Company Amalgamation and Revaluation Method

TERMINOLOGIES ASSOCIATED WITH INFLATION
1. Inflationary gap: Inflationary gap refers to an economic situation in which the total demand in the economy exceeds the total supply of goods and services available to satisfy demand. Inflationary gap is calculated as the difference between the total amount of money available for spending and the total money value of goods and services available to meet the demand. The greater the inflationary gap, the greater the rate of inflation in the company and vice versa.

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Efficiency of Labour

INTRODUCTION
 
Efficiency of labor may be defined as the ability of labor to increase output without increasing the quantity of labor. Increase in efficiency is normally expressed in terns of increase in output of labor within a shorter period of time without any fall in the quality of goods and services produced. If a labour is efficient, the quality of goods and services produced will be high.

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Concept of labour and factors affecting the size of abour force

INTRODUCTION

Labour can be defined as all human efforts of any kind, either skilled or unskilled, mental or manual, directed towards the production of goods and services.

Market, on the other hand, is defined as a place or any means of communication whereby the sellers and buyers can communicate with one another, to exchange goods and services at prices determined by the market forces.

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Basic Economic Problems: What to produce, how to produce, for whom to produce and effiency of Resource Use.

INTRODUCTION

Basic economic problems refer to the problems people encounter in the society while attempting to satisfy their numerous wants with the limited resources available to them. These basic economic problems of society include what to produce, how to produce, for whom to produce and efficiency of the resources used or efficient use of resources.

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Effects And Control of Inflation

Inflation has both positive and negative effects:

The Positive effects

1. Reduction in burden of debt: During inflation, debtors gain because there is too much money in circulation, which will enable them to pay their debts with ease.
2. Higher profit margin: Because producers are selling their goods at higher prices, this will lead to higher profits.
3. Higher tax yield: As a result of high volume of money in circulation, government is able to realize high yield from taxes.

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Definition, Types And Causes of Inflation

INTRODUCTION

Inflation may be defined as the persistent rise in the general price level of goods and services. Inflation occurs when the volume of purchases is permanently running ahead of production, with too much money in circulation chasing too few goods.

TYPES OF INFLATION

There are four main types of inflation. These are:

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Limitations To The Scale of Production or To The Growth of Firms.

LIMITATIONS

There are some limitations affecting the growth of firms or the scale of production. Some of which are:

1. Extent of the market: When there is a high demand for certain products of a firm, this will motivate the firm to produce more goods so as to expand.
   
   
2. Availability of capital: The availability of adequate capital and other resources will enable a firm to expand and produce more goods but when these resources are no more available, growth and expansion will be impossible.
   
   
3. Falling price of the commodity: A falling price of the commodity without corresponding increase in supply definitely tends to lower the scale of production.
   
   
4. Increased risks: It is generally known that the bigger a firm, the greater the level of risks and vice versa. In order to reduce the level of risks, the size of the firm has to be reduced.
   
   
5. Nature of Business: The nature of business is directly related to the scale of production. When a large number of people demand for a particular commodity, it will require a large firm to handle it but when a personal service of a barber for example is required, the size of the firm has to be small.
   
   
6. Need to cater for individual taste: Large firms are known and associated with standardization of products which does not meet the taste of individual. To meet this taste, there will be limitations in the scale of production.
   
   
7. Nature of the firm's products: If a firm's products are of inferior and perishable type, their size and growth are definitely going to be limited.
   
   
8. Increasing management costs: When a firm embarks on large scale expansion, there is a corresponding employment of managers and this tends to increase the cost of production of such firms.

EXTERNAL ECONOMIES AND EXTERNAL DISECONOMIES

External economies are the benefits a firm derives from concentration or localisation of industries in a particular area. In other words, these are the benefits a firm enjoys from increase in its output and decrease in cost as a result of the kind of assistance it derives from other firms within the same location. External economies are mostly derived from industrial estates where there are many firms operating in the same location.

External dis-economies, on the other hand, means the advantages a firm experiences when the activities of one or more industries increase the cost of production or output of that firm within the same location.

The advantages and disadvantages of localization of industries are also applicable to external economies and dis-economies.

You can also read the following related topics:
1.Labor as a factor of production
2.Capital as a factor of production
3.Entrepreneur as a factor of production
4.Land as a of production

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Entrepreneur As A Factor of Production

INTRODUCTION

An entrepreneur can be defined as the factor of production that co-ordinates and organizes other factors of production (Land, Labour and Capital) in order to produce goods and services. The entrepreneur bears the risks and takes his capital in setting up the business with the aim of obtaining maximum profit.

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Capital As A Factor Of production

INTRODUCTION

Capital can be defined as man-made assets used in production. In other words, capital refers to man-made goods or wealth used in the production of other goods and services. It may also be defined as the stock of previous wealth invested in order to produce future wealth.

Capital, when properly combined with other factors of production, produces goods and services.

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Labor As A Factor Of Production

LABOR
Labor as a factor of production is defined as all forms of human efforts put into or utilized in production. It also refers to man's mental and physical exertions generated in the process of production.

Human beings provide the necessary labor which combines with other factors to provide goods and services.

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Land As A Factor Of Production

INTRODUCTION

Factors of production refers to agents, resources or components that are combined together to produce goods and services. We have only four factors of production which are:

1. Land
2. Labor
3. capital
4. Entrepreneur

 LAND
Land can be defined in economics as a free gift of nature.

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Importance And Factors That Determine The Level Of Production

FACTORS THAT DETERMINE THE LEVEL OF PRODUCTION

1. Amount of capital: The amount of capital available to a producer determines the volume of production. The greater the amount of available capital, the higher the volume of production and vice versa.

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Know More About Theory Of Production

INTRODUCTION
Production can be defined as the various economic activities aimed at the creation of goods and the distribution of the goods and services to the final consumers for the satisfaction of human wants.

Production can also be defined as the creation of utility. All goods and services must possess utility. That is to say that they must be capable of satisfying certain human wants.

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Divisions of Subsidiary Books

This is the continuation of the the previous post. To read the Part, click here

The Subsidiary books are divided into six, which are sales day book, purchases day book, sales return, purchases return, general journal and cash book.

1. SALES DAY BOOK
It is a book of original entry in which credit sales are entered or recorded before posting to the ledgers. In the sales day book, cash transactions should and must not be recorded.

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Subsidiary Books And Source Documents

INTRODUCTION
There are two books of accounts, namely:
1. Principal books.
2. Subsidiary books.

Let it be noted that the two books are very necessary in the recording of financial transactions. All transactions must must pass through the books of accounts.
The subsidiary books are explained below while you are to click here for the the principal books.

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