aakar account 8 final _080

51 Handling of Mails Unit 4 Learning Objectives After studying this unit, students will be able to : write the meaning of Darta and Chalani, know the entry of incoming and dispatch of outgoing mail, write differences between Darta and Challani. Handling of Mails Registry Book or Main General Entry Book Entry No. Incoming mail Date Name and address of sender Subject in brief Person or authority concerned Signature of the authority receiving it Date Remarks Date Ref. No. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 1. 075/8/5 1101/075 075/8/1 Education Office, Kaski Scholarship Principal 2. 075/8/9 1109/075 075/7/30 Dawn School, Chitwan Participation Programme chief 3. 075/9/8 110/075 075/8/5 Ganesh Gyan Joyti School, Rupandehi Participation Programme chief

52 Aakar’s Office Practice and Accountancy - 8 1. Introduction An office deals with thousands of transactions through the paper form of letters, circulars, notices, telegrams, agreements, etc. The collective name of all the paper performances in an organization is known as mail. Mails may be incoming or outgoing. All the incoming mails should be properly received and the outgoing mails should be properly dispatched by an office. The large scale organizations establish separate sections for receipt and dispatch of the mails and small ones may establish a single section for handling both the mails as a general receipt and dispatch section which is known as Entry and Dispatched Section (Darta Chalani Phant). Thus, handling of mails refers to the receiving of incoming mails, and dispatching of outgoing mails properly in a regular and systematic way by recording them in the entry and dispatch book respectively. Key Point Handling of mails refers to the receiving of incoming mails and dispatching of outgoing mails in a regular and systematic way by recording them. 2. Entry of Incoming Mail (Darta) Entry of incoming mails refers to the receiving of the mails which are written to the organization by recording them in a registry book (Darta Kitab) and forwarding them to the concerned authority for necessary actions. Most of the big and modern organizations form a separate section to register the incoming mails which is known as registry section. The main purpose of making the entry of mail is to save and maintain the documents properly or in systematic order. There are three important procedures for handling the incoming mails, they are: i. Receiving the mails: The incoming mails are received by the Darta Chalani Phant or entry section. It can be received from postman, messenger, persons or from post box. Darta Chalani section

53 Handling of Mails ii. Registry of the mails: The incoming mails are registered in the registry book to avoid the chances of their losses or damages. An office maintains a registry book or main general entry book to register the incoming mails. As soon as a mail is received, it is recorded in a book. This book contains necessary information regarding the mail. A registry book or main general entry book may be prepared in different format as the requirement of an office. A common specimen of a registry book is simply and shortly discussed below. Registry Book or Main General Entry Book Entry No. Incoming mail Date Name and address of sender Subject in brief Person or authority concerned Signature of the authority receiving it Date Remarks Date Ref. No. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 1. 075/8/5 1101/075 075/8/1 Education Office, Kaski Scholarship Principal 2. 075/8/9 1109/075 075/7/30 Dawn School, Chitwan Participation Programme chief 3. 075/9/8 110/075 075/8/5 Ganesh Gyan Joyti School, Rupandehi Participation Programme chief The ruling of a registry book is as follows: a. In the first column, the serial or entry number of the receiving mail is recorded. b. In the second column, the date on which the mail is received is recorded. c. In the third column, the reference number, code number or post number of the mails are recorded. d. In the fourth column, the data mentioned on the letter is recorded. e. The name and address of the sender, in brief, are recorded in the fifth column. f. A mail may be a letter, draft, cheque bill, invoice, receipt, agreement, bank statement, etc. and may contain the subject in it. Thus, the types of mail along with its subject are mentioned in the sixth column. g. The name of the concerned authority i.e. person section or department to which the mail is sent for action is mentioned clearly in the seventh column. h. The signature of the authority receiving the mail from the registry section is mentioned in the eighth column.

54 Aakar’s Office Practice and Accountancy - 8 i. In the ninth column, the date of receiving letter by the concerned authority is recorded. j. And finally, the additional information or the symbols like urgent, important, confidential, etc. may be mentioned according to the priority of the mails in the tenth column. iii. Stamping the mail After the mails are registered, they should be stamped for the proof that they are already registered. It gives necessary and short information about the mails like Ref. No., date of receipt of the mail, entry number, section, department or person concerned, etc. The following is a common specimen of a stamping. Ref No. : .................................................................................. Entry No. : .................................................................................. Date of receipt : .................................................................................. Person/Section/Department : .................................................................................. iv. Forwarding to the concerned authority After stamping the mails, they are sent to different departments, sections or persons concerned to take necessary action on them. The essence of the handling of incoming mails is giving a timely response to them by relaying the mails to the concerned authority. v. Clearing the mail Finally the concerned department section or authority. Key Point Entry of incoming mails or darta refers to the process of recording the information of all the incoming mails for future reference. 3. Dispatch of Outgoing Mail A number of mails are frequently sent by an organization to any person or organization outside for different purposes. All the mails which are created for dispatching purpose should be timely dispatched by an authority according to their priority. As such, outgoing mails are recorded in a dispatch book. The act of recording the outgoing mail in the separate book is called dispatch of mail or Chalani. The book

55 Handling of Mails in which the record of outgoing mail is recorded is called Chalani Book or Outward Mails Register. There are also different procedures for handling the outgoing mails. i. Drafting the mails The outgoing mails are drafted by the concern department or section. Generally draft of mail is prepared on computer and it is checked by the authority for it’s correctness. After typing, concern authority must sign the outgoing mails for official validity. ii. Collection of mails Different sections or departments of an organization may create a number of letters, bills and invoice, receipts, agreements and other documents. These are official documents and they should be dispatched by a certain authority. Each section or department dispatching mails maintains a sectional dispatch register for a proof that letters were already dispatched to the General Dispatch Section. The ruling of the sectional dispatch register is as follows: Sectional Dispatch Register S.N. Date Subject Reference Person/Section receiving the mail Remarks Name Sign iii. Recording the mails The outgoing mails, after they are received from various sections of the organization, are registered in a book called dispatch book or outward mail register to avoid the chances of their losses or damages. It also determines the responsibility of the authority dispatching the mails. The common and simple format of a dispatch book is shortly discussed below. Dispatch Book or Outward Mail Register S.N. Outgoing mail Organization or authority to whom the mail is written Subject in brief Name of the sending section or department Ref. No. Remarks Date Dispatch. No. (1) (2) (3) (4) (5) (6) (7) 1. 075/10/ 2 101/2075 Aroma School, Chitwan Quiz contest Administration 110 2. 075/10/13 l02/2075 Daisy School, Parsha Quiz contest Administration 111 3. 075/10/13 103/2075 Ganesh Gyan Joyti School, Rupandehi Quiz contest Administration 112 4. 075/10/15 l04/2075 Peoples’ Academy, Parsa Quiz contest Administration 113

56 Aakar’s Office Practice and Accountancy - 8 The ruling of a dispatch book or outward mail register is as follows: a. In the first column, serial number of the dispatching mail is recorded. b. In the second column, the date on which the mail is dispatched and the dispatch number are mentioned respectively. c. The organization or the authority to which the mail is written is mentioned clearly in the third column. d. Subject of the mail, in brief, is mentioned in the fourth column. e. Name of the section or department dispatching the mail is mentioned in the fifth column. f. Reference number, code or symbol or post or peon book number is mentioned in the sixth column. g. And finally, the necessary information like important, urgent, confidential, etc. may be mentioned to give the priority to the mail or letter in the seventh column or it may contain any other information or signature not mentioned in other columns. iv. Dispatching to the person or authority concerned After the mails are registered in the dispatch book or outward mail register, they are ultimately dispatched to the concerned person or organization by post or office peon, by mentioning the dispatch number in it for necessary action. After enveloping the documents, postal stamps should be stamped if the letters are to be sent through the post office. The important, urgent and confidential words are also mentioned in some mails (i.e. letters) for determining their priority and take expected prompt attention and response. The letters for local area can be sent through the peon of the office. For this a separate peon book is used to keep the records as follows. S. No. Dispatch No. Name and address of receiver Date and time of dispatch Receiver Date & time Signature 1. 101/2075 Aroma School, Chitwan 075/08/ 20 2. l02/2075 Daisy School, Parsha 075/08/ 21 3. 103/2075 Ganesh Gyan Joyti School, Rupandehi 075/08/ 24 4. l04/2075 Peoples’ Academy, Parsa 075/08/ 26 Key Point The dispatching of mail or chalani refers to the process of recording the information of all the outgoing mails for future reference.

