Book 10 Account Final for 2077_new

Readmore's OFFICE MANAGEMENT AND ACCOUNTANCY 1 0GRADE Authors Jaya Ram Khanal Dopindra Kumar Basnet

Published by TU Road, Kuleshwor, Kathmandu, Nepal. Phone: 4672071, 5187211, 5187226 Fax: 00977-1-4672073 E-mail: [email protected] www.readmorenp.com © Copyright Copyright jointly held by the authors and publisher First Edition : 2072 BS (2015) Revised Edition : 2075 BS (2018) Reprint : 2076 BS (2019) Reprint : 2077 BS (2020) No part of this book may be reproduced or transmitted by any means, electronic, photocopying, recording, or otherwise, without prior written permission of the publisher. Any breach of this condition will entail legal action and prosecution. Authors Jaya Ram Khanal Dopindra Kumar Basnet Layout Readmore Desktop Printed in Nepal You can exchange this book from your nearest book shop if any binding errors are found. Read to help others read ! We are pleased to inform that certain amount from each book will be allocated to Charity Fund. The fund will be provided to the deserving and needy students all over Nepal. The charity always welcomes co-operation and support from all the well wishers and agencies.

Preface It is a great pleasure for us to serve this revised edition of textbook \"Office Management and Accountancy\" as an optional II subject for English medium students of grade ten. This book has been designed and written according to the new curriculum recommended by Curriculum Development Center, Sanothimi, Bhaktapur. It fulfils the present competitive requirement of all the readers who keep concern on the subject. This book has the following salient features:  The book is strictly based on latest curriculum of grade ten.  Every chapter begins with some “Learning objectives”, which students should be able to achieve on the completion of that chapter.  Every chapter provides the “Key terms” with their meaning that help students to understand the text clearly.  Every chapter includes the “Definitions” given by the eminent authors and a key definition of the topic that help students to explain the matter in their own words.  Important points, recent information and summary of the matter have been presented separately under the title “Short Notes to Remember (SNR)” that help students to understand the text at glance and gain further knowledge.  Well designed “Illustrations” have been incorporated in sequential order covering both the theoretical and practical aspect.  Each practical chapter provides “Review illustrations” that provide depth knowledge on practical aspects.  \"Memory Tips\" section is given in the chapter whereever necessary that helps to remember the points easily for explanation of theoretical answer.  “Theoretical questions” have been classified as very short, short and long as per the pattern of Secondary Education Examination (SEE).  “Practical problems” have been designed and arranged in a friendly manner so that students can solve any type of practical problems t asked in the examination.  Seven sets of \"Model questions\" have been included at the end of book to make students able to solve the questions asked in Secondary Education Examination (SEE). We would like to inform that the series is an outcome of our long experience and the assembled ideas of various subject teachers. We hope that it may be an alternative material on accounting for students and teachers who are really in search of a friendly book for teaching and learning purpose. We express our deep gratitude to all the authors whose materials have been consulted as a reference. Lastly, we would like to be grateful towards Readmore Publishers & Distributors for its appreciated job of publishing and distributing the book on time. We promise to acknowledge any advice and suggestion for the revision of the textbook. Authors

SYLLABUS Unit - 1 Office Procedure LH 10  Introduction  Tippani: Introduction and considerations for drafting a tippani  Report: Introduction, considerations for drafting report and types of report  Resolution: Introduction, types Unit - 2 Filing LH 12  Introduction and need  Traditional Filing: Misil and box filing  Methods of filing: Alphabetical, Numerical, Geographical and Subject wise,  Filing system: Horizontal and vertical,  Indexing: Introduction, Importance of indexing in filing Unit - 3 Trade LH 12  Introduction  Procedures/ Methods of Home Trade and Foreign Trade  WTO, SAFTA,  Invoice: Introduction and types  Means of Payment: Introduction and types; Letter of Credit, Cheque, ATM Card, Bank Draft, Electronic Transfer and Hundi Unit - 4 Financial Institutions LH 15  Introduction  Types of Financial Institutions  Bank: Introduction,Types and Functions  Cheque: Introduction, Types and Rules for issuing cheque, Computerised payment system of cheque  Insurance: Introduction,Types and Functions  Provident Fund: Introduction and Functions  Citizen Investment Trust: Introduction and Functions  Financial Cooperatives: Introductions and Functions Unit - 5 Trial Balance LH 10  Introduction

