METHODS OF DATA COLLECTION

Data can be regarded as information. It can be given out or taken for the purpose of making interferences in research. In this case, it may include numerical or statistical results or figures such as percentages. It may also include verbal materials like newspaper accounts, scholastic essay etc. we can therefore say that any collection of verbal or numerical information from which inferences or conclusions can be drawn or analyzed is regarded as data. It means that data can be quantitative or qualitative. 

Any information which comes in numbers, figures, measures or quantities is said to be quantitative. Where as any information which comes as a verbal description of attribute or characteristics is regarded as qualitative. So when you have evidences obtained from other research studies, observations made from the field and laboratory settings, information extracted from records and documents, score collected from tests of various types etc; you say you have data. 

Remember that you go to the field to collect data for the purpose of using the data carefully collected from your subject, to test your hypotheses in order to draw your inferences and conclusions. These inferences and conclusions are about rejecting the hypotheses or supporting them as away of providing answers to your problem of study. Therefore, the data you collect and the tools which you use for collecting them must be relevant to your hypotheses and research design. According to Tolbert (1967) all data gathering devices should be closely related to the design of the study. You can conveniently describe data collection then, as a research activity involving the process of gathering relevant information with reference to the stated hypotheses, variables and design

TYPES OF DATA USED IN RESEARCH INVESTIGATIONS 
There are basically two categories data collected and used in research. These, according to Gupte (1979) are: - Primary data and Secondary data

Primary data: These are information, facts or statistical materials which you as a researcher originate for the purpose of the inquiry on hand. This is sometimes popularly called the “First hand information” or “information from the horses mouth”. They are referred to as eye witness account of an event or phenomenon. Such information is extracted from the actual participants themselves. It may be through oral interviews or discussions or through written diaries, minutes, proceedings, pictures, objects etc

 Secondary data: These refer to information, facts or statistical materials which are not originated by you as the researcher or investigator. These are materials from someone else‟s records or other documents like books, journals, newspaper reports and other research works that may be got from the libraries. In the simplest form, secondary data are not first hand information.

QUESTIONNAIRE METHOD OF COLLECTING DATA 
Let us start this section by letting you know that any time you want to collect data. You will need to consider some factors before you choose the suitable method. These factors include: Purpose, problem and hypothesis of the study Time required for the study The accuracy desired of the study Funds available for the study Other facilities available and The nature of the person conducting the research in terms of the level of training. 

Most researchers, who conduct survey researches, make use of the questionnaire as the instrument for data collection. The questionnaire is generally a form containing some questions which the respondents fill out without any help or comment from the researcher. It enables data to be collected from large samples

According to Okpata, Onuoha and Oyedeji (1993) a questionnaire is a self reporting instrument that has received a good use in educational, researches, psychological and social science researches, programme evaluation etc. it is described as the most common type of research instrument.

CHARACTERISTICS OF A GOOD QUESTIONNAIRE 
The characteristics of a good questionnaire are: 
- A questionnaire deals with a significant topic:. The topic or problem should be such that any respondent will recognize it as important enough to warrant spending his time on. Therefore, the significance should be clearly and carefully stated either on the questionnaire or in the accompanying letter. 
 - It seeks only such information which cannot be obtained from other sources like financial reports, census data etc. 

 - It is as short as possible, and only long enough to get the essential data. Do not make the instrument very long. This is because most people find it time wasting. Most of the times, long questionnaires find their ways into the waste basket. Therefore, make the questionnaire response clear and very easy to complete. Keep the writing required to a minimum. 

 - It is attractive in appearance. It is neatly arranged and clearly printed or produced.

 - Instructions are clear and complete. Important terms are defined. Each item deals with a single idea and is worded as simply and possible.

CONSTRUCTION OF A QUESTIONNAIRE 
According to Okpala, et al (1995) a researcher is faced with respondents who have great amount of information that could go untapped unless the questionnaire items are valid and reliable enough to elicit the required information. Henderson et al (1978) suggested eight steps to which the process of developing and using a questionnaire can be divided. 
These are; 

• Identifying the programmes objectives and specific information to be obtained. 
• Select a response format 
• Identifying the frame of reference of the respondents. 
• Writing the items/questions 
• Preparing a data summary sheet 
• Critiquing the questions, trying them out and revising them 
• Assembling the questionnaires 
• Administering the questionnaires

TYPES OF QUESTIONNAIRES 

There are two main types of questionnaires based on two basic types of question formats. These are closed ended questions and open-ended questions. Closed ended questions and those that provide respondent with fixed set of alternatives from which they are to choose. For instance, the response format of multiple choice-items and scales are all closed-ended. Where as open-ended questions are those questions to which the respondents write their own response, as it is in an essay examination questions. 

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RESEARCH METHODOLOGY

kalin (1995) sees research as the systematic and objective analysis and recording of controlled observations that may lead to the development of generalizations, principles or theories, resulting in prediction and possibly ultimate control of events. 

Research may be broadly described as any systematic endeavors or striving towards the understanding, on perceiving certain complex situational problem of more than immediate personal concern and stated in a problematic form (Heros, 1960)

Travers (1969) has described research as an activity directed towards the development of an organized body of scientific knowledge about the events with which human  beings are concerned

Leedy (1997) defines research as the systematic process of collecting and analyzing information (data) in order to increase our understanding of the phenomenon with which we are concerned or interested.

Research originates with a question or problem: Everywhere around us is filled with many answered questions and unresolved problems. When we look around, we observe things that make us wonder and to ask questions. These questions may start to spark igniting chains of reactions which terminate in the research process. An inquisitive mind is the beginning of research. 