57 Handling of Mails 4. Differences between Entry and Dispatch of Mail Entry of mail Dispatch of mail 1. It is the process of recording incoming mail. 2. It is called ‘Darta’ in Nepal. 3. It helps to avoid the loss of incoming documents. 1. It is the process of recording outgoing mail. 2. It is called ‘Chalani’ in Nepal. 3. It helps to know the records of particulars of outgoing mail. Glossary Entry : Recording the incoming mails in a book Dispatch : Entry of outgoing mails Registry : Entry of incoming mails Essence : Importance Confidential : Secret Register : Record book Exercise A. Fill in the blanks: 1. The book which keeps the record of incoming mail is called .............. 2. Handling of mails means ..................... 3. Entry book is used for recording ...................... 4. Chalani is also called ....................... 5. Dispatch book is used for recording ................ B. Give very short answers to the following questions: 6. What does Darta mean? 7. What is handling of mails? 8. What is meant by dispatch of mail? 9. What is the stamping the mail?

58 Aakar’s Office Practice and Accountancy - 8 C. Give short answers: 10. What is entry of mail? Explain the procedures for handling of incoming of mails in brief. 11. Explain the process of dispatching mail. 12. Write the differences between Darta and Chalani. 13. Write any five importances of handling of mails. D. Give long answers: 14. Explain the procedures of handling of mails with an example. 15. Draw the specimen and give any five suitable examples of Darta and Chalani. Project Work a. Make a format of entry of mails used by your school. b. Make a format of dispatch of mails used by your school.

59 Postal Service Unit 5 Learning Objectives After studying this unit, students will be able to : know the meaning of postal service, know the importance of postal service, describe the development of postal service in Nepal, know the methods of sending letter through post office in Nepal, write the differences between ordinary letter and registry letter. Postal Service

60 Aakar’s Office Practice and Accountancy - 8 1. Introduction Communication is an essential process of human society. A number of communication means are used by persons and organizations to communicate their ideas, feelings, notices, news, problems and solutions, etc. with others in an ordinary course of personal life or organizational operations. Of the means, correspondence is the most common one. Correspondence simply is known as letter writing. A person may write different letters to his/her friends, relatives or organizations. Similarly, an office may prepare hundreds of mails i.e. letters and other documents to the parties in and outside the country. A way or medium is required to send such mails from one place to another. It is the post office, which carries mails and parcels from the sender to the receiver in consideration to certain charges. In addition to the transfer of mails and parcels, a post office provides other services like remittance of money by means of money order, postal order. Thus, postal services refer to the services of transferring letters and parcels from one party to another, remittance of money and the services in consideration to certain charges. In order to send mails and parcels through a post office, the name and address of the receiver as well as the sender should be clearly mentioned in the front and back of the envelope or on the left and right hand side of the envelope respectively by affixing the postal tickets of the prescribed value. A letter may be generally dropped into the post box or get registered but the parcels should be essentially registered for its security. In most of the countries, post offices are owned and managed by the government. Nowadays, with the considerable involvement of private sectors in commercial activities, postal services are rendered by both the public and private sectors. In Nepal, postal services are being rendered by the post offices and some private sectors under the Postal Service Department. Key Point The office which transfers letters and parcels from one place to another in and outside the country is known as post office and the services rendered by such office is known as postal service. 2. Importance of Postal Service Postal service is one of the most popular mediums of communication. In spite of the development of faster and easier means of communication, it has not lost its utility. It is more important for the under-developed and poor countries like Nepal, where it has not been possible to develop the modern means and make them accessible all over the country because of its poor economic and geographical condition. Thus, the postal service in Nepal is of immense importance. Its importance may be studied in response to the following sectors:

61 Postal Service i. Importance to the Government The government of any country has different ministries, departments and constitutional bodies to carry on various government activities. A number of subordinating offices may be established under them at regional, zonal, district and local levels. Hundreds of circulars, notices and other documents (except confidential matters) from central level office to subordinating office and proposals, reports and memos, etc. from subordinating office to their central level offices are sent through post offices. Similarly, other letters and parcels are also sent through post offices from one office to another. Moreover, the modern means of communication are economically and technically inaccessible especially, to far and remote areas. Government also benefits from agency service, remittance services, etc. through post offices. Thus, postal services are indispensable to the government. ii. Importance to Business Organizations Postal service is a medium of business link between business parties by means of sending and receiving various business letters. The internal communication through mails can also be easily made between central and branch office through postal services. Business organizations need to exchange the letters related to letter of enquiry, quantity, order, acknowledgment, complaint, etc. to each other. Furthermore, it also helps to make the remittance of trade values in terms of money order, postal order, postal stamps, etc. in the place where there are no banking facilities. Even though, there’s a maximum use of modern means of communication in the urban areas, the postal service is the only medium of communication in terms of correspondence in the distant and remote areas. Thus, postal services are the essential subsidiaries in the development of business worldwide. iii. Importance to the General Public/Individuals Postal service is also important to the general public to communicate personal ideas, opinions, feelings and news, etc. between friends, relatives and family members. Sometimes, individuals send letters i.e. inquiries and applications, etc. to the organizations through post offices. Money can also be sent or received through post offices under postal bank services and get promotion of philatelic activities. Because of high charges in the use of the modern means of communication on one side and their inaccessibility in the distant and remote areas on the other, postal services are of greater importance to the general public. Points to Remember i. Importance to the government ii. Importance to business organization iii. Importance to the general public

62 Aakar’s Office Practice and Accountancy - 8 3. Development of Postal Service in Nepal Human being is the source of information itself and it is the primary means of communication from the ancient times. When messages and matters were to be sent from one place to another, human beings were used from the past immemorial. As mentioned in the religious stories, different birds and animals like pigeon, parrot, dog, horse, etc. were supposed to be used in relaying messages. This is all the matter of stories but in reality, messages, news and things were used to be relayed by Rissallas i.e. the horse soldiers from about the Malla Regime. King Prithvi Narayan Shah had begun postal services by establishing Thapley Hulak and Kagazi Hulak. The former was to carry the government ration and the latter for transferring mails from one place to another. This attempt was the foundation in the development of postal system in the country. The organized postal system was started in the country from the regime of King Surendra Bikram Shah with the establishment of Hulak Ghar (Postal House) in 1935 B.S. Nepal started sending the letters using stamps in 1936 B.S. From 1938 B.S. the postal stamp began to be used. The cost of stamp was one anna, two anna and four anna which had the sign of cross knives and the crown of the king. Since then a number of post offices were established in different parts of the country, 43 such offices were established till 1956 B.S. From the year 1957 B.S., the government initiated the Bahirangi Chithee Policy in addition to the general practice of posting letters by affixing postal tickets on the envelope. Bahirangi Chithee means posting letters without tickets where the receiver has to pay a double charge to the postman at the receipt of the letter. Because of its discomfort, it could not remain in practice for a long time. Till the year 2015 B.S., Nepal’s postal services were limited to India. Mails and parcels were to be sent to other countries through the Indian Embassy by using Indian tickets. Nepal got the membership of World Post Federation (WPF) in 2013 B.S. and started sending mails to any country in the world by using her own postal tickets from the 1st of Baisakh, 2016 B.S. The WPF made it possible to send letters and parcels directly to any country throughout the world. Aerogramme was also brought into practice from the same year. Philatelic Beauro of Nepal was established in Nepal 2017 B.S. During fifth year plan period (2032-2037 B.S.), Nepal started saving bank service on 2033 B.S. After the establishment of Postal Service Department under the Ministry of Information and Communication, the postal services have been developed to some considerable extent. In seventh fifth year plan period (2042-2047 B.S.), Nepal established foreign money order service. In 2046 B.S., internal express mail service was established and foreign express mail service was established in 2052 B.S. In 2052 B.S. hundred years Golden Jubilee was also observed in Nepal. The post offices have been gradually increased after the initiation of the economic planning in 2013 B.S. There were 124 post offices till the starting of the first plan and increased to 413 till the end. The