 Advantages and Uses  Adjustment and Closing  Locating Errors: Disclosed or not disclosed by the Trial Balance  Items Included Unit - 6 Final Accounts LH 15  Introduction  Profit and Loss Account: Introduction and Advantages, Uses of Determining Gross Profit, Gross Loss, Net Profit, and Net Loss Balance Sheet: Introduction, Advantages and Uses  Adjustment: Closing Stock, Advance Payment, Outstanding Expenses, Depreciation Unit - 7 Government Accounting System LH 7  Introduction  Objectives and Features of New Accounting System  Office of the Auditor General: Introduction  Office of the Finance Comptroller General : Introduction  Office of the Treasury and Comptroller: Introduction  Auditing: Introduction, Difference between Internal Audit and Final (External) Audit, Importance of Auditing  Classification of Budget Expenditure Head Number Unit - 8 Journal Voucher LH13  Introduction, Types and Uses/Practices  Petty Cash Fund: Introduction and Importance Unit - 9 Bank Cash Book LH7  Introduction, Related Accounts and Uses / Practices Unit - 9 Budget Sheet LH7  Introduction, Parts and Uses / Practices Unit - 11 Monthly Statements LH7  Introduction and Types  Uses/Practices of Statement of Expenditure Practical LH35

CONTENTS Chapter 1 OFFICE PROCEDURE 11-24 Chapter Introduction................................................................................................................................11 Concept and definition............................................................................................................. 12 Need of office procedure.......................................................................................................... 12 Types of office procedure......................................................................................................... 12 Tippani................................................................................................................................ 13 Objectives or importance of a tippani............................................................ 13 Considerations for drafting a tippani............................................................ 14 Specimen of a tippani....................................................................................... 14 Report................................................................................................................................. 15 Objectives of a report........................................................................................ 16 Types of report................................................................................................... 17 Considerations for preparing a report........................................................... 19 Resolution.......................................................................................................................... 20 Importance of resolution.................................................................................. 20 Types of resolution............................................................................................ 20 Similarities & dissimilarities between ordinary and special resolution ......................... 22 Key terms................................................................................................................................... 23 Theoretical questions................................................................................................................ 23 2 FILING AND INDEXING 25-40 Introduction................................................................................................................................25 Concept and definition of filing...............................................................................................26 Need or importance of filing....................................................................................................26 Methods of filing........................................................................................................................27 Alphabetical filing..............................................................................................................27 Rules for making order of name in the folder...............................................28 Advantages of alphabetical filing....................................................................29 Disadvantages of alphabetical filing..............................................................29 Numerical filing.................................................................................................................29 Advantages of numerical filing........................................................................30 Disadvantages of numerical filing...................................................................30 Subjective filing..................................................................................................................30 Advantages of subjective filing........................................................................31 Disadvantages of subjective filing...................................................................31 Geographical filing ...........................................................................................................31 Advantages of geographical filing..................................................................32 Disadvantages of geographical filing.............................................................32 Filing system...............................................................................................................................32 Traditional filing system...................................................................................................33 Box filing....................................................................................................................33 Advantages of box filing...................................................................................33 Disadvantages of box filing..............................................................................33 Misil filing.................................................................................................................34 Advantages of misil filing ................................................................................34 Disadvantages of misil filing............................................................................34 Modern filing system.........................................................................................................35 Horizontal filing.........................................................................................................35 Advantages of horizontal filing.......................................................................35 Disadvantages of horizontal filing..................................................................35 Vertical filing...............................................................................................................36 Advantages of vertical filing............................................................................36 Disadvantages of vertical filing ......................................................................36 Differences between horizontal andvertical filing system ..................................................37 Concept and definition of indexing.........................................................................................38 Usefulness of indexing..............................................................................................................38 Key terms....................................................................................................................................39 Theoretical questions.................................................................................................................40