Research requires a clear articulation of a goal: It is critical to have a clear and unambiguous statement of the problem. This statement gives you an exercise in intellectual honesty. The ultimate goals of the research should be given in a grammatically complete sentence which is precise and clear. 

Research requires a specific plan of procedure: You should not hope that the data necessary to solve the problem would somehow fortuitously come up. You have to have rather a planned attack, a search – and – discover mission explicitly planned or designed in advance. 

Research usually divides the principal problem into more manageable subproblems: A whole is made up of parts. This is a natural law universally accepted. So when you think about your principal goal in research, try to observe this goal precept. Research is guided by specific research questions, problems or hypothesis: These guide you and direct you on what to do and how to do it in order to arrive at the solution to the problem. 

Research accepts certain critical assumptions: These must be self-evident truths. These assumptions must be valid in order to make the research to proceed. You must let others know what you assume with respect to your study.

Research requires the collection and interpretation of data: You need to collect appropriate data, organize them in a meaningful way so that they can be analyzed and interpreted.

CHARACTERISTICS OF RESEARCH

The major characteristics of any research are; Objectivity, precision, design and verifiability.

Objectivity: In an ideal situation, a research is beyond the subjective bias of the researcher. As a researcher, you have to make deliberate efforts to eliminate all personal preferences. You should resist the temptation to seek only such data which support your hypotheses or your 9 line of taught. In a scientific research, emphasis is on testing the hypothesis not to prove it. You have to willingly suspend your personal judgment in order to allow the data and logic to lead independently to a sound conclusion.

Precision: When you conduct a good research and write the report but your readers do not understand what you have done, you may have succeeded in wasting your time and efforts. Every research should use a technical language in order to convey the exact meaning to the readers. Such research languages include validity, reliability, random sampling variables etc. The most precise expression in quantitative research is the mathematical equation or statistical finding which explains or represents the truth. But in qualitative research, precision is achieved through words rather than numbers

Design: If you want to have a good research, you must have a very good and systematic design. This implies that every scientific inquiry will generally undergo such steps as:

 - Definition of the problem 

 - Statement of the hypothesis 

 - Collection and analysis of data 

 - Testing and confirmation or rejection of hypothesis. 

 - Reporting of the results. 

Any research, which has no orderly design, cannot be replicated for verification.

Verifiability: When you conduct a research, you write your report. This presents the research design and the findings to the professional community. From this point other researchers and scholars will study the report, analyze it in order to confirm or reject the outcomes. This tells you that research is a social enterprise. Its information is open for public scrutiny. Verification is related to objectivity and precision. It is only through further investigation or replication of the study can the results of any study be confirmed, revised or rejected. It is also through this process that a body of new knowledge is developed and new questions identified. 

Verifiability can be achieved through two different approaches:

- Analyzing the same data on the same sample through alternative analytical tools or statistical methods.

-  Replicating the study on a different sample.

TYPES OF RESEARCH 

Research in general can be classified in many different ways. If we want to classify research based on its goal or objective, then we think of two major types. These are fundamental or basic research and applied research.

Fundamental Research: The main purpose of these types of research is to obtain empirical data which can be used to formulate, expand or evaluate a theory. It is not actually directed in design or purpose towards the solution of practical problems. The main aim is to expand the frontiers of knowledge without the intention of having practical applications.

Applied Research: Unlike basic research, this type is directed towards the solution to an immediate, specific and practical problem. It is the type of research which you can conduct in relation to actual problems and under the conditions in which they are found in practice.

When research is classified according to methodology, if can also be classified according to Creswell (1994) into two broad areas. These are quantitative and qualitative approaches.

Quantitative and Qualitative Research: According to Leedy (1995) Quantitative research is an inquiry into a social or human problem, based on testing a theory composed of variables measured with numbers or figures and analyzed with statistical procedures in order to determine whether the predictive generalizations of the theory hold true. He also defines Qualitative research is an enquiry process of understanding a social or human problem, based on building a complex, holistic picture formed with words reporting detailed views of information, and conducted in a natural setting.

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DEFINITION AND SCOPE OF LABOUR ECONOMICS

Definition of Labour Economics
Labour is the totality of all human, physical and mental efforts used in creation of goods and services.
That is, it is the measure of work done (i.e. physical or mental) by human beings. From the above definition, it is clear that labour is an important factor of productive resources. Also, it is logical to
conclude that labour in economics is not just limited to physical effort but also mental activities which give rise to the creation of utility. 
Therefore, in the field of economics, labour is classified into skilled, semi-skilled and unskilled labour.

Skilled Labour: It is a segment of the work force with a high skill level that creates significant economic value through the work performed. Skilled labour is characterised by advanced or formal education. Examples of skilled labour include medical doctors, engineers, scientists, lecturers, lawyers, etc.
Semi-Skilled labour: It is the part of the work force requiring less training than skilled labour, and more than unskilled labour. The labour requirement here is generally routine in nature and requires less skill or expertise. Examples include book binder, ironman, dyer, dry cleaner, etc. it can be added that semi-skilled labour stands in between the skilled labour and unskilled labour.
Unskilled labour: This requires operations that involve the performance of simple duties, which require little or no skill. This kind of labour requires physical exertion as well as familiarity with variety of articles. Examples include watchman, sweeper, cleaner, loader, messenger, etc.

Economics is concerned with maximization of resources (i.e. labour) to achieve maximum output.