63 Postal Service Postal Service Department has printed and published different postal stamps of different traditions, cultures, natural beauties, distinguished personalities, etc. at a cost between minimum 5 paisa to maximum 25 rupees in Nepal. As the objective of the government to provide postal services in all the villages in the country, it has made due attempts to involve private sectors in this field and to develop the procedures for autonomous administration in the post offices running under the Postal Service Department from the beginning of 9th Five Year Plan. Furthermore, the government has introduced new technologies, increased physical capacity of the offices for the advancement of its services. In this way, the post office in Nepal has been developed to a considerable extent with the involvement of private sectors. Many courier service agencies are working in different services in urban areas. It has rendered valuable services in relaying mails and parcels between different places in and outside the country. It has also been providing banking services and other agency services by collecting insurance premium, remittance of money and with philatelic services. Thus, postal services have occupied large area of market by providing a number of services in and outside the country in its extensive network system: 4. Method of Dispatching Mails There are different methods of sending letters and parcels from one place to another through post offices. According to the nature, importance and matter of news and materials on one side and the charge factor on the other, letters can be dispatched through the following ways. i. Ordinary Letter The method in which mails are sent only by affixing the postal tickets of the minimum prescribed cost on the envelope is known as ordinary post and such a letter is called an ordinary letter. It contains only the ordinary news and message and simply for communication purpose. In Nepal, such mails can be sent by using the postal tickets of Rs. 2, Rs. 5, Rs. 10 but it varies according to the weight. If the weight of the letter is more than 20 gms additional postage stamp is essential. The post offices do not bear any legal responsibility for their losses or damages. It is a common method of sending mails. Key Point The letter which is sent only by affixing the postal tickets of the minimum cost known as ordinary cost is called an ordinary letter. Ordinary letter

64 Aakar’s Office Practice and Accountancy - 8 ii. Registry Letter The method in which letters and parcels are sent by affixing the postal tickets of a certain prescribed costs/charges on the envelope and by registering them in the post office is known as registered post and the letters are said to be the registered letters. This sort of letters contains urgent or confidential matters. Registration of such a letter is done by paying certain registration fees in terms of postal tickets, which are affixed on the envelope just like an ordinary post. The name and address of the addressee i.e. the receiver and of the sender himself should be clearly mentioned on the envelope to the appropriate sides. After its registration, the word ‘registered’ is written in bold type letters on the face of the envelope and stamped by the post office. A registered post can be a simple registration or a Registered AD (Acknowledgement Due). After the registration of a letter, a slip is issued by the post office as its evidence. A simple registration does not inform the sender about when the post was received by the addressee. But a Registered AD can make the acknowledgement due. AD uses an acknowledgement form available at the post office by filling up the necessary details and is sent to the receiver attaching with the letter. It is duly signed by the receiver and again delivered to the sender to inform him/her that the letter is duly received. It acts as a proof of the receipt of letter or parcel. An additional charge is payable for this acknowledgement form and the services thereon. Return Receipt (to be returned to the original post office for the delivery to the sender) Received a registered letter insured with Rs. ................. numbered .............. Delivered to the name ............................................... weight (in words) (in figures) Signature of the receiver Date of delivery received Even though this method is more reliable, the post office doesn’t bear the legal responsibility for any loss or damage of a registered letter. For the total security of such a letter or parcel, the sender can insure it with the post office in payment of some additional insurance charges. Under such an insurance, the sender may legally be able to claim the compensation for the loss or damage so caused by the negligence of the office. Key Point Letter which is registered in the post office for the security and the sender pays additional cost for postal ticket is called registered letter. Registry letter

65 Postal Service iii. Aerogramme It is a simple method of sending news, message, etc. It was named as aerogramme in the sense that it was supposed to be carried by aeroplanes in the past. At present, it may be carried by means of air, water and land transport as desired. It is a form prepared by the post office with a pre-printed postal stamp, having little space for writing the news and message, and place to write the name and address of the sender and receiver. No enclosures are allowed in aerogramme. It also does not contain urgent, important and confidential matters. Key Point A letter which is sent through aircraft and has place to write message, news, etc. within the letter and ticket is already affixed is called aerogramme. iv. Postcard It is the card prepared and issued by the post offices for writing and sending short news and message like greetings, wishes, congratulations, condolences, complaints, advertisements, business information, etc. It has a little place for writing the name and address of the addressee and the sender as well. It also provides a space for writing a few lines of the news or message. The postal stamp of the required value is affixed on the card itself. It is completely naked and thus cannot maintain secrecy of the matters. The size of the card may be 4” × 6”, 3” × 5” and 6” × 8”. We can get this card from post office and also from open market in printed form. Key Point Postcard is a kind of naked card which is used to send short and less important massage through post office. Aerogramme Post card

66 Aakar’s Office Practice and Accountancy - 8 v. Express Mail Service (EMS) The process of exchanging documents and materials through airbus or express means of transportation is known as Express Mail Service (EMS). It is the latest and modern technology in the field of communication. It has high speed, lower cost and time bound guaranteed delivery service. In Nepal, Express Mail Service (EMS) is available in more than 48 major towns and cities of the country and more than 26 countries of the world. In this system, if they got lost or delayed in delivery it makes substantive compensation by insurance. Some of the best Express Mail Service provider of the world are DHL, FedEx, Aramex, TNT, etc. Key Point Express Mail Service is the act of exchanging documents and materials between or among the individuals and organizations using fast means of transportation and technology. Points to Remember i. Ordinary letter ii. Registry letter iii. Aerogramme iv. Postcard v. EMS 5. Differences between Ordinary letter and Registered letter Point of Difference Ordinary Letter Registered letter 1. Meaning The letter which is sent through ordinary post is called ordinary letter. The letter which is sent by registering into the book of post office is called ordinary letter. 2. Cost It is economical method of sending letter. It is costly or expensive method of sending letter. Express Mail Service

67 Postal Service 3. Useful It is useful for sending ordinary message. It is useful for sending urgent, confidential and important message. 4. Receipt It has no provision of providing receipt to the sender as an evidence of delivery. It has provision of providing receipt to the sender as an evidence of delivery. 5. Recording It does not have any kind of record in post office. It has the record in the book before delivery of letter. 6. Responsibilities The post office is not responsible for the loss or damage of the letter. The post office is responsible for the loss or damage of the letter. Glossary Remittance : transfer of funds from other country Parcels : packages Courier : messenger (transfer goods and documents) Enclosures : attachment/includes Secrecy : confidentiality/privacy Philatelic : collection and studies of postage stamps Affixing : sticking Stamp : ticket Slip : chit Post office : government institution established for providing postal service to the public Exercise A. Fill in the blanks: 1. Kagazi Hulak transfers ................................. from one place to another. 2. The first Post Office was established in ................................. 3. Economic planning was started from ................................. 4. Registry letter contains ..................... and ..................... matter. 5. Postcard cannot maintain ..............................

68 Aakar’s Office Practice and Accountancy - 8 B. Give very short answers to the following questions: 6. What is postal service? 7. What is the full form of WPF? 8. What is ordinary letter? 9. What you mean by postcard? 10. When was the postal service started in Nepal? C. Give short answers to the following questions: 11. Distinguish between ordinary and registery letter. 12. Describe post card and aerogramme. 13. Why is aerogramme more popular in Nepal? D. Give long answers to the following questions: 14. What do you mean by postal service? Explain its importance. 15. Describe the evolution of postal services in Nepal. 16. What are the different methods of sending letters and parcels through post offices? Discuss. Project Work a. Collect any one aerogramme, post card, registry letter or postage stamp from nearby post office. b. Make an e-mail and send to all your friends.