Chapter 3 TRADE 41-62 Chapter Introduction............................................................................................................................... 41 Concept and definition..............................................................................................................42 Types of trade.....................................................................................................................42 Home trade.................................................................................................................42 Types of home trade..........................................................................................43 Procedures of home trade.................................................................................43 Document of home trade..................................................................................45 Foreign trade...............................................................................................................46 Types of foreign trade........................................................................................46 Procedures of foreign trade..............................................................................47 Document of foreign trade................................................................................49 Similarities between home trade and foreign trade..............................................................49 Differences between home trade and foreign trade..............................................................49 Terms and conditions of trade..................................................................................................49 Invoice..........................................................................................................................................51 Item included in invoice...................................................................................................52 Importance of invoice........................................................................................................52 Types of invoice..................................................................................................................52 Means of payment......................................................................................................................54 World trade organization (WTO).............................................................................................58 Functions of world trade organization...........................................................................58 South Asian Free Trade Area (SAFTA)....................................................................................59 Functions or importance of SAFTA.................................................................................60 Key terms................................................................................................................................... 60 Theoretical questions.................................................................................................................61 4 FINANCIAL INSTITUTIONS 63-100 Introduction................................................................................................................................63 Concept and definition..............................................................................................................64 Types of financial institution....................................................................................................64 Concept and definition of bank...............................................................................................65 Importance of bank....................................................................................................................66 Types of bank......................................................................................................................68 Central bank................................................................................................................69 Functions of central bank..................................................................................70 Commercial bank.......................................................................................................72 Functions of commercial bank.........................................................................73 Differences between central bank and commercial bank.....................................................75 Development bank.....................................................................................................76 Functions of development bank......................................................................76 Cheque.........................................................................................................................................79 Parties involved in a cheque.............................................................................................79 Types of cheque..................................................................................................................80 Rules for issuing a cheque................................................................................................82 Dishonour of cheque.........................................................................................................83 Computerised system of bank for deposit and encashment of cheque.............................83 Concept and definition of insurance.......................................................................................84 Functions of insurance..............................................................................................................85 Types of insurance.............................................................................................................87 Life insurance.............................................................................................................87 Non-life insurance......................................................................................................90 Differences between life insurance and non-life insurance ............................................... 93 Employee provident fund ....................................................................................................... 94 Functions of employee provident fund..........................................................................95 Citizen investment trust............................................................................................................96 Functions of citizen investment trust..............................................................................96 Financial cooperatives...............................................................................................................97 Functions of financial cooperatives.................................................................................98 Key terms....................................................................................................................................98 Theoretical questions.................................................................................................................99

Chapter 5 TRIAL BALANCE 101-128 Chapter Introduction............................................................................................................................. 101 Chapter Concept and definition............................................................................................................102 Objectives of preparing a trial balance..................................................................................102 Advantages of a trial balance.................................................................................................103 Specimen of a trial balance.....................................................................................................103 Procedures for preparing a trial balance..............................................................................104 Preparation of a trial balance from the given ledger balances..........................................106 Adjustment and closing in a trial balance............................................................................109 Concept and definition of accounting errors.......................................................................112 Types of accounting errors..............................................................................................112 Errors disclosed by the trial balance.....................................................................112 Errors not disclosed by a trial balance..................................................................114 Review illustrations.................................................................................................................116 Key terms..................................................................................................................................123 Theoretical questions...............................................................................................................123 Practical problems....................................................................................................................124 6 FINAL ACCOUNTS 129-182 Introduction............................................................................................................................. 129 Concept and definition............................................................................................................130 Objectives of final accounts....................................................................................................130 Preparation of final accounts..................................................................................................131 Trading account........................................................................................................................131 Advantage of trading account........................................................................................131 Specimen of trading account..........................................................................................132 Items included in trading account.................................................................................132 Procedures of preparing trading account ....................................................................133 Profit and loss account............................................................................................................135 Advantage of profit and loss account...........................................................................135 Specimen of profit and loss account..............................................................................136 Items included in profit and loss account....................................................................137 Procedure of preparing profit and loss account..........................................................138 Combined specimen of trading & profit & loss account ...................................................149 Difference between trading account and profit and loss account.....................................142 Balance sheet ............................................................................................................................143 Advantages of balance sheet..........................................................................................143 Specimen of balance sheet..............................................................................................144 Items included in a balance sheet..................................................................................145 Similarities between trial balance and balance sheet..........................................................150 Differences between a trial balance and balance sheet.......................................................150 Adjustments in final accounts................................................................................................151 Closing stock.....................................................................................................................151 Prepaid expenses..............................................................................................................152 Outstanding expenses.....................................................................................................152 Depreciation on fixed assets...........................................................................................153 Review illustrations.................................................................................................................157 Key terms..................................................................................................................................166 Theoretical questions...............................................................................................................167 Practical problems....................................................................................................................168 7 GOVERNMENT ACCOUNTING 183-214 Introduction..............................................................................................................................183 Concept and definition............................................................................................................184 Differences between government and business accounting ............................................184