Labour economics is defined as the branch of economics which studies how the market for labour operates, with a view to understanding the interactions between workers and employers. Labour
economics studies the nature and determinants of employment and compensation. There are three (3) key players in the Labour market: the workers, the firm and the government. 

Labour economics basically looks at the suppliers of labour services (workers), the demanders of labour services (employers), and attempts to understand the resulting pattern of wages, employment and income.

Below are some of the reasons for studying labour economics;
 For virtually all households in the economy, the sale of their labour services constitutes their major source of income.
 The price of the goods that they sell is the main determinant of their economic well being.
 To understand the distribution of income in society─who earns what and why, we need to understand labour markets, and how wages are determined.
 Like every commodity, labour has a number of special features/peculiarities that must be taken
into account in a more in-depth analysis.
 Each of these features has important implications for how labour markets work and for prices and
quantities.
 Labour economics helps to understand the result pattern of income, employment and wages by examining and analyzing wage distribution across industries.
 It has helped us to gain a far better understanding of the factors affecting labour and labour market.

Labour Market
In a simple term, labour market is a market in which workers find paying work, employers find willing and able workers, and the wage rates are determined. Technically, labour market involves the interplay of the demand for labour and the supply of labour in the determination of the wage rate

Types of labour market
There are two types of labour market: internal and external labour market.
Internal labour market (ILM) refers to the determinants of pay and employment within a firm, while external labour market (ELM) refers to the determinants of pay and employment between firms, or within and across industries. Economists place emphasis on these distinctions in explaining how labour market works.

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GENERAL INTRODUCTION TO LAW AND BUSINESS LAW

Law simply means “that which is laid down, ordained or established; a rule or method according to which phenomena or actions co-exist or follow each other. That which must be obeyed and followed by citizens subject to sanctions or legal consequences is a “law.”

Classification of Law
(i) Public Law deals with the State in its political and sovereign capacity e.g. Criminal Law, Administrative and Constitutional Law.
(ii) Private Law is administered between citizens. It deals with enforcement of rights e.g Contract, Family Law, Torts, Trusts and Succession.
(iii) Public International Law consists of rules regulating relationship amongst sovereign states.
(iv) Private International Law is also called “Conflict of Laws,” that is, differences between the municipal laws of different countries. It arises from the diversity of laws of the different nations and the need to reconcile the inconsistency e.g. Marriage laws.

Law, Morals and Religion
(i) Law consists of rules and regulations.
(ii) Law varies from culture to culture hence the problem of universally accepted definition. Law is therefore better described in line with what it does in a particular setting.
(iii) Morality is premised on human behaviour. It is based on the notion of what is good or bad or what is right or wrong in the circumstance. Ability to enforce law is the main distinction between law and morality. Law, if disobeyed, is punitive. Violation of moral precepts leads to social sanction repulsion, indignation or surprise
(iv) Religion guides the morals of a given society by preaching what is good or bad. It impacts on the inner spiritual being of the people. According to Philosopher Karl Mark, ‘Religion is the opium of the people.’
(v) Law is essentially premised on authority and command. Austin (John) said. “It is the command of the commander to the commanded and as such, it must be obeyed, good or bad.” Bad laws may still be valid e.g. in Hitler’s Germany or Saddam Hussein’s Iraq.

Concept of Justice
􂀕 Justice means the idea of fairness according to law.
􂀕 The idea of justice is highly instrumental to the understanding of law.
􂀕 Justice is all about the just and fair application of legal rules with emphasis on fair hearing, natural justice and adherence to the due process of law. Justice is synonymous with peace in the society. The antithesis of justice is chaos and anarchy.
􂀕 Justice also relates to the fair and equitable distribution of obligations and opportunities in the society

Rule of Law
- The concept of rule of law pre-supposes that all activities within the society should be done according to laid down procedures. There should be no arbitrary actions by individuals, groups or institutions of governance.
- The idea of Rule of Law was propounded by A.V. Dicey, an English constitutional law expert who summarized it under the three principles of legality, equality and impartiality. Access to these implies freedom, liberty and justice for the citizens.
- Society would be orderly and peaceful. Economic, social and political development would be assured.

Fundamental Human Rights
Fundamental human rights are those categories of rights to which citizens are naturally entitled. They are inalienable rights that cannot be ordinarily derogated from. Those outlined in the 1999 Constitution (as amended) among others include:

(a) Right to life (s. 33)
(b) Right to dignity of human person (s. 34)
(c) Right to personal liberty (s. 35)
(d) Right to fair hearing (s. 36)
(e) Right to private and family life (s. 37)
(f) Right to freedom of thought, conscience and religion (s. 38)
(g) Right to freedom of expression and the press (s. 39)
(h) Right to peaceful assembly and association (s.40)
(i) Right to freedom of movement (s. 41)
(j) Right to freedom from discrimination (s. 42)
(k) Right to acquire and own immovable property anywhere in Nigeria (s. 43) Section 44 enacts that there shall be no compulsory takeover of property without adequate compensation

Functions of law in the society
(i) Maintenance of law and order
(ii) Ensuring national unity and cohesion
(iii) Resolving conflicting interests
(iv) Serving as means of social cleansing
(v) Serving as means of social engineering
(vi) Serving as means of correcting and guiding the people
(vii) Articulating and re-orientating human behaviour within the society
(viii) Ensuring the smooth ordering of affairs within the society
(ix) Conferring rights and imposing obligations and duties on the citizens and the government alike
(x) Manifesting and reflecting the ethos of the society. A society gets the type of law that suits its polity.