69 Indexing and Filing Unit 6 Learning Objectives After studying this unit, students will be able to : know about the meaning and importance of indexing, explain the types of index, know about the meaning and importance of filing, describe the methods of filing. Indexing and Filing

70 Aakar’s Office Practice and Accountancy - 8 Indexing 1. Introduction In an office, there may be hundreds of documents of different nature and requirements. These documents may be circulars, minutes, memos, reports, agreements, contracts, maps, etc. and are very important property of the organization. They should be well preserved in different files and folders in a systematic order in such a way that they can be easily located when required. It is indexing which helps to ensure the quick and easy location of files and documents when required. The literal meaning of indexing is an indicator or guide about any matter, i.e. records, documents, places, words, etc. In record management, indexing may be defined as an indicator or guide to locate a certain file/folder and documents. According to J.C. Denyer, “an index is anything that indicates or points out. Its prime function is to act as a guide to a body of data or to a collection of records.” From the above meaning, we can say that index is the process of pointing or indicating particular information or documents easily and quickly which are preserved in an office. Contents in a book, the head words in a dictionary, personal name cards, file and folder numbers are some examples of indexing. Key Point An indicator or guide to locate a certain document, file or folder in a drawer/cabinet is known as indexing. 2. Need and Importance of Indexing Filing is indispensable official function of every type of organization and indexing is complementary to filing. The importance of indexing is given below: i. Indexing presents an orderly list of documents and files of the correspondents on the basis of their name, number, etc. for their systematic storing. ii. It indicates the location of the records easily and quickly as and when required. iii. It maintains economy in records management. Telephone index

71 Indexing and Filing iv. It helps for the easy, quick and effective performance by the reference of records and documents. v. It helps to find out the record of various parties like customers, the suppliers, etc. 3. Types of Index There are various types of index. The common types are introduced below: i. Book Index It is the method in which index is maintained in the form of a bound book or register with pages divided into a number of alphabetic sections, each page bearing a letter of alphabet at its right hand side edge which is cut in such a way that all the letters of alphabet can be seen together. Each page consists of a list of correspondents whose name begins with the letter to which it is allotted. In this way, the right hand sides of the pages are allotted for the letters of alphabet and the name of the person, file number, etc. are mentioned in the corresponding pages. Generally, the name of the correspondents is written in a style beginning from surname followed by the first and middle name like Hari Prasad Sharma as Sharma, Hari Prasad and it is mentioned in the page allotted to ‘S’ alphabet. But the name of the institutions is arranged as it is. ii. Cabinet Index Some offices make indexing in their cabinets. Simply the alphabetic guides are mentioned in the front of the cabinet or drawers and the files or folders are kept inside the respective cabinet or drawers in such a way that the tabs of the files or folders can be seen together when the cabinet or draws are opened. Hence, cabinet index is that method in which the index is made in the cabinets themselves by mentioning the alphabetic group on the face of the cabinets and the names, numbers or subjects along with other necessary details on the back of the thick folders inside the cabinets. iii. Card Index Card index is an advanced method of indexing. It was developed by a French scholar ‘Abbe Jean Rosier’ in the 18th century. Under this system different cards of different shapes and sizes are made for each individual person, firm or subject as the arrangement of documents. The necessary details like name, address, subject, file Cabinet index Book index

72 Aakar’s Office Practice and Accountancy - 8 number, etc. are mentioned in the cards. The cards may be simply kept in the open drawers, or in rotary system as the necessity and system of an organization. Card index is of three types, viz. simple card index, visible card index and rotary card index as shown in the figures above. The size of the cards may be 3”× 5”, 4” × 6” or 5” × 8” according to need. Rotary card index Visible card index Filing 4. Meaning and Definition An office is a source of information in the sense that it retains all the necessary information in required form and format. Hundreds of documents relating to various correspondents are kept in an office for various purposes with secured preservation. Such storage and preservation of the documents in a systematic manner is simply known as filing. Filing must be followed by a systematic indexing. It is regarded as an essence to records management and an important aid to the general management. Filing is the process of collecting and keeping the records of an organization and storing them well so that they can be referred to when required. In the words of Denyer, “Filing is the process of classifying, arranging and storing records so that they can be located when required.” From the study of the meaning and objectives of filing, it may be defined as a regular and systematic process of collecting, arranging and preserving documents, making these records easily accessible and quickly available for use, classifying the different types of record, etc. so that they can be referred without delay and difficulty when required. Key Point Filing is the systematic and scientific arrangement of documents, bills, letters, etc. in a file for future reference and use.

73 Indexing and Filing 5. Need/Importance of Filing Filing stores and preserves records and documents to serve the performance of present and future activities. It is important for every sort of organization. Its importance can be discussed as given below: i. Safeguarding Records Filing preserves the records in files/folders and cabinets. So it safeguards them by protecting from the damaging factors like insects, rats, dust, water, fire, theft, etc. ii. Ready Reference Filing is a systematic and classified arrangement and storing of documents in accordance with the pre-determined indexing. So the records and documents can be immediately and easily found from the respective files/folders for future references. iii. Legal Formality There may be a legal obligation to preserve some of the official records for a certain time in the future. In such a case, filing fulfils the legal formality by preserving the records for the future. Such records may be of agreements, national and international treaties, audited books of accounts, etc. iv. Builds Business Image A good filing system helps an organization to build up and boost its image and goodwill in the society. It enables the society to make positive attitude towards the organization, which leads to a good social relation. A good social relation results a business success by mutual help and cooperation with the societies. v. Improves Efficiency A good filing system helps in providing the records whenever needed without delay and difficulty. It facilitates the smooth performance and prompt replies of the inquiries, etc. In this way, filing serves in improving office efficiency by means of smooth and regular functioning and proper cooperation among the units of an organization. vi. Others Documents kept in filing system can settle the disputes, help to formulate the plans and policies, help to take the decision making, etc. Points to Remember i. Safeguarding records ii. Ready reference iii. Legal formality iv. Builds business image v. Improves efficiency vi. Others

74 Aakar’s Office Practice and Accountancy - 8 6. Classifications / Methods of Filing Method of filing refers to the particular way of arranging the files and folders in the cabinets. Files can be arranged in order of alphabet, numbers, places, subjects, dates, etc. as the convenience of an organization. Some important filing methods are briefly discussed below. A. Alphabetical Filing Method Alphabetical filing method is the method of arranging and classifying files and folders alphabetically by applying the alphabetic indexing rules. Under this method, files are kept systematically from the front to the back or from the left to the right in drawer or cabinet in order of alphabets like, A, B, C ………….. Z in English Script and s, v, u, ============== 1 and c, cf, ========= cM in Devanagari Script. If many names come from the same letter, the classification is made on the dictionary order of names. For example, if there are two names Abdul and Abbal that come in the documents, Abbal is taken first because the first two letters are same in both the names, but the third letter is `b’ in ‘Abbal’ and `d’ in ‘Abdul’ where `b’ comes before `d’ . The alphabetical filing may be used for correspondence files, staff records, etc. It has two special merits, viz. (a) it is based on alphabetical order to which, everyone is familiar and (b) no card index is required for this method. Key Point The process of the arrangement of files & folders in a drawer according to the names of correspondents in alphabetical order is known as alphabetical filing method. Advantages i. It is easy and simple to understand and use, as the alphabetical arrangement is common in practice. ii. It is flexible as additional files are easily adjusted and old ones can be removed. iii. No separate index is necessary as the files are self-indexed. iv. It is economical as it does not need separate index and trained staff. v. It is suitable for both small and big organizations especially for those where names are more frequently used than numbers. vi. It provides a direct reference to records because the records are grouped by names. Disadvantages i. It is difficult and tedious to adjust the new and additional documents from time to time. ii. The misspelling of the names may arise mistakes.

75 Indexing and Filing iii. It is not suitable for those organizations where numbers are used instead of the names. iv. It is not secret method as names are written on the tabs of files. v. It is not suitable for those organizations where numbers are used instead of the names. Rules for making order of names The following are the rules for making order of names in the folders. For individual name: Hari Prasad Regmi as Regmi, Hari Prasad. For individual name with title and degree: Dr. Gyendra Neupane as Neupane, Gyendra (Dr.) For the name of firm: Kumari Textile Industry as Kumari Textile Industry (No change) For the individual as well as name of firm: Ganesh Neupane Motor Parts as Neupane, Ganesh Motor Parts. Rules for Alphabetical Filing Most of the organizations file their records in alphabetical order. In organizing alphabetical filing, there are some common rules, which are introduced below in short: i. Primary guide card Primary guides are those guides, which divide the folders into major alphabetical sections. These guide cards are kept at the beginning of each section respectively. It has a tab at the top left corner before the individual folders. Alphabetical captions are written in the tab of such primary guides. ii. Individual file/folder Individual file is the one, which is maintained in the name of a person or firm having at least five records. Individual folders are arranged alphabetically after the respective guides. The individual files are kept behind the primary guide cards. A A-E A Acharya, Sudip Primary guide Individual file

