Unit 4 Handling of Mails
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.
Registry Book or Main General Entry Book
Entry Incoming mail Date Name and Subject in Person or Signature of
No. Date Ref. No. (4) address of brief authority the authority Date Remarks
(1) (2) (3) 075/8/1 (6) concerned receiving it
1. 075/8/5 1101/075 075/7/30 sender
Scholarship (7) (8) (9) (10)
2. 075/8/9 1109/075 075/8/5 (5)
Participation Principal
3. 075/9/8 110/075 Education
Office, Kaski Participation Programme
chief
Dawn School,
Chitwan Programme
chief
Ganesh Gyan
Joyti School,
Rupandehi
Handling of Mails 51
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: Darta Chalani section
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.
52 Aakar’s Office Practice and Accountancy - 8
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 Incoming mail Date Name and Subject in Person or Signature of
No. Date Ref. No. (4) address of brief authority the authority Date Remarks
(1) (2) (3) 075/8/1 (6) concerned receiving it
1. 075/8/5 1101/075 075/7/30 sender
Scholarship (7) (8) (9) (10)
2. 075/8/9 1109/075 075/8/5 (5)
Participation Principal
3. 075/9/8 110/075 Education
Office, Kaski Participation Programme
chief
Dawn School,
Chitwan Programme
chief
Ganesh Gyan
Joyti School,
Rupandehi
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.
Handling of Mails 53
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
54 Aakar’s Office Practice and Accountancy - 8
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 Subject in brief Name of the Ref. Remarks
Date Dispatch. No. whom the mail is written sending section or No.
(1) (2) (3) (4) department (6) (7)
1. 075/10/ 2 101/2075 Quiz contest 110
2. 075/10/13 l02/2075 Aroma School, Chitwan Quiz contest (5) 111
Daisy School, Parsha Administration
3. 075/10/13 103/2075 Ganesh Gyan Joyti School, Quiz contest Administration 112
4. 075/10/15 l04/2075 Rupandehi Quiz contest Administration 113
Peoples’ Academy, Parsa
Administration
Handling of Mails 55
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 Name and address of Date and time of Receiver
No. Date & time Signature
1. receiver dispatch
2. 101/2075
3. l02/2075 Aroma School, Chitwan 075/08/ 20
4.
103/2075 Daisy School, Parsha 075/08/ 21
l04/2075 Ganesh Gyan Joyti 075/08/ 24
School, Rupandehi
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.
56 Aakar’s Office Practice and Accountancy - 8
4. Differences between Entry and Dispatch of Mail
Entry of mail Dispatch of mail
1. It is the process of recording 1. It is the process of recording
incoming mail. outgoing mail.
2. It is called ‘Darta’ in Nepal. 2. It is called ‘Chalani’ in Nepal.
3. It helps to avoid the loss of 3. It helps to know the records of
incoming documents. particulars of outgoing mail.
Glossary : Recording the incoming mails in a book
: Entry of outgoing mails
Entry : Entry of incoming mails
Dispatch : Importance
Registry : Secret
Essence : Record book
Confidential
Register
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?
Handling of Mails 57
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.
Pr oject 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.
58 Aakar’s Office Practice and Accountancy - 8
Unit 5 Postal Service
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 59
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:
60 Aakar’s Office Practice and Accountancy - 8
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
Postal Service 61
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
62 Aakar’s Office Practice and Accountancy - 8
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 Ordinary letter
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.
Postal Service 63
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 Registry letter
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.
64 Aakar’s Office Practice and Accountancy - 8
iii. Aerogramme 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 Post card
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.
Postal Service 65
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 Express Mail Service
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 The letter which is sent by
through ordinary post is registering into the book
called ordinary letter. of post office is called
ordinary letter.
2. Cost It is economical method of It is costly or expensive
sending letter. method of sending letter.
66 Aakar’s Office Practice and Accountancy - 8
3. Useful It is useful for sending It is useful for sending
4. Receipt
ordinary message. urgent, confidential and
5. Recording
6. Responsibilities important message.
It has no provision of It has provision of
providing receipt to the providing receipt to the
sender as an evidence of sender as an evidence of
delivery. delivery.
It does not have any kind It has the record in the
of record in post office. book before delivery of
letter.