Concept and definition of new accounting system.............................................................186 Objectives of new accounting system...................................................................................187 Features of new accounting system.......................................................................................188 Level of government accounting...........................................................................................190 Central level accounting.................................................................................................190 Operating level accounting.............................................................................................191 Differences between central level and operating level accounting..................................191 Office of the Auditor General.................................................................................................192 Functions, rights and duties of the Office of the Auditor General...........................192 Office of the Finance Comptroller General..........................................................................193 Functions, rights and duties of the Office of the Finance Comptroller General.....193 Office of Treasury and Comptroller......................................................................................194 Functions, rights and duties of the Office of the Treasury and Comptroller..........194 Concept and definition of auditing.......................................................................................195 Historical development of auditing in Nepal......................................................................196 Types of audit...........................................................................................................................196 Internal audit....................................................................................................................196 Final audit.........................................................................................................................197 Differences between internal audit and final audit.............................................................198 Importance and advantages of audit....................................................................................198 Classification and explanation of budget expenditure heads...........................................199 Key terms..................................................................................................................................212 Theoretical questions...............................................................................................................213 Chapter 8 JOURNAL VOUCHER 215-260 Introduction............................................................................................................................. 215 Concept and definition............................................................................................................216 Specimen of journal voucher..................................................................................................216 Importance or advantages of journal voucher.....................................................................217 Rules of debit and credit.........................................................................................................218 Types of journal voucher.........................................................................................................218 General journal voucher ................................................................................................219 Advance journal voucher ...............................................................................................220 Journal voucher at the time of giving advance........................................................221 Journal voucher at the time of clearing advance.....................................................222 Miscellaneous journal voucher .....................................................................................227 Initial imprest fund..................................................................................................227 Budget release...........................................................................................................228 Petty cash fund.........................................................................................................230 Salary distribution...................................................................................................231 Loan............................................................................................................................234 Transfer of budget....................................................................................................235 Security deposit........................................................................................................237 Rectification of errors...............................................................................................239 Review illustrations................................................................................................................240 Key terms..................................................................................................................................249 Theoretical questions...............................................................................................................250 Practical problems....................................................................................................................251

Chapter 9 BANK CASH BOOK 261-282 Introduction..............................................................................................................................261 Concept and definition............................................................................................................262 Specimen of bank cash book..................................................................................................262 Objectives of bank cash book.................................................................................................263 Importance of bank cash book..............................................................................................263 Types of account under bank cash book...............................................................................264 Considerable points for preparation of bank cash book....................................................265 Posting of transactions into bank cash book.......................................................................266 Posting of general/budgeted transactions...................................................................266 Posting of advance transactions.....................................................................................267 While giving advance..............................................................................................267 While clearing advance...........................................................................................268 Posting of miscellaneous transactions..................................................................................270 Preparation of a trial balance..................................................................................................271 Closing of bank cash book......................................................................................................273 Review illustrations.................................................................................................................274 Key terms ............................................................................................................................277 Theoretical questions...............................................................................................................278 Practical problems....................................................................................................................278 Chapter 10 BUDGET SHEET 283-298 Introduction..............................................................................................................................283 Concept and definition............................................................................................................284 Importance of budget sheet....................................................................................................284 Parts of budget sheet...............................................................................................................284 Rules for preparing budget sheet..........................................................................................286 Closing of budget sheet...........................................................................................................288 Review illustrations.................................................................................................................290 Key terms..................................................................................................................................293 Theoretical questions...............................................................................................................294 Practical problems....................................................................................................................294 Chapter 11 MONTHLY STATEMENT 299-322 Introduction..............................................................................................................................299 Concept and definition............................................................................................................300 Importance of monthly statements........................................................................................300 Types of monthly statement...................................................................................................301 Statement of expenditure................................................................................................302 Specimen of statement of expenditure..................................................................302 Parts of statement of expenditure..........................................................................303 Statement of outstanding advance................................................................................306 Bank reconciliation statement........................................................................................307 Statement of governmental revenue.............................................................................309 Statement of security deposit.........................................................................................310 Review illustrations.................................................................................................................311 Key terms..................................................................................................................................316 Theoretical questions...............................................................................................................317 Practical problems....................................................................................................................318 SEE Model Questions Sets.....................................................................323-335 Bibliography.................................................................................................... 336