Sources of Nigerian Law
(i) Primary sources
- Received English Law – Common Law, Equity, Statutes of General Application as at January 1, 1900
- Nigerian Legislation and Statutes e.g., Hire Purchase (HP), Company and Allied Matters Act (CAMA), Sale of Goods Act (SOGA), Labour Act, Insurance Act.
- Judicial Precedents and Case Laws
- Delegated Legislation – Statutory Instruments and Ministerial Orders.
(ii)Secondary Sources
- Customary/Islamic Law: The Repugnancy Doctrine states that customary/Islamic law.
• Must not be repugnant to natural justice, equity and good conscience.
• Must not be contrary to public policy and
• Must not be incompatible with any law for the time being in force
- International law – Conventions, Treaties Protocols e.g., Economic Community of West Africa (ECOWAS). African Union (AU), United Nations Organisation (UNO).
- Books by Authors – interpretative opinions.

What is Business Law
Business or Commercial law or Mercantile law, also known as trade law, is the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales. It is often considered to be a branch of civil law and deals with issues of both private law and public law.

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PARTNERSHIP (FORM OF BUSINESS OWNERSHIP)

Partnership
This is a business owned by two or more persons who have agreed to abide by a Partnership Agreement otherwise known as Partnership Deed. A partnership usually comprises of between 2 and 20 persons. The Partnership Deed will set out how management decisions are to be made and the proportion of the profits that each partner is entitled to. The Partners then pay personal income tax on their share of the profits.
Partnership like sole proprietorship also faces the challenge of unlimited liability. If the business runs into financial difficulties, each partner can be held responsible for all the business debts and not just his or her contributions to the partnership. The moral therefore is ‘know thy partner’. The life span of the partnership depends on the agreement signed by the partners involved.

Types of partnerships
There are different types of partnership arrangements. Below are some examples.

Limited Partnership
This is a type of partnership which is formed and registered under the Limited Partnership Act. In a limited partnership, there must be one general partner with unlimited liability and one limited partner whose liability is limited to the amount invested. The limited partners cannot take equal part in management and administration of the business but can have access to the account of the partnership.

General (Ordinary) Partnership
In this type of partnership, partners have equal responsibilities and risks in the business. All partners are agents of the firm and they share the responsibility of running the business. Hence they are liable to the full extent of the debts of the firm. The liability of members is unlimited.

Active Partnership
Partners under this type of partnership arrangement take active part in the management and administration of the partnership business. Partners contribute to the financing and formation of the business, take active roles in the day-to-day running of the enterprise and they earn salaries as agreed in the partnership deed.

Nominal (Quasi) Partnership
This is a type of partnership where a nominal partner contributes only his name to the formation of the business. He neither contributes capital nor takes part in the management of the firm. A nominal partner must be a distinguished personality within the society as his name must surely increase the reputation and possibly the goodwill of the partnership business. A nominal partner would share in the profits and or debts of the firm as specified in the Partnership Act of 1980.

Dormant Partnership
A dormant partner takes no part in the conduct and management of the partnership business. He will contribute capital and share from the profit but will not engage in the day-to-day running of the business. A dormant partner is not exonerated from the debts of the enterprise and would share in any liability in the event of wrong decisions by the active partners.

Formation of Partnership
Persons entering into partnerships usually express their intention in a partnership agreement known as Deed of Partnership. The Deed of Partnership is defined as agreements, rules and regulations guiding the members of a partnership.

The agreement contains the following rules and regulations:
1. The names of the partners.
2. The name of the firm.
3. The nature of the business formed.
4. The rights and duties of each partner.
5. The proportion in which capital is to be provided.
6. Whether interests should be paid on capital or not.
7. The signatories to the firm’s accounts.
8. The sharing of profits, provisions for drawings and payment of salaries to partners.
9. Duration of the partnership.
10. The circumstances under which the partnership shall be dissolved.
11. The method of admission of new partners.
12. The objective of the firm.

Advantages of partnership
The following advantages exist.
¨ Sufficient Capital: unlike sole proprietorship whose capital is limited to the investment of only one person, a partnership is able to generate adequate capital because it involves more persons who can provide more sources of funds for the business.
¨ Increase in production efficiency as a result of increase in capital and management.
¨ Better management through combination of skills and abilities and joint decision making that is, putting heads together to take joint decisions.
¨ Privacy: partnerships are not compelled by law to publish their annual accounts for public consumption.
¨ Sharing of risks and liabilities reduces individual burdens
¨ Higher chances of continuity
¨ No legal formalities required
¨ Specialization in management

Disadvantages of partnership
· Unlimited liability
· The business is not a legal entity
· Limited growth: growth potentials are dependent on the managerial abilities of the partners
· Disagreement between partners can end the business
· There is risk of dissolution of the business through death, insanity or bankruptcy
· The business may still not be able to raise sufficient capital required to run the business.

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SOLE PROPRIETORSHIP (FORM OF BUSINESS)

Sole proprietorship is a type of business that is wholly owned by one person. The business belongs to just one owner who has no partners or any other shareholder. The business owner is personally liable for the entire firm’s obligations, that is, the owner bears all the costs and keeps all the profits. The company may or may not be registered with regulatory authority that is, Corporate Affairs Commission (CAC).

Advantages of a Sole Proprietorship
· A sole proprietorship is a business that can be easily established.
· Capital requirement is small.
· Decision making process is quick.
· There are no strict regulations governing the establishment of a sole proprietorship.
· It is a form of business well-suited for small companies with informal business structure.
· All profits belong to the business owner.
· There is privacy in conducting business affairs.
· There is close relationship between owner and customers.