The post office is not The post office is
responsible for the loss or responsible for the loss or
damage of the letter. 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 ..............................
Postal Service 67
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.
Pr oject 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.
68 Aakar’s Office Practice and Accountancy - 8
Unit 6 Indexing and
Filing
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 69
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 Telephone index
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.
70 Aakar’s Office Practice and Accountancy - 8
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 Book index
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 Cabinet index
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
Indexing and Filing 71
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.
72 Aakar’s Office Practice and Accountancy - 8
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
Indexing and Filing 73
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.
74 Aakar’s Office Practice and Accountancy - 8
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 A A-E
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
Primary guide
A Acharya, Sudip
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.
Indexing and Filing 75
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 Aakar Publication
Special file
Individual file
Primary guide
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/ Position Name and No. of the file Signature
authority file
v. Miscellaneous files/folders Miscellaneous
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
76 Aakar’s Office Practice and Accountancy - 8
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.
Indexing and Filing 77
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 Main numeric section
The index card, which is
arranged alphabetically contains cards 10 A
with the name, address, numeric code Aryal, Ashish
and other necessary information. They Aryal, Ashish
are of different sizes and shapes like Bharatpur-9, Chitwan
3”×5”, 4”×6”, 5”×8”, etc. or as required. Phone: 9845070844
They are arranged in alphabetical
order in a separate rack or cabinet.
Sometimes, double index can also be Index card
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
78 Aakar’s Office Practice and Accountancy - 8
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, Geographic filing method
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.
Indexing and Filing 79
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 Subject filing method
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.
80 Aakar’s Office Practice and Accountancy - 8
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 ………………..
Indexing and Filing 81
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.
Pr oject 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.
82 Aakar’s Office Practice and Accountancy - 8
Unit 7 Business
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 83
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.
84 Aakar’s Office Practice and Accountancy - 8
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
Business 85
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 non-
human resources are utilized in industrial and commercial sectors so as to make all-
round 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
86 Aakar’s Office Practice and Accountancy - 8
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 Commerce
Primary Extractive industry Trade Management
industry Genetic industry service
Secondary Construction industry Home trade Foreign trade Advertisement
industry Manufacturing industry Warehousing
Wholesale trade Import trade Insurance
Service Retail trade Export trade Banking and finance
industry Entrepot trade Transportation
Communication
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.
Business 87
a. Extractive Industry
It refers to the extraction or drawing out goods Fish farming
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 Poultry farm
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 Sugarcane factory
Generally the term industry refers to the
manufacturing industry. It is concerned with the
production of goods by using raw materials or semi-
raw 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 Hongshi Cement Factory
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
88 Aakar’s Office Practice and Accountancy - 8
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 Hotel Soaltee Crown Plaza
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 Retail trade
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.
Business 89
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 Media hub advertising agency
Warehousing
Advertisement and publicity let the customers
know about the goods or services. It can draw their National Life Insurance Company
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.
90 Aakar’s Office Practice and Accountancy - 8
d. Banking and finance Nepal Bank Limited
Sajha Yatayat
Banks and financial institutions frequently Ncell
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:
Business Organization
Sole Trading Partnership Joint Stock Public Cooperative Multinational
Concern Firm Company Enterprise Society Company
Business 91
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 Tailoring shop
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 Partnership
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.
92 Aakar’s Office Practice and Accountancy - 8
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 Mega Bank Nepal Ltd.
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.
Business 93
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 Nepal Telecom
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
94 Aakar’s Office Practice and Accountancy - 8
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 Members of Bharatpur SACCOS
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
Business 95
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
Businessactivitieshaveexceededthenationalboundaries
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 Coca-cola company
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
96 Aakar’s Office Practice and Accountancy - 8
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 : professional
: collecting/gathering
Expert : supporting
Assembling : free enterprise
Auxiliary : continuation
Entrepreneurship : continuous
Existence : independent
Perpetual : rich person
Autonomous : condition
Capitalist : need/want
Provision : small part of capital
Demand : willingly
Share : quick / timely
Voluntary : accountability / responsibility
Prompt
Liability
Business 97
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.
Pr oject 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.
98 Aakar’s Office Practice and Accountancy - 8
Unit 8 Bank and
Insurance
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 99
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 Bank of Venice
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,
100 Aakar’s Office Practice and Accountancy - 8
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