76 Aakar’s Office Practice and Accountancy - 8 iii. Special file/folder Special file or folder is the one, which is maintained for the correspondent, whose documents are very important and frequently used from time to time. In order to identify the special files, the files with tabs, positioned at the right hand side, are used and the name of the person or subject is written in bold typed letters or in different colour in the tabs. A Acharya, Sudip Primary guide Individual file Special file Aakar Publication iv. Out guide card When a file or folder is taken out of the filing cabinet for reference, out guide is put on that place. This card contains a tab at the right hand side. The out guide indicates the date and time of the folder taken out. Name, position and the signature of the person or authority taking it should be mentioned along with the duration and the purpose of the folder so taken out. An out guide may be as the following. OUT Date Time Name of the person/ authority Position Name and No. of the file file Signature v. Miscellaneous files/folders Miscellaneous file is the one, which is used for those persons and firms who have less than five documents or letters. The tab of miscellaneous file is placed just in right side of special file or individual file. The word ‘miscellaneous’ is mentioned on its tab. When the documents of a person reach up to five or more in this file, a separate individual file is created for him and is placed at the back of the primary guide. B. Numerical Filing Method Numerical filing method is a process of arranging the files and folders in numerical order by assigning distinctive numbers to each correspondent. All the records and documents relating to a particular person or location, etc. are placed in Miscellaneous

77 Indexing and Filing one file bearing its distinctive number, i.e. 1, 2, 3, ........ for identification of files. There is no chance of twist as the numbers are given distinctively. Hence, a numerical filing method is that method in which the documents are filed in order of their number instead of the alphabets of their names or subjects. It is very useful for the insurance company, bank, libraries, traffic police, etc. which need to deal with the numbers. If any person or organization has more than one file, such file will be given decimal numbers like 100.1, 100.2, etc. A separate index is prepared for the names of the persons/firms or subjects, etc. of the corresponding file number. It helps in finding out a given file or folder from the drawer quickly and easily. Index may be prepared in the order of alphabets of the name of persons or subjects or in serial orders. Cards containing the name, address, phone number, subject and other necessary details are prepared and inserted in proper places. The filing clerk must consult alphabetical index to find out the file number, otherwise it becomes difficult to locate the concerned files. Key Point The process of arrangement of files/folders in a drawer according to the numbers of correspondents in numerical order is known as numerical filing method. Advantages i. It is a modern method and can be used as per the time and situation. ii. It is completely flexible that documents and files and folders can be easily increased or reduced. iii. Since there is a separate index, it is easy and quick to find out any of the files with the help of index cards and catalogues. iv. It is more suitable for the organizations like traffic police, insurance companies, libraries, etc. which use numbers of the correspondents instead of their names. v. It is the secret method of filing as only a number is written to the file which does not provide any information to the outsiders. Disadvantages i. It is expensive because it needs separate index and trained human resource to handle it. ii. It is not suitable for those offices, which use the names of correspondents or subjects instead of numbers. iii. It consumes more time while referring the guide cards and index. iv. It is more complex and difficult to understand. v. It needs trained staff to manage the catalogue system.

78 Aakar’s Office Practice and Accountancy - 8 Rules for numerical filing method Numerical filing method has five major parts or rules. They are given below. i. Entry Book When an individual or firm is given a separate file, his/her name should be entered in a book called entry book. Names are registered in this book serially in the order of dates and the same serial number may be assumed as the file or folder number of the person. Entry book is arranged as shown below: S. No. Name Date 1 Sednai, Uchchata 2075-9-5 2 Panta, Dinesh Murti 2075-10-3 3 Neupane, Gyendra (Dr.) 2075-11-5 4 Megha Bank Ltd. 2075-1-2 5 Marahatta, Nabin Babu 2075-10-6 ii. Main Numeric Section The main numeric section is the part of a cabinet or drawer where guide cards and individual files are kept. The pre-assigned numbers are written on the tab of these cards and individual files. Each file contains the records concerning a separate person, firm , subject, place, etc. There’s a numeric guide for each group of 1 to 20, 20 to 40, files, etc. As the files are arranged in orderly manner behind the guides, they are easy to locate. The figure on the side is a simple example of the main numeric section. iii. Index Card The index card, which is arranged alphabetically contains cards with the name, address, numeric code and other necessary information. They are of different sizes and shapes like 3”×5”, 4”×6”, 5”×8”, etc. or as required. They are arranged in alphabetical order in a separate rack or cabinet. Sometimes, double index can also be made when cross reference is needed, i.e. alphabetical as well as numeric order. The index is used as a guide to locate a particular file in the numeric section as records are better known by the names than Main numeric section Index card 10 Aryal, Ashish Aryal, Ashish Bharatpur-9, Chitwan Phone: 9845070844 A

79 Indexing and Filing numbers. If a document is kept in a miscellaneous file, it is indicated by the letter `M’ and a separate file number is given to that person when his documents reach up to at least five. An example of an index card may be as given above. iv. Miscellaneous Alphabetical File The miscellaneous alphabetical file contains different guides and files bearing alphabetic captions. A miscellaneous alphabetic file contains the records of several persons and parties who have less than five documents. Usually, when a person’s documents reach upto, at least, five or more, he/she is assigned a separate numeric file. The miscellaneous file may be as given on the side. v. Out Guide It is same as in the alphabetical filing method. C. Geographic Filing Method Geographic filing method is that which classifies the files and folders according to the geographical location of places. It again arranges them in alphabetical or numeric order within the geographical classification. This method is mostly applied by the organizations, which operate their business all over a country or all over the world. The geographical classification may be made as country wise, state-wise, district-wise, town-wise, etc. Post offices, public utility service institutions, banking institutions, etc. use this method. It applies at least two classifications one, on the basis of places and the other, on the basis of alphabet, number or subject but within the geographical classification. Key Point The process of classifying the files and folders according to the geographical locations and arranging them in alphabetical or numerical order in the separate cabinet or drawer is known as geographical filing method. Advantages i. This method is very easy to understand and use. ii. It is advantageous especially to those, which have correspondence with a large number of places in home and foreign countries. Geographic filing method

80 Aakar’s Office Practice and Accountancy - 8 iii. Any one of alphabetical, numerical and subject filing method can be used under the geographical classification. iv. It is duly flexible. Disadvantages i. Difficulty in making various types of guide cards and indices. ii. More expensive to make two classifications and arrangements of documents. iii. Difficulty in making the accurate classification of places all over the country or the world. iv. Not suitable for very small organization having limited dealings. v. Secrecy cannot be maintained. vi. It takes more time to find the files and documents. D. Subject Filing Method The method of arranging and storing files and folders according to their subject is known as subject filing method. This method of filing is useful in the organizations where documents are classified and arranged according to the subjects. All documents relating to a subject are brought together in a file even though they may be from different correspondents. In a government office subject may be salary, rent, stationery, furniture, machinery, vehicle, contingencies, etc. In a trading office the subjects may be salary, rent, general expenses, stationery, clothes, metallic materials, oil, sport materials, contingencies, etc. If the number of documents of a certain subject is too large, sub-divisions are also made. For example, the documents of clothing material may be sub-divided into polyester, cotton, woolen, nylon, etc. For the identification of a particular subject, guide cards are placed in drawers. Key Point The process of arrangement of files/folders in a drawer according to the subjects of correspondence in alphabetical order is known as subject filing method. Advantages i. This method is simple and easy to understand and use because subject head is written on the file. Subject filing method

81 Indexing and Filing ii. It is flexible method because the number of files can be easily added and deducted. iii. It is easy to keep, arrange and locate the file as different guide cards are used. iv. It is suitable for those offices where subject is more important than name and numbers like, Land Revenue Office, Chief District Office, Court, etc. v. The documents related to the same subject can be found in one file. Disadvantages i. It is difficult to find the document of a particular person because the documents of a person are kept in different files as per their subjects. ii. It is difficult to decide the subject of a document or a paper. iii. It is not a secret method as the details related to files are on the face of files. iv. It is expensive method as it requires trained human resource and more cabinets. Glossary Indispensable : vital/essential Complementary : related/matching Correspondent : letter writer Allotted : selected / divided Cabinet : cupboard Referred : passed on Retain : hold Obligation : responsibility/duty Flexible : elastic/changeable Economical : cost-effective/cheap Tedious : boring/dull Captions : title/heading Dispute : conflict Reference : the act of using Exercise A. Fill in the blanks: 1. The literal meaning of indexing is an ……………….. 2. Filing must be followed by a systematic ………………..