Disadvantages of a Sole Proprietorship
· One major disadvantage of sole proprietorship is that the owner is responsible for all the business’s debts and liabilities. If the assets of the business are not adequate to pay back the debts of the business, the personal belongings of a sole trader would be used in paying back such debts. 
· Problem of business continuity in the event of death of the business owner.
· Inadequacy of capital.
· Business expansion is limited to owner’s capital.
· Unregistered business name can not do business with government agencies and some well established companies.
· Inability to keep bank account in the name of an unregistered business name.
· Problem of business continuity in the event of death of the business owner.
· Inadequacy of capital.
· Business expansion is limited to owner’s capital.
· Unregistered business name can not do business with government agencies and some well established companies.
· Inability to keep bank account in the name of an unregistered business name.

Sources of capital of a sole proprietorship
The sole proprietor can obtain his capital from the following sources:
· Personal savings
· Loans from friends, cooperative societies etc
· Trade creditors
· Loans and overdrafts from banks
· Grants and loans from Government

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The Business Environment

The business environment is simply the surroundings within which a business exists. Business environment embraces all institutions, organisations and individuals whose activities have an impact, whether directly or indirectly, on business behaviour (Ifechukwu, 1986).

• Business environment is made up of the internal and the external environment. 
• The external environment is further divided into two - Macro and Micro Environment. 
• The macro environment is regarded as the general environment while the micro environment is regarded as the specific or task environment. 
• The internal environment could be termed the controllable environment while the external environment is seen as uncontrollable.

The internal environmental factors refer to those factors over which the management of the

business has control, at least in the short run; this is why it is also called the controllable environment of the business.

The external environment is a set of complex, rapidly changing and significant interacting institutions and forces that affect the organization's ability to serve its customers. External forces are not controlled by an organization but they may be influenced or affected by the organization. 

The external environment is divided into two – macro and micro environment. The macro environment is referred to as the general or remote environment while the micro environment is seen as the specific or task or operating environment. 

Macro environment (General or Remote Environment)

The external macro environment consists of all the outside institutions and forces that have

an actual or potential interest or impact on the organization's ability to achieve its objectives.

This includes the economic, technological, political, legal, social, cultural, demographic and

ecosystem. 

Economic Environment: The economic environment consists of factors that affect consumer

purchasing power and spending patterns. Economic factors include business cycles, inflation,

unemployment, interest rates, and income. Changes in major economic variables have a

significant impact on the marketplace. 

Technological Environment: The technological environment refers to new techniques or

methods which are used to create new product and market opportunities. Technological

developments are the most manageable uncontrollable forces faced by marketers.

Organizations need to be aware of new technologies in order to turn these advances into

opportunities and a competitive edge.

Political and Legal Environment: Organizations must operate within a framework of

governmental regulation and legislation. Government relationships with organizations

encompass subsidies, tariffs, import quotas, and deregulation of industries.

Demographic Environment: Demographics tell marketers who current and potential

customers are, where they are, and how many are likely to buy what the marketer is selling.

Demography is the study of human populations in terms of size, density, location, age, sex,

race, occupation, and other statistics.

Social/Cultural Environment: Social/cultural forces are the most difficult uncontrollable

variables to predict. It is important for businesses as well as marketers to understand and

appreciate the cultural values of the environment in which they operate. The cultural

environment is made up of forces that affect society's basic values, perceptions, preferences,

and behaviours.

Micro (Specific or Task or Operating) Environment

The external microenvironment consists of forces that are part of an organization's marketing

process but are external to the organization. These micro environmental forces include the

organization's market, competitors, producer-suppliers, and its marketing intermediaries.

While these are external, the organization is capable of exerting more influence over these

than forces in the macro environment.

Characteristics of Business Environment

The environment of business exhibits the following characteristics:

Dynamism: The business environment is not static. It is dynamic and as such changes

continuously. This is because of the interactions of the various factors that make up the

business environment.

Complexity: The business environment is not simple; it is complex by virtue of the various

components that comprise it and the interactions and interrelationships among these factors.

Multifaceted: The business environment is many-sided. It can be viewed from many angles

by the parties involved. Hence, an occurrence that is viewed as strength to an organization

may be perceived as a weakness by another.

Far-reaching impact: The happenings in the business environment can have enormous

impact on the organization. It could have the ripple effect. This is because the business

environment can be conceived as a system, specifically an open system made up of different

components that interact and interrelate with one another.

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THE CONCEPT OF BUSINESS

Karimu (1992) defines Business as “the sum of all the activities involved in the creation and distribution of goods and services for private profit”.

Business is therefore any legal means of satisfying human wants with the motive of profit.
When people engage in illicit deals and make abnormal income it is not business.
When people engage in criminal and fraudulent activities to enrich themselves it is not business.

Business must be seen as rendering legal services or producing goods at a cost.

Likewise, the major essence or purpose of business is the supply of goods and services in order to satisfy the societal needs (Isimoya, 2005)

Economic Systems
An economic system describes how a given society distributes its resources to produce goods

and services.

There are basically three types of economic systems found in the world today. These are
Communism, Socialism, and Capitalism.

Communism by Karl Marx (1818-1883) was first described as a society in which the people,

without regard to class, own all the nation’s resources. In this type of economy, the people (through the government) own and operate all business and factors of production. Central government planning determines what goods and services satisfy citizens’ needs, how the goods and services are produced, and how they are distributed.

Socialism is closely related to communism. Socialism is an economic system in which the
government owns and operates basic industries such as postal service, telephone, utilities,
transportation, health care, banking, and some manufacturing, but individuals own most businesses.