1 OFFICE PROCEDURE Chapter Learning Objectives After studying this chapter, the readers will be able to :  write the definition of office procedure,  define tippani and state its objectives,  draft a tippani considering the problem, related rules and provisions,  write the meaning of report and describe its types,  state the objectives and importance of report as an office procedure,  mention the considerable points for preparing a report,  write the meaning and importance of resolution,  explain the types of resolution along with their subject matter. Introduction Every office has to perform the daily activities regularly and smoothly. In order to perform such activities, it needs certain procedures, which are called office procedures. Office procedures are designed and adopted as per the prevalent rules and regulations, tradition and necessity of organization. Different offices use different office procedures to ensure the smooth functioning of official activities. In context of Nepal, Civil Service Code and Rules is used for civil servants, education act and regulations is used in education sector etc. Office procedures facilitate to get the solution on any official problem, matter and issue. Office procedures may be in the form of tippani, report and resolution. Tippani is prepared by lower level staff and forwarded to upper level to get the final decision on the related matter. Report is a kind of descriptive statement on the topic or matter. It may be prepared by the individual or organization. Similarly, resolution is the written proposal presented in meeting or assembly to get the final decision on the matter. Whatever the form of office procedure, it is the democratic practice of getting solution over the problem or matter. The main purpose of office procedure is to simplify the office operation and to perform the official tasks in efficient manner. Office Procedure 11

Concept and definition The office has to follow some administrative procedures to perform the jobs. Such systematic administrative procedure is called office procedure. The office procedure is the act of getting decision from the authorized level in order to perform the official functions smoothly, efficiently and qualitatively. Thus, the specific system, way or administrative procedure followed for smooth functioning of an office is called office procedure. It helps to solve the official problems in democratic manner. Office procedure is a formal and systematic communication through which various administrative decisions are taken in formal, systematic and efficient manner. It is the act of making official decision by the concerned authority by considering opinions, views and suggestions of office personnel, prevalent rules and regulations. Following are the definitions of office procedure: “A procedure is a series of logical steps by which all repetitive business actions are initiated, performed, controlled and finished.” Carl Heyel “A procedure is a planned sequence for handling recurring business transactions uniformly and consistently.” Nenner and Keiling Office procedure is the specific technique, way or administrative action followed by an office for smooth functioning by taking the decision on problem or specific matter in democratic manner. Need of office procedure Following are the points that highlight the necessity of office procedure in an office:  It facilitates to perform the official jobs in simple way.  It helps to perform the jobs in effective and efficient manner.  It ensures the performance of the official activities in systematic and flexible manner.  It helps to make the decision in democratic manner with the participation of all the concerned authorities.  It helps to collect the opinions and suggestions of all office personnel for smooth operation of an office. Types of office procedure Generally the office follows the following procedures for smooth operation of an office by taking decisions on important matter or issues: 12 Office Management and Accountancy

Figure 1.1 Types of office procedure Office procedure Tippani Report Resolution Tippani Tippani is the process of making official decision on specific problem or matter by the concerned authority through written means. It is called ‘Memo’ in English. It is raised by the lower level staff and forwarded to the upper level with a view to get the final decision on a related matter. If the prevalent rules and regulations are unclear and the lower level staffs do not deserve right to take the decision, raising tippani is a must. If the rules and regulations are clear and decisions have been made in the past on exactly same issue, tippani is not raised and forwarded. Tippani should be prepared only on important issues mentioning all the related facts, information, rules and regulations, suggestions, opinions and possible solution etc. Then it is presented to the concerned authority expecting the final decision. Thus, a tippani is a statement prepared by the lower level staff and forwarded to the upper level from where the final decision is expected. It is an upward communication originated from the lower level officer and forwarded to the senior level officer. Once the tippani is prepared and forwarded to the upper level, all the concerned authorities read it carefully, express their opinion and give the decision. It may reach upto the highest level even to the council of ministers. It is much popular in government offices of Nepal. Tippani is a written statement prepared by the lower level officer and forwarded to the upper level with a view to get the final decision on a particular problem or matter. Objectives of a tippani Following are the main objectives of a tippani:  To collect the suggestions, opinions, facts and information from the concerned authorities on a particular problem or matter.  To provide information to the upper level officers about the problem and situation of the office.  To formulate new rules and amend the existing rules and regulations. Office Procedure 13