82 Aakar’s Office Practice and Accountancy - 8 3. Numerical filing is a process of arranging the documents in …………. 4. Individual files are created for the particular person having …………….. No. of letters/documents. 5. The coloured letter/tab is used in ……………….. file. B. Give very short answers to the following questions: 6. Define the term ‘filing’. 7. Define the term ‘indexing’. 8. What is primary guide? 9. Define card index. 10. What is special file? 11. Define entry book. 12. Write the sizes of index card. C. Give short answers to the following questions: 13. What is indexing? Write the importance of it. 14. “Indexing and filing are complementary to each other”, Justify. 15. Explain the importance of filing. 16. Write the advantages and disadvantages of numerical filing. 17. Briefly explain the rules of alphabetical filing method. 18. What is geographical filing method? Write its advantages and disadvantages. 19. What is subjective filing method? Write any four advantages and disadvantages of it. D. Give long answers to the following questions: 20. Why is indexing needed? Explain the types of index. 21. What is alphabetical filing method? Briefly describe its advantages and disadvantages. 22. What is numerical filing? Explain the rules of numerical filing method. Project Work a. Which filing method and system are used in your school? With detail study, make a list of its advantages and disadvantages. b. Study and make a report about the indexing system which is used by local and well managed library near your house.

83 Business Unit 7 Learning Objectives After studying this unit, students will be able to : know the meaning and characteristics of business, describe the importance of business, explain about the types of business, explain about the forms of business organization. Business

84 Aakar’s Office Practice and Accountancy - 8 1. Introduction The literal meaning of business is the state of being busy. This meaning cannot satisfy the real meaning of business because some people seem to be busy in some sort of non-economic activities and some others in any employment or profession and such an engagement does not mean business in its real sense. Business refers to those human activities which involve money or money’s worth by means of regular production or distribution of goods or services for earning profit through customer satisfaction. Prof. L.H. Haney has defined business as “The human activities directed towards producing and acquiring wealth through buying and selling goods.” According to Prof. L.R. Dicksee, “Business is a form of activity pursued primarily with the object of earning profits for the benefit of those on whose behalf the activity is conducted.” Besides, production and buying and selling of goods, banking, carriage and insurance, warehousing, etc. are also concerned with business. Thus, business may be defined as the human activities directed towards acquiring wealth i.e. earning profit through a regular production or distribution of goods and services with the help of other management services. It also involves some elements of risks. Key Point Business is the act of regular production and distribution of goods and service for earning profit through customer satisfaction. 2. Characteristics of Business The characteristics of a business have been discussed below: i. Economic Activity It is an economic activity in the sense that it involves monetary worth in terms of the dealing of goods and services. All the economic activities may not be business but all business activities are economic activities. ii. Regularity in dealing of Goods and Service There should be a regular process of production and distribution of goods or rendering of services to mean any economic activity as business, otherwise it does not mean business. For example, if Ram sells his book to somebody for a certain value, it does not mean his business but if he continues such a selling to a number of persons regularly, it becomes his business.

85 Business iii. Profit Motive A business is motivated by profit and thus is directed towards earning of profit through the regular dealing of goods and services. It does not however mean that there will never be loss in it i.e. it may also suffer from losses. A profit is necessary for a business for its smooth running, growth and development and thus a business should have profit motive. iv. Risk and Uncertainty Risk is the chance of occurring losses and uncertainty refers to unpredictable future. The internal and external forces like organizational structure, office resources, working environment, personnel policies, labour unions, market, government policies, pressure group, etc. may lead to risk and uncertainty. As a result, business activities are supposed to be risky to some large extent. v. Production and Distribution Business involves in the production and distribution goods and services for earning profit. Production and distribution of goods and services are done according to the wants and needs of the customer to get them satisfied. vi. Customer Satisfaction In this age, for the continuity of business, customer satisfaction is the most important factor. No business can survive without satisfying the customer. So business activities should be customer centred. Points to Remember i. Economic activity ii. Regularity in dealing of goods and service iii. Profit motive iv. Risk and uncertainty v. Production and distribution vi. Customer satisfaction 3. Importance of Business Business, which is comprised of industry and commerce, has become the backbone of the economy of the developed countries and has a growing participation in the economy of the developing countries. The following points highlight the importance of business. i. Economic Development Business is a major economic activity, which mobilizes the idle money in different productive sectors in terms of the investment in materials, production

86 Aakar’s Office Practice and Accountancy - 8 and distribution process. It helps to strengthen national economy by developing all economic sectors like industrial, trading, banking, insurance, warehousing, etc. which help the economic development of a counting. It is only possible through the development of business. ii. Utilization of Resources With the growth and development of business activities, the human and nonhuman resources are utilized in industrial and commercial sectors so as to make allround development of a country. Besides, agro-based industries are also developed by the optimal utilization of agricultural resources in the country. Hence, business activities help to utilize the national resources for a country’s development. iii. Creation of Employment Business activities help to create employment opportunities through the development of industrial and trading enterprises. Employment assures the income of the people of different qualification and calibre through which their standard of living can be improved. iv. Earning Foreign Currency Business is the major source of earning foreign currency. The development of business and its advancement can maintain the quality and thus the international standard of the product and easily enter the international market. It helps to earn foreign currency especially by the export trade. v. Maintaining International Relation With the expansion and development of business, especially the foreign trade, there begins a regular contact with the business parties of the various countries. In course of time, it helps to establish friendly relationship among the countries in the government level. Then they begin the exchange of mutual cooperation in different sectors by means of financial and technological partnership. Hence, business helps to maintain good international relationship. vi. Others Business improves living standard, increases government revenue, etc. Points to Remember i. Economic development ii. Utilization of resources iii. Creation of employment iv. Earning foreign currency v. Maintaining international relation vi. Others

87 Business 4. Scope / Types / Classifications of Business Business relates to the entire field of industrial and commercial activities. The production and creation of utilities and services are the primary concept of industrial activities, whereas distribution of goods and services is within the coverage of commerce. Hence, the business activities are classified into two categories, viz. (i) industry and (ii) commerce. The classification of business is shown in the following figure. Business Industry Primary industry Extractive industry Genetic industry Secondary industry Construction industry Manufacturing industry Service industry Commerce Trade Home trade Wholesale trade Retail trade Foreign trade Import trade Export trade Entrepot trade Advertisement Warehousing Insurance Banking and finance Transportation Communication Management service Tourism Hotel and restaurant Entertainment Industry Industry refers to the production of goods and services by converting the inputs into outputs and creation of utilities to customers. Goods produced by an industry are used either by consumers to satisfy their wants and needs or by other industries for further production. An industry may refer to an extraction, generation, conversion or production of goods and services or construction of building products for a certain price. According to the process of production and the nature of the products, an industry can be divided into the following categories: i. Primary Industry Primary industries refer to the creation of utilities by extracting materials from natural resources or the growth and development of vegetation and animals by means of process of the reproduction. Primary industries are further classified as (a) Extractive Industry and (b) Genetic Industry.

88 Aakar’s Office Practice and Accountancy - 8 a. Extractive Industry It refers to the extraction or drawing out goods from the natural resources like land, water, air, etc. and creation of utilities in them. It supplies raw materials to other types of industry. Mining, hunting, fishing, etc. are the examples of this sort of industry. b. Genetic Industry It is related to the growth and development of flora and fauna i.e. vegetation and animals by multiplying a certain species of plants and breeding of animals. Plant nurseries, forestry, farming; animal husbandry, poultry, etc. are the examples of genetic industry. ii. Secondary Industry The industries which produce finished goods by the use of materials and supplies taken from the primary industries are known as secondary industries. Such industries convert raw materials and semi-raw materials into finished products by way of processing the materials, assembling components, constructing building products, etc. According to the process applied and the nature of the products, these industries are divided into the following two types. a. Manufacturing Industry Generally the term industry refers to the manufacturing industry. It is concerned with the production of goods by using raw materials or semiraw materials as inputs and also creates form utility in them. Production of sugar from sugar cane, petroleum products from the crude oil, manufacturing vehicles by assembling various components, etc. are some of the examples of this sort of industry. b. Construction Industry The industries, which are concerned with the engineering, erecting and construction of building products are known as construction industries. They use materials produced by other industries like cement, iron rods, concrete, bricks, etc. Their distinctive characteristic is that the products of such industries are not generally sold in the ordinary market but built Poultry farm Sugarcane factory Hongshi Cement Factory Fish farming