Capitalism or free enterprise is an economic system in which individuals own and operate
the majority of businesses that provide goods and services. Competition, supply, and demand
determine which goods and services are produced, how they are produced, and how they are
distributed.

Aside from the generally accepted profit motive of private business, Isimoya (2005) states that there are other objectives of business and this include:
i. Innovation: introduction of new products or services
ii. Productivity: Business aims at enhancing productivity i.e. the ratio of input to output.
An increase in productivity can be measured in terms of output per labour employed, and output per capital employed, which show the extent to which the business is able to effectively utilize a set of resources to achieve the highest possible value of output.

iii. Employees’ satisfaction: Business seeks to enhance employees’ satisfaction, so as to optimize contributions to business well-being.
iv. Shareholders’ Satisfaction: increase in dividends and reduction in business risk exposures.
v. Social responsibility: Business aims at identifying with the locality in which it operates.
vi. Stakeholders’ Satisfaction: Apart from employees and shareholders who are directly
involved in the running of business, there are other stakeholders every business outfit strives to satisfy, such as:

- Consumers: These are people who buy the goods and services produced.
- Suppliers: They supply the inputs to business
- Distributors: They distribute the goods produced by business
- Government: The government legally regulates the business operations so that individual’s rights would not be infringed upon.
- Pressure Groups/General Public: They are the recipients of all that the business produces and assess the positive and possible negative impacts on the society.

Businesses can be classified by industry characteristics thus:
i) Extractive Industry: This is a group of business firms whose primary activities involve mining, fishing, forestry, farming, quarrying, drilling, etc.
ii) Manufacturing Industry: This is composed of businesses whose primarypurpose is to convert items (goods) in the crude state to a more useful state. The manufacturing group gets the inputs (raw materials) from the extractive industry, and then processes either by reshaping or refining them to enhance their utility.
iii) Construction Industry: This comprises businesses involved in building infrastructure like roads, bridges, houses, office blocks, seaports and airports, stadia, to mention but a few.
iv) Commercial Industry: The activities engaged in these organizations serve as facilitators of business. Examples are the banks, insurance companies, wholesale and retail trade organizations, real estate companies, transportation firms, etc.
v) Service Industry:  Examples are entertainment and recreation, hotels and lodging, laundry and general cleaning, engineering and other professional services, as well as automobile repair.

Posted by: Monday Desmond

Financial Accounting - Depreciation

Depreciation reduces the value of assets on a residual basis. It also reduces the profits of the current year.

Depreciation indicates reduction in value of any fixed assets. Reduction in value of assets depends on the life of assets. Life of assets depends upon the usage of assets.

There are many deciding factors that ascertain the life of assets. For example, in case of a building, the deciding factor is time. In case of leased assets, the deciding factor is the lease period. For plant and machinery, the deciding factor should be production as well as time. There can be many factors, but the life of assets should be ascertained on some reasonable basis.

Why Do We Need to Account for Depreciation?

Here is why we need to provide depreciation:

• To ascertain the true profit during a year, it is desirable to charge depreciation.
• To ascertain the true value of assets, depreciation should be charged. Without calculating the correct value of assets, we cannot ascertain the true financial position of a company.
• Instead of withdrawal of overstated profit, it is desirable to make provisions to buy new assets to replace old asset. The accumulated value of depreciation provides additional working capital.
• Depreciation helps in ascertaining uniform profit in each accounting year.
• Depreciation allows to take the advantage of tax benefit.

Accounting Entries Related to Assets and Depreciation

Let us see the accounting entries related to assets and depreciation:

S.No.	Particulars	Journal Entries
1	Purchase of Fixed Assets	Asset A/c Dr. To Bank A/c
2	Expenses on purchase of Fixed Assets	Related Asset A/c Dr. To Cash/Bank A/c
3	For Providing depreciation	Depreciation A/c Dr. To Assets A/c
4	Transfer of depreciation to Profit & Loss a/c	Profit & Loss A/c Dr. To Depreciation A/c
5	Sale of Assets	Bank A/c Dr. To Assets A/c

Depreciation  =  

Cost of Assets−Scrap Value of AssetsEstimated Life of Assets

Method of Depreciation

Depreciation can be calculated using any of the following methods, however the most popular methods remain (a) Straight Line Method and (b) Written Down Value Method.

• Straight Line Method
• Written Down Value Method
• Annuity Method
• Insurance Policy Method
• Machine Hour Rate Method
• Depletion Method
• Revaluation Method
• Depreciation Fund Method

Format

DEPRECIATION CHART
Desc.	Opening Value	Addition during the year	Sale	Balance	Rate of Depreciation	Value of Depreciation	Closing Value
1	2	3	4	5 (2+3-4)	6	7	8 (5-7)

Format of ledger accounts

ASSET ACCOUNT
Date	Particulars	L.F.	Amt	Date	Particulars	L.F.	Amt
25-06-13	To Bank		xxx	31-03-2014	By Depreciation		xx
					By Balance c/d		xx
	Total		xxx		Total		xxx
01-04-2014	To Balance		xx		By Depreciation		xx

Posted by: Monday Desmond

Cc: Tutorials point

Financial Accounting - Subsidiary Books

Cash Book

Cash book is a record of all the transactions related to cash. Examples include: expenses paid in cash, revenue collected in cash, payments made to creditors, payments received from debtors, cash deposited in bank, withdrawn of cash for office use, etc.

In double column cash book, a discount column is included on both debit and credit sides to record the discount allowed to customers and the discount received from creditors respectively.

In triple column cash book, one more column of bank is included to record all the transactions relating to bank.