 To create evidence of all the decisions made by an authorised body on important subject matter.  To take the final decision with the participation of different levels of authorities in an office.  To provide guidelines on similar subject matter to take the decision in future.  To ensure the smooth operation of office by solving the problem and taking appropriate administrative decision. Considerations for drafting a tippani Drafting a tippani is the act of writing or preparing it. Drafting a tippani requires special knowledge of language, office etiquette, skills and further knowledge of rules and regulations. Following are the main considerations for drafting the tippani:  The subject of the tippani should be mentioned at top.  It should be simple, clear and to the point so that the concerned officers can understand easily.  The prevalent act, rules and regulations should be mentioned in orderly manner.  The problem, past decisions and actions on the similar subject, if any should be stated clearly.  The opinions, suggestions and recommendation of concerned authorities should be stated clearly.  All the supportive documents relating to a tippani should be enclosed systematically.  It should be addressing the third parties without using salutation and complementary closing.  It should be verified by the concerned authorities to ensure the enclosure of necessary documents and follow up of administrative rules.  It should be kept on the left hand side and the supportive documents on the right hand side of the file.  Each page of tippani should be signed and forwarded to the upper level. Specimen of a tippani Suppose, Miss Supriya Basnet, the receptionist of National Management College has forwarded an application letter to college administration requesting sick leave for three months to be effective from 1st Baishakh, 2075. In such case, the tippani is drafted as follows: 14 Office Management and Accountancy

National Management College Balaju, Kathmandu Phone: 01-5136321 P.O. Box No............. Ref. No..........                                                Date: 28th Falgun 2074 Subject: Regarding approval of sick leave of the Receptionist Miss Supriya Basnet The letter of application submitted by Miss Supriya Basnet, the Receptionist of this institution on 27th Falgun 2074 for the approval of sick leave along with the medical report is attached herewith. In her application letter, she has requested for an approval of sick leave for three months with effect from Baishakh 1, 2075. The medical report states that she was hospitalized on 2074/10/2 and stayed there completely for seventeen days due to surgery of her stomach and is further required to take bed rest for next two months. Under the provision of the prevailing rules and regulations, a full time employee of an institution can get sick leave for maximum six months in case proved by hospitalised documents and other reasonable causes without paying remuneration for that period. The previous records also disclose that Mr. Binod Adhikari, the Computer Operator had also taken sick leave for two months for his medical treatment that was approved by the Principal. Thus, considering the rules and regulations and past procedure, the school Principal can approve such leave after verifying the supportive documents. Viewing all these conditions, I forward it for the approval. Submitted by Ms. Bibhusi Neupane (School Coordintor) I forward it with recommendation for approval as it seems justifiable. Recommended by Mr. Kamal Basnet (Vice Principal) Approved by Mr. Bishal Rupakheti (Principal) Report Report is a statement of the jobs done by individual, group, organization or committee during a fixed period of time. It is a case study or historical statement of certain matter, problem or event. The report is also one of the important type of office procedure. It is prepared on completion of certain job, study, survey or research and investigation. It presents the past performance, progress, achievement, problem and their solutions in Office Procedure 15

suggestive manner. Thus, a report is a formal and analytical statement prepared by any level including the facts and findings as well as suggestions and recommendations. It can be prepared for internal as well as external purpose. It facilitates to take the administrative decisions and draw conclusion in any matter. On the basis of report, the details of jobs or matters can be summarized. Following is a definition of report: “A report is a written statement based on the collection of facts, events and opinions usually expresses in summarised and interpretative value of the information. It may deal with past accomplishments, present conditions and probable future development.” George R. Terry Short Notes to Remember (SNR 1.1) Following are the steps to be followed while preparing a report:  Identification of the problem, topic or a matter.  Determination of the objectives.  Fixation of the methodology i.e. questionnaire, field study or any others.  Collection of data, facts or information relating to the problem or topic.  Analysis and interpretation of the collected data and facts.  Drawing conclusion on the basis of analysis and interpretation.  Presentation of findings of the report in sequential order.  Giving proper suggestions and recommendation for solving the problem. Report is a descriptive and analytical statement of facts, information and suggestions which is prepared by a person, group or organization after the detailed study, survey, investigation or research on a problem or case. Objectives of a report The objectives of report may differ as per its nature and type. However in overall, the objectives of all types of report can be pointed as below:  To share knowledge, skill and experiences among the members or concerned authorities.  To support for planning, policy making and implementation function of an office.  To know the past progress, performance and problems of the official jobs.  To inform the concerned authorities about the problem of the organization.  To collect the opinions and suggestions for the progress and betterment of an office.  To provide basis or guidelines for finding solution of future problem.  To inform the findings of survey, study or research to the employer, public or concerned authorities. 16 Office Management and Accountancy