89 Business at a certain place and transferred its ownership or it is constructed as the order of the customer at the said site/place. Construction of bridges, roads, dams, canals, building, etc. are the examples of construction industry. iii. Service Industry Service industries are those industries, which do not produce physical goods but create utility services and sell them for a price. Nursing home services, film industries, travelling, lawyer’s service, doctor’s service and lodging services, etc. are the examples of service industries. Commerce Goods produced by an industry should be distributed in time to the appropriate market either by the producer himself or through any middlemen. It is commerce, which makes the entire management for the distribution of goods with the help of necessary services. Hence, commerce is the process of distribution of goods in different places. It is an organized system of buying and selling goods, transportation of goods, insurance, banking, warehousing and communication, etc. between the trading parties. Commerce is divided as trade and auxiliary services. i. Trade Trade refers to the purchase and sale of goods between the parties. It is the process by which goods are transferred from the producers to the customers and consumers along with their ownership. According to the nature and scope of trade, it can be classified into the following categories: a. Home Trade The trade which is conducted within the boundary of one country in known as home trade. It is also of two types: wholesale trade and retail trade. Wholesale trade is the one which deals with a large quantity of goods by purchasing from the producers or authorised suppliers and selling them to the retailers. Retail trade is that in which goods are bought from wholesales and sold to the ultimate consumers. Hotel Soaltee Crown Plaza Retail trade

90 Aakar’s Office Practice and Accountancy - 8 b. Foreign Trade The trade which is conducted between two or more countries is known as foreign trade. The buying and selling of the goods in the foreign trade are termed as import and export. In foreign trade, payment should be made in foreign currency. Hence, foreign trade is further divided into import, export and entrepot trade. Import trade implies the purchase of goods from a foreign country. The purchasing act is known as import and the party importing goods is known as importer. Export trade implies the sale or supply of goods to a foreign country. The selling act is known as export and the party exporting the goods is known as exporter. Entrepot trade (re-export trade) is the trade in which a country purchases goods from a foreign country and sell the same goods to the next country. For example; India imports computer from Japan to export to Nepal. ii. Management Service Management service refers to the integration of all the agency services, which facilitate the distribution of goods and services. The following are the important management services of trade and industry: a. Advertisement and Publicity Advertisement and publicity let the customers know about the goods or services. It can draw their attention towards the products and thus it promotes the trade dealing in the wider coverage. b. Warehousing It is a way of storage of goods, which protects them from losses, fire, theft, etc. on one side and creates time utility on the other. Some goods are produced seasonally but demanded throughout the year. They should be stored so that they can be supplied when demanded. Thus, warehousing promotes trade activities by providing storage facilities for the goods. c. Insurance Insurance is a way of transferring business risks to an agency in consideration of the payment of a certain premium. There may occur any sort of financial loss in production, storage, carriage, etc. It is insurance, which assures the recovery of financial loss and promotes and develops trade activities. Media hub advertising agency Warehousing National Life Insurance Company

91 Business d. Banking and finance Banks and financial institutions frequently provide capital in terms of loan under different terms and conditions. Banks also provide agency services like credit guarantee, remittance of money, etc. to the business parties. In this way, banking service is an important auxiliary service to commerce. e. Transportation Trade is an act of distribution of goods from producers to ultimate consumers. It is transportation, which delivers the goods to various consumers from the manufacturers. Many carrier companies in private as well as public sectors are in operation for the transportation of the goods. It plays a significant assistance in promoting trade. f. Communication It is a process of transmission of information among persons and places. With the development of communication network, the world has become a small village. Most of the business communication is made through various means like correspondence, radio, television, telephone, fax, e-mail, internet, etc. and most of the trade dealings are performed by the way of such communication. Thus, communication is an important aid for trade and commerce. 5. Forms of Business Organization An organization is an integrated system of human and non-human resources working together towards the accomplishment of some common goals. In this sense, business organization may be defined as the combination of the means of production i.e. land, labour, capital and entrepreneurship for the purpose of acquiring wealth through the regular process of production and distribution. With the development of the economic sectors and globalisation of business activities, a number of business organizations have been developed in the world of business. The common forms of business organization are briefly introduced below: Sole Trading Concern Partnership Firm Joint Stock Company Public Enterprise Cooperative Society Multinational Company Business Organization Nepal Bank Limited Sajha Yatayat Ncell

92 Aakar’s Office Practice and Accountancy - 8 A. Sole Trading Concern A sole trading concern is a form of business organization established under the sole ownership and management in which the proprietor assumes full responsibility in sharing the profit and bearing the risks and losses. A sole trader is an individual who owns and manages a business by investing his own capital, enjoying the entire managerial responsibility and sharing all the profit or loss by himself. This is the oldest and most traditional form of business organization. Even though it is not necessary to get its registration in Nepal, it may be registered under the Private Firm Registration Act 2014 BS. The characteristics of sole trading concern are as follows: i. Single/sole ownership ii. Unlimited liability iii. Limited capital iv. Sharing of profit or loss by the person concerned v. Business is organized, managed and controlled by the owner. Key Point A sole trading concern is a business organization in which a single person invests capital and manages the business, enjoys all the profit and bears all the risk and responsibilities. B. Partnership Firm Due to the limited capital, limited managerial skill and limited resources, a sole proprietorship could not carry on business in a large size and volume. In course of time, such business organizations could not satisfy the increasing demand. As such, the businessmen gradually developed partnership organizations to conduct their business by combining their skill and resources. A person may possess exceptional business ability but may not have capital, one may get a financing partner but no managerial and technical expert. Thus, a partnership is formed by combining the capital, labour, skill and efforts for carrying on large-scale business for mutual profit bearing unlimited liabilities. Hence, partnership may be said as an agreement between two or more individuals to carry on a certain business under common ownership and assuming joint responsibility for its conduct. It should be registered under the concerned act of the countries. In Nepal, it should be registered under Nepal Partnership Act, 2060 BS. Tailoring shop Partnership

93 Business According to Nepal Partnership Act 2060, “Partnership means any registered in the book of government of Nepal, which is carried on by some persons under one name for sharing the profits and with the agreement of participation in the transactions by all partners or a single partner acting for all.” According to L.H. Honey, “Partnership is the relation between persons who agree to carry or a lawful business in common with a view to private gain.” In partnership business, all the individuals who have contributed capital in the business are known as partners and the nature of work is called partnership. All or any of the partners may handle its management for all. Hence, a partnership firm essentially requires the following elements: i. There should be at least two persons to form a partnership. ii. There must be a written or oral agreement between the partners. iii. The persons joining a partnership must be competent in the eye of law. iv. Business is managed by all or any of them acting for all. v. It should be registered in the books of the government. vi. Partners have unlimited liabilities. vii. Capital of such organization is collected from all the partners. Key Point A partnership is a form of business organization in which two or more persons make agreement to carry on business for profit by assuming joint responsibility. C. Joint Stock Company Before the industrial revolution during the 19th century, production was made at the small and cottage level. The industrial and transport revolution have brought about radical changes in the system of production and distribution. With the advent of factory system, large-scale industries and mass scale production came into being. As a result, trade dealings also began to develop from sole trading and partnership to the companies of national and international level in the 2nd half of the 19th century. A new form of business organization in the name of joint stock company came into existence. This sort of business organizations was intended to overcome the limitations of the traditional forms of organizations, i.e. sole proprietorships and partnerships. Hence, a joint stock company may be called as an artificial person created by law with a distinctive name, common seal and a common capital divided into number of transferable shares and having limited liability and perpetual succession. The ownership of a company is the condition of its membership. In Nepal, joint stock companies must be registered under Nepal Company Act 2063 BS in the concerned department of Government of Nepal. Mega Bank Nepal Ltd.