Note: In modern accounting, simple cash book is the most popular way to record cash transactions. The double column cash book or three column cash book is practically for academic purpose. A separate bank book is used to record all the banking transactions as they are more than cash transactions. These days, cash is used just to meet petty and routine expenditures of an organization. In most of the organizations, the salaries of employees are paid by bank transfer.

Note: Cash book always shows debit balance, cash in hand, and a part of current assets.

Single Column Cash Book

Cash book is just like a ledger account. There is no need to open a separate cash account in the ledger. The balance of cash book is directly posted to the trial balance. Since cash account is a real account, ruling is followed, i.e. what comes in – debit, and what goes out – credit. All the received cash is posted in the debit side and all payments and expenses are posted in the credit side of the cash book.

Format

CASH BOOK (Single Column)
Dr.				Cr.
Date	Particulars	L.F.	Amount	Date	Particulars	L.F.	Amount

Double Column Cash Book

Here, we have an additional Discount column on each side of the cash book. The debit side column of discount represents the discount to debtors of the company and the credit side of discount column means the discount received from our suppliers or creditors while making payments.

The total of discount column of debit side of cash book is posted in the ledger account of ‘Discount Allowed to Customers’ account as ‘To Total As Per Cash Book’. Similarly, credit column of cash book is posted in ledger account of ‘Discount Received’ as ‘By total of cash book’.

Format

CASH BOOK (Single Column)
Dr.					Cr.
Date	Particulars	L.F.	Discount	Amount	Date	Particulars	L.F.	Discount	Amount

Triple Column Cash Book

When one more column of Bank is added in both sides of the double column cash book to post all banking transactions, it is called triple column cash book. All banking transactions are routed through this cash book and there is no need to open a separate bank account in ledger.

Petty Cash Book

In any organization, there may be many petty transactions incurring for which payments have to be done. Therefore, cash is kept with an employee, who deals with it and makes regular payments out of it. To make it simple and secure, mostly a constant balance is kept with that employee.

Suppose cashier pays N5,000 to Mr A, who will pay day-to-day organization expenses out of it. Suppose Mr A spend N4,200 out of it in a day, the main cashier pays N4,200, so his balance of petty cash book will be again N5,000. It is very useful system of accounting, as it saves the time of the main cashier and provides better control.

We will soon discuss about ‘Analytical or Columnar Petty Cash Book’ which is most commonly used in most of the organizations.

Format

PETTY CASH BOOK
Amount Recieved	C.B.F	Date	Particulars	Amount Paid	Stationery & Printing	Cartage	Loading	Postage	L.F.

Purchase Book

Purchase book is prepared to record all the credit purchases of an organization. Purchase book is not a purchase ledger.

Format

PURCHASE BOOK
Date	Particulars	Inward Invoice No.	L.F.	Amount

Sale Book

The features of a sale book are same as a purchase book, except for the fact that it records all the credit sales.

Format

SALE BOOK
Date	Particulars	Outward Invoice No.	L.F.	Amount

Purchase Return Book

Sometimes goods are to be retuned back to the supplier, for various reasons. The most common reason being defective goods or poor quality goods. In this case, a debit note is issued.

Format

PURCHASE RETURN BOOK
Date	Particulars	Credit Note No.	L.F.	Amount

Sale Return Book

The reason of Sale return is same as for purchase return. Sometimes customers return the goods if they don’t meet the quality standards promised. In such cases, a credit note is issued to the customer.

Format

SALE RETURN BOOK
Date	Particulars	Debit Note No.	L.F.	Amount

Bills Receivables Book

Bills are raised by creditors to debtors. The debtors accept them and subsequently return them to the creditors. Bills accepted by debtors are called as ‘Bills Receivables’ in the books of creditors, and ‘Bills Payable’ in the books of debtors. We keep them in our record called ‘Bills Receivable Books’ and ‘Bills Payable Book’.

Format

BILLS RECEIVABLE BOOK
Date	Received From	Term	Due Date	L.F.	Amount

Bills Payable Book

Bills payable issues to the supplier of goods or services for payment, and the record is maintained in this book.

Format

BILLS PAYABLE BOOK
Date	To Whom Given	Term	Due Date	L.F.	Amount

Key Features of Subsidiary Books

There is a difference between a purchase book and a purchase ledger. A purchase book records only credit purchases and a purchase ledger records all the cash purchases in chronical order. The daily balance of purchase book is transferred to purchase ledger. Therefore, purchase ledger is a comprehensive account of all purchases.

The same rule applies to sale book and sale ledgers.

• It is quite clear that maintaining a subsidiary book is facilitation to journal entries, practically it is not possible to post each and every transaction through journal entries, especially in big organizations because it makes the records bulky and unpractical.
• Maintenance of subsidiary books gives us more scientific, practical, specialized, controlled, and easy approach to work.
• It provides us facility to divide the work among different departments like sale department, purchase department, cash department, bank department, etc. It makes each department more accountable and provides an easy way to audit and detect errors.
• In modern days, the latest computer technology has set its base all over the world. More and more competent accounts professionals are offering their services. Accuracy, quick results, and compliance of law are the key factors of any organization. No one can ignore these factors in a competitive market.

Bank Reconciliation

On a particular date, reconciliation of our bank balance with the balance of bank passbook is called bank reconciliation. The bank reconciliation is a statement that consists of:

• Balance as per our cash book/bank book
• Balance as per pass book
• Reason for difference in both of above

This statement may be prepared at any time as per suitability and requirement of the firm, which depends upon the volume and number of transaction of the bank.

