI 10.
Patentability: novelty + inventive step + industrial applicability; §3(d) anti-evergreening (Novartis 2013); §84 CL — first Natco v Bayer 2012.
Trademark: Nice 45 classes; Madrid Protocol since 2013; § 103-104 criminal.
Copyright: automatic, §52 fair dealing, §57 moral rights.
GI: Darjeeling Tea 2004 — first; Banarasi, Mysore Silk, Kanchipuram, Basmati (post-battle), Kashmir Saffron.
International: Paris 1883, Berne 1886, TRIPS 1995 (WTO), PCT (India 1998), Madrid (2013), Budapest.
India NIPR Policy 2016; IPAB abolished 2021; TKDL (CSIR-NISCAIR).

88. Goods and Services Tax (GST): Objectives and main provisions; Benefits of GST; Implementation mechanism; Working of dual GST

Topic 88 Quick Recall

Date: 1 July 2017 via 101st CAA 2016.
Articles: 246A (concurrent), 269A (IGST), 279A (Council), 366(12A) (definition).
Dual GST: CGST + SGST/UTGST intra-state; IGST inter-state + imports; compensation cess.
Council — FM chair; 3/4 vote (Centre 1/3, States 2/3).
Slabs: 0, 5, 12, 18, 28 % + 0.25 / 3 %; alcohol & petroleum outside GST.
Registration: goods ₹40 L / services ₹20 L; composition ₹1.5 cr goods / ₹50 L services.
Returns: GSTR-1, 3B, 9/9C; e-invoice ≥ ₹5 cr; e-way bill > ₹50,000.
ITC §16; blocked §17(5).
Bodies: CBIC, State tax dept, GSTN, GSTAT 2024, NAA → CCI 2022.

Chapter 10 — Income Tax and Corporate Tax Planning

89. Income-tax: Basic concepts; Residential status and tax incidence; Exempted incomes; Agricultural income; Computation of taxable income under various heads; Deductions from Gross total income; Assessment of Individuals; Clubbing of incomes

Topic 89 Quick Recall

Act 1961, Rules 1962, Finance Act annual; CBDT.
Person §2(31) — 7 categories; AY = PY + 1.
5 heads §14: Salary, House Property, PGBP, Capital Gains, Other Sources.
Residence §6: basic 182 / (60+365); ROR additional 2/10 + 730/7.
§5 scope: ROR — global, RNOR — Indian, NR — Indian only.
Agri exempt §10(1); partial integration if net agri > ₹5,000 + non-agri > basic.
Salary §16: std deduction ₹50k old / ₹75k new (FY 2024-25).
House property §24: 30 % + interest (₹2 L SOP).
PGBP: §44AB audit ₹1 cr/₹10 cr; presumptive §44AD 8/6 %, §44ADA 50 %.
CG: STCG §111A 20 %; LTCG §112A 12.5 % above ₹1.25 L.
Chapter VI-A: 80C ₹1.5 L; 80CCD(1B) ₹50k; 80D ₹25k/₹50k; 80G; 80E; 80TTA/TTB.
New regime §115BAC default; rebate §87A ₹25k (new) / ₹12.5k (old).
Clubbing §§60-65; minor §64(1A) + ₹1,500 §10(32).

90. International Taxation: Double taxation and its avoidance mechanism; Transfer pricing

Topic 90 Quick Recall

Double taxation — source-residence conflict.
DTAA methods: Exemption, Credit, Underlying tax credit, Tax sparing, Deduction.
Bilateral §90; Unilateral §91; treaty / Act, whichever more beneficial (subject to GAAR).
PE (OECD Art 5) — fixed-place, construction, service, agency, insurance, SEP (digital, §9 since 2021).
GAAR Ch X-A — ₹3 cr threshold; effective 1 April 2017.
TP §§92-92F — ALP via CUP, RPM, CPM, PSM, TNMM, Other; §92E Form 3CEB; §92CC APA (5+4 yrs); §92CB safe harbour; § 286 CbCR > ₹6,400 cr.
BEPS 2.0: Pillar 1 reallocation, Pillar 2 — 15 % global minimum; MLI in force June 2019.
Equalisation Levy: 6 % ads since 2016; 2 % e-com 2020 (withdrawn 1 Aug 2024).
Notable cases: Azadi Bachao 2003, Vodafone 2012, Engineering Analysis 2021, Nestlé MFN 2023.

91. Corporate Tax Planning: Concepts and significance of corporate tax planning; Tax avoidance versus tax evasion; Techniques of corporate tax planning; Tax considerations in specific business situations

Topic 91 Quick Recall

Tax planning vs avoidance vs evasion vs management.
Indian corporate rates: 30 % default; 25 % (TO ≤ ₹400 cr); §115BAA 22 %; §115BAB 15 % new mfg; MAT 15 %; foreign co 35 % (post Budget 2024).
DDT abolished FY 2020-21; dividend taxed in shareholder hands; buy-back tax shifted to shareholder from 1 Oct 2024.
Techniques: form of org, location (SEZ §10AA, backward area), capex with depreciation (§32 + 20 % additional §32(iia)), capital structure, MAT credit, loss c/f (§§70-80, §72A merger), § 47(xiiib) co → LLP.
Decisions: Make-buy, Own vs Lease, Replace, Shut down — compare post-tax differential cash flow / NPV.
Start-up §80-IAC: 100 % deduction any 3 of first 10 yrs.
VRS amortisation §35DDA — 5 yrs.

92. Deduction and collection of tax at source; Advance payment of tax; E-filing of income-tax returns

Topic 92 Quick Recall

Pre-paid taxes: TDS + TCS + Advance tax; balance via §140A SAT.
TDS: §192 salary, §194A interest, §194C contract (1/2 %), §194I rent, §194IA property (1 %), §194J professional 10 %, §194N cash withdrawal, §194Q purchase of goods 0.1 %, §194R benefits, §194S VDA 1 %, §195 non-resident, §206AA 20 % no-PAN.
Returns: 24Q salary, 26Q non-salary, 27Q non-resident.
Forms: 16, 16A, 16B (property), 16C, 16D.
Advance tax §208 ≥ ₹10,000; instalments 15/45/75/100 % by 15-Jun/Sep/Dec/Mar; §234A/B/C interest 1 %/month; refund §244A 0.5 %.
ITR forms 1-7 — Sahaj/Sugam etc.; due dates 31 Jul / 31 Oct / 30 Nov; belated/revised §139(4)/(5) by 31 Dec; §139(8A) updated within 2 yrs.
Faceless §144B, AIS, TIS, Form 26AS; PAN-Aadhaar mandatory.