Types of report On the basis of purpose and nature, report can be classified into different types. Following are some of the important types of report: Figure 1.2 Types of report Report Government Audit Annual Educational Committee report report report report report Government report The government of the country is responsible body of the state for development. It formulates plans and policies as well as implements them for overall development. It provides various basic utilities to the general people by launching different projects and programmes. The government also estimates the budget for the forthcoming year. Thus, the government prepares a report to inform the people about plan and policy, budget or other matter of the government which is known as government report. Sometimes, the government publishes the report in the national level newspaper and others. It also may be published regularly in the form of progress report, budget speech etc. The report which is prepared by the government to provide information to the public about governmental plans, policies, programme, budget etc is known as government report. Audit report All types of government and private organizations have to keep the record of financial transactions. Such transactions should be recorded as per the accounting principles, financial rules and provisions. The books of account maintained by the offices should be audited at the end of accounting period or periodically. Auditing is the act of checking books of account to ensure the correct application of rules and accounting principles. The person who examines the books of account is known as auditor. Thus, the audit report is a statement prepared by an auditor after examining the books of account. As per the provision of constitution of Nepal, all the government offices should get their books of account audited from the Office of the Auditor General. The private organizations have to audit their books of account from the person having Office Procedure 17

license as per the provisions made in constitution. The auditor presents the findings of the examination of books of account to concerned authority for further improvement in maintenance of books of account. The report which is prepared by an auditor after examination of books of account to ensure the correct application of accounting principles, financial rules and provisions is known as audit report. Annual report Annual report is the detailed statement prepared by the constitutional bodies, ministries, companies and other organizations at the end of year. It is prepared after evaluating the activities, progress and achievements made during a year. The annual report includes the matter relating to plans, policies as well as administrative and financial activities of a firm. It also discloses the total revenue and expenditure of the firm during a period. The audit report provides information about profitability and financial position, past achievements, strengths, weaknesses and future challenges to the firm. The different organizations prepare annual report to fulfill their own e requirements. In case of public limited company, annual report must be prepared and presented in annual general assembly among the shareholders for approval. On the basis of this report, shareholders and other parties can get administrative, financial and other information about the company. The report which is prepared by the constitutional bodies, companies and other organizations at the end of year disclosing the past progress, achievements and problems during the year is known as annual report. Educational report Students or academicians can also prepare the report. Such report is called educational report. It is prepared during or on completion of an academic session or study. This report is prepared after the detailed study or investigation over a certain educational problem, topic or subject. Such report is prepared to fulfill the requirement of certain educational degree. The educational report is based upon observation, investigation and survey. The thesis prepared by the students of masters’ degree level and the report prepared by the students after educational tour are the examples of educational report. The report which is prepared by the students or academicians on completion of an academic session or after study on certain educational topic or matter is known as educational report. 18 Office Management and Accountancy

Committee report A committee refers to a group of two or more individuals formed to deal with a particular subject or case. The government sometimes also forms a committee or commission to study and submit the report on a certain problem or case like murder case, accident case, theft case etc. After the detailed study, investigation and research, such committee prepares and submits the report to the concerned level or body which is known as committee or commission report. The committee is given a certain period to complete the task and thus it prepares a report and submits in given time. It contains the findings and suggestions regarding the problem or matter. The report prepared by the examination committee, account committee, evaluation committee, election commission etc are the examples of committee report. The report which is prepared by the group of individuals formed by the government or other organizations on completion of particular job, study or investigation on certain matter is known as committee report. Considerations for preparing a report