94 Aakar’s Office Practice and Accountancy - 8 According to Company Act 2063, “Company means any limited company incorporated under this act.” According to Kimball and Kimball, “A corporation is by nature an artificial person created of authorized by the legal statute for some specific purpose.” Some of the main characteristics of a joint stock company are mentioned below: i. Voluntary association ii. Limited liability iii. Common seal iv. Management by representative v. Perpetual succession vi. Divisible and transferable share capital vii. Separate legal entity viii. Artificial person Key Point A joint stock company may be defined as an artificial person created by law with a distinctive name, common seal and a common capital divided into a number of transferable shares and having limited liability and perpetual succession. D. Public Enterprises The business undertakings in the private sector like sole trading, partnerships and joint stock companies, caused the centralization of the means of production in the hands of a few persons on one side and concentration at profit maximization on the other. Therefore, government’s involvement in business sector, especially in basic needs and public utility sectors, was strongly realised. Hence, the government started to own and manage some of the industrial and trading undertakings fully or partially (with majority share) in order to deal with the goods and services in public utility sectors like water, electricity, transportation, communication, banking, etc. to serve the countrymen. This type of business undertakings is called public enterprise. According to A.H. Honson, “Public enterprises are established, controlled and operated by government to produce and supply goods and services to the society.” According to World Bank Report: 1998, “Public enterprises are the state owned enterprises which are financially autonomous and legally distinct entities wholly or partly owned by central or sub-national governments.” Hence, a public enterprise may be defined as an industrial or commercial undertaking incorporated under a special act, with some government privileges in order to deal business in public utility services under the full or partial ownership and control of the government. It is an autonomous or semi autonomous body to conduct the Nepal Telecom

95 Business specified business. Nepal Electricity Authority, Water Supply Corporation, Nepal Industrial Development Corporation, Rastriya Banijya Bank etc. are some examples of public enterprises in Nepal. Key Point A public enterprise is a business organization established and managed by government holding at least 51% of the total shares for producing and distributing goods and services at a minimum possible price to the general public. Objectives/Need/Importance of Public Enterprises With the industrialization and planned economic development, the government of any country has an ever increasing role to be played in the production and distribution of goods and services of public utilities. Moreover, the government should have monopolistic control in the security and defence sector. Thus, the need and importance of public enterprises cannot be overemphasized in any sense. The important objectives need/importance of public enterprises are mentioned hereunder: i. To have the entire management and control over the security and defence sector of the country. ii. To render services and supply goods of public welfare sectors to general people at a minimum possible price. iii. To control over the pricing system and also to increase government revenues by conducting business activities. iv. To promote and develop all economic sectors for strengthening the national economy. v. To make equitable distribution of the available resources to all sectors and parts of the country rather than letting them to be concentrated in the fewer hands. vi. To overcome the unfair trade practices by establishing public enterprises in such sectors. vii. To carry on business activities in unprofitable but public utility sectors because private sectors do not want to conduct business in such sectors. viii. To create many employment opportunities to the different classes of people. E. Cooperative Societies With the ever-growing involvement of the private sector entrepreneurs into business activities, most of the factors of production have begun to be centralised in the hands of a few capitalists. The growth and development of the capitalist form of business organizations led the total business sector towards the Members of Bharatpur SACCOS

96 Aakar’s Office Practice and Accountancy - 8 complicated chain of middlemen. As a result, the middle and lower class people i.e. ultimate consumers started to be exploited by the business parties especially by the manufactures. Thus, the consumers began to unite together to form cooperatives to deal with the business activities especially to serve themselves. According to Prof. Henry Calvert, “Cooperative is form of organization in which persons voluntarily associate together as human beings on the basis of equality for the promotion of economic interests of themselves.” According to Nepal Cooperative Act 2048, “Society or unions means a primary cooperative society or union registered under section 5.” In a simple sense, the word ‘cooperation’ stands for the idea of ‘living together and working together for mutual benefit’. Hence, a cooperative society may be defined as a form of business organization where persons of moderate means and common interest freely associate together on the basis of equality for the promotion of their economic interest and supply with their needs with mutual efforts with service motive rather than profit. Some important characteristics of cooperative societies are mentioned below: i. Voluntary organization ii. Basis of equality and unity iii. Spirit of cooperation iv. Cash dealing v. Separate legal entity vi. Limited liability vii. Disposal of surplus Key Point A voluntary association of economically weak people organized democratically to fulfil their common interest and to raise their economical condition through joint effort is known as cooperative society. F. Multinational Companies Business activities have exceeded the national boundaries and spreaded all over the world with the industrialization and development of information technology. The power nations had introduced the concept of multinational companies to capture the resource market in the world, especially after Second World War. Multinational companies set the production units in several countries under the direct or collaborated ownership and control of the central company by utilizing the local resources at a negligible cost. It has two types of business operations, viz. (a) the parent company established in the main country as the central company and (b) the host or subsidiary company established in the other countries as branch companies with the same name but incorporated under the provisions of the company Coca-cola company

97 Business act of the concerned countries. Hence, multinational company may be defined as a company, which carries on its activities in at least more than two countries by establishing the parent company in the main country and subsidiary companies in other countries to carry out the similar activities. According to United Nations, “Multinational corporations, in the broad sense, are any corporation with one or more foreign branches or the affiliates engaged in any of the activities mentioned may qualify as multinational.” According to David E. Lilenthan, “Multinational corporations are corporations which have their home in one country and live under the laws and customs of other countries as well.” Generally, multinational companies are found established in manufacturing and financial sectors. Asian Paints, Bottlers Nepal Ltd., Gulf Lubricants, Nepal Lever Ltd., Nepal Arab Bank Ltd (NABIL), etc. are some of the subsidiary multinational companies established in Nepal. Some features of multinational companies are given below: i. Joint investment ii. Productive organization iii. World-wide operation iv. Transfer of technology v. Mass production and selling vi. Joint management and control Key Point Multinational company refers to such a company which conducts its business activities in two or more countries by establishing the head office in one country and its branch offices in other counties. Glossary Expert : professional Assembling : collecting/gathering Auxiliary : supporting Entrepreneurship : free enterprise Existence : continuation Perpetual : continuous Autonomous : independent Capitalist : rich person Provision : condition Demand : need/want Share : small part of capital Voluntary : willingly Prompt : quick / timely Liability : accountability / responsibility

98 Aakar’s Office Practice and Accountancy - 8 Exercise A. Fill in the blanks: 1. The act of buying and selling of goods is known as …………….. 2. The production of goods and services refers to …………….. 3. …………….. is a way of storage of goods. 4. There should be …………….. to form partnership. 5. …………….. company is established in the main country. B. Give very short answers to the following questions: 6. What is business? 7. Define secondary industry. 8. What is entrepot trade? 9. What is cooperative? 10. What rules are followed to register joint stock company? 11. Define management service. C. Give short answers to the following questions: 12. Explain any five characteristics of business. 13. Describe the importance of business in the modern world. 14. What is meant by an industry? Mention the different types of industry. 15. Define a sole trading concern. Mention the characteristics of industry. 16. What is partnership organization? Mention its important characteristics. 17. Distinguish between a sole trading concern and partnership firm. 18. Define joint stock company. Mention its characteristics. 19. Define public enterprises. Give some examples. 20. Define a cooperative organization. Mention its characteristics. 21. Define multinational company. Give any four examples of multinational company. D. Give long answers to the following questions: 22. Define business. Explain the types of business in brief. 23. What are the forms of business organization? Explain the forms in brief. Project Work a. Collect the different names of organization which are situated in your locality and classify them into different forms of business organization with reasons. b. Make a list of cooperatives which are located in your society.

99 Bank and Insurance Unit 8 Learning Objectives After studying this unit, students will be able to : write about the meaning and importance of bank, know about the types of bank, write about the meaning of insurance, write about the advantages and disadvantages of insurance, write the functions of insurance, know about the types of insurance. Bank and Insurance

100 Aakar’s Office Practice and Accountancy - 8 Bank 1. Introduction Most of the human beings are busy in either type of occupations i.e. employment, profession or business. Generally, they earn some amount of income and make necessary expenses in a regular course. Some of the persons may have some portion of their income after satisfying their necessities. It is known as surplus income. They want due security of their surplus income from fire, theft, unnecessary spending etc. on one hand and some amount of risk free return i.e. interest on it, on the other. This has led to the development of the concept of bank. There are different views about the origin of bank. According to one view, the word ‘bank’ is derived from the Italiarn word ‘Banco’ which means a bench. In the early days, monetary/banking activities were done by sitting on a bench by Italian goldsmith. Then, banco became bank. The first bank called the “Bank of Venice” as established in Venice, Italy in 1157 AD. A bank simply is a financial institution, which deals with the monetary activities by accepting deposits, lending to the various parties against securities and performing agency services to its client/customer. In the banking history of Nepal, Nepal Bank Ltd. was established in 1994 B.S. as the first bank and then Nepal Rastra Bank in 2013 B.S. as the Central Bank of the country. Then other banks were established with the passage of time. According to the Oxford Advanced Learner’s Dictionary, “The term ‘bank’ means an establishment for keeping money and valuables safely, the money being paid out on the customer’s order or cheques.” Similarly, in the words of Kent, “A bank is an organization whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditure.” According to the World Bank, “Banks are financial institutions that fund in the form of deposit repayable in demand or in short notice”. According to dictionary of Banking and Finance, “Business which holds money for its clients which leads money at interest and trades generally in money.” In the modern day business world, the scope of bank has become so wide that it covers all the financial activities from the issue of money to the performance of agency services to its clients/customers. In this sense, a bank may be defined as a financial institution, Bank of Venice