In these days, where most of the banking transactions are done electronically, the customer gets alerts for every transaction. Time to reconcile the bank is reduced more.

Format

BANK RECONCILIATION STATEMENT
Particulars	Debit Bank Balance as per Bank Book	Credit Bank Balance as per Bank Book (overdraft)
Balance as per Bank Book	50,000	-50,000
1. Add: Cheque issued to parties but not presented in bank	3,25,000	3,25,000
2. Less: Cheque deposited in bank but not cleared yet	-50,000	-50,000
3. Less: Bank Charges debited by bank but not entered in our books of accounts	-1,200	-1,200
4. Less: Bank interest charged by bank but not entered in our books of accounts	-10,000	-10,000
5. Add: Payment direct deposited by party without intimation to us	1,75,000	1,75,000
Balance as per Bank Pass Book/ Statement	4,88,000	3,88,000

Trial Balance

Trial balance is a summary of all the debit and credit balances of ledger accounts. The total of debit side and credit side of trial balance should be matched. Trial balance is prepared on the last day of the accounting cycle.

Trial balance provides us a comprehensive list of balances. With the help of that, we can draw financial reports of an organization. For example, the trading account can be analyzed to ascertain the gross profit, the profit and loss account is analyzed to ascertain the profit or Loss of that particular accounting year, and finally, the balance sheet of the concern is prepared to conclude the financial position of the firm.

Format

TRIAL BALANCE
S.No.	Ledger Accounts	L.F.	Debit(Rs.)	Credit(Rs.)
1	ADVANCE FROM CUSTOMERS			XX
2	ADVANCE TO STIFF		XX
3	AUDIT FEES		XX
4	BALANCE AT BANK		XX
5	BANK BORROWINGS			XX
6	BANK INTEREST PAID			XX
7	CAPITAL			XX
8	CASH IN HAND		XX
9	COMMISSION ON SALE		XX
10	ELECTRICITY EXPENSES		XX
11	FIXED ASSETS		XX
12	FREIGHT OUTWARD		XX
13	INTEREST RECEIVED			XX
14	INWARD FREIGHT CHARGES		XX
15	OFFICE EXPENSES		XX
16	OUTSTANDING RENT			XX
17	PREPAID INSURANCE		XX
18	PURCHASES		XX
19	RENT		XX
20	REPAIR AND RENUWALS		XX
21	SALARY		XX
22	SALARY PAYABLE			XX
23	SALE			XX
24	STAFF WELFARE EXPENSES		XX
25	STOCK		XX
26	SUNDRY CREDTIORS			XX
27	SUNDRY DEBITORS		XX
	TOTAL		XXXXX	XXXXX

Financial Statements

Financial statements are prepared to ascertain the profit or loss of the business, and to know the financial position of the company.

Trading, profit & Loss accounts ascertain the net profit for an accounting period and balance sheet reflects the position of the business.

All the above has almost a fixed format, just put all the balances of ledger accounts into the format given below with the help of the trial balance. With that, we may derive desired results in the shape of financial equations.

Trading & Profit & Loss Account of M/s ABC Limited For the period ending 31-03-2020
Particulars	Amount	Particulars	Amount
To Opening Stock	XX	By Sales	XX
To Purchases	XX	By Closing Stock	XX
To Freight charges	XX	By Gross Loss c/d	XXX
To Direct Expenses	XX
To Gross Profit c/d	XXX
Total	XXXX	Total	XXXX
To Salaries	XX	By Gross Profit b/d	XXX
To Rent	XX
To Office Expenses	XX	By Bank Interest received	XX
To Bank charges	XX	By Discount	XX
To Bank Interest	XX	By Commission Income	XX
To Electricity Expenses	XX	By Net Loss transfer to Balance sheet	XX
To Staff Welfare Expenses	XX
To Audit Fees	XX
To Repair & Renewal	XX
To Commission	XX
To Sundry Expenses	XX
To Depreciation	XX
To Net Profit transfer to Balance sheet	XX
Total	XXXX	Total	XXXX

Balance sheet of M/s ABC Limited as on 31-03-2020
Liabilities	Amount	Assets	Amount
Capital XX Add:Net Profit XX	XX	Fixed Assets XXXX Less:Description XX	XX
Bank Borrowings	XX	Current Assets -
Long Term Borrowing	XX	Stock	XX
Current Liabilities -		Debtors	XX
Advance Form Customers	XX	Cash In hand	XX
Sundry creditors	XXX	Cash at Bank	XX
Bills Payable		Bills receivables	XX
Expenses Payable
Total	XXXX	Total	XXXX

Owner’s Equity

The equation of equity is as follows:

Owner Equity = Assets – liability

The owner or the sole proprietor of a business makes investments, earns some profit on it, and withdraws some money out of it for his personal use called drawings. We may write this transaction as follows:

Investment (capital) ± Profit or Loss – drawings = Owner’s Equity

Current Assets

Assets that are convertible into cash within the next accounting year are called current assets.

Cash in hand, cash in bank, fixed deposit receipts (FDRs), inventory, debtors, receivable bills, short-term investments, staff loan and advances; all these come under current assets. In addition, prepaid expenses are also a part of current assets.

Note: Prepaid expenses are not convertible into cash, but they save cash for the next financial or accounting year.

Current Liabilities

Like current assets, current liabilities are immediate liabilities of the firm that are to be paid within one year from the date of balance sheet.

Current liabilities primarily include sundry creditors, expenses payable, bills payable, short-term loans, advance from customers, etc.

Posted by: Monday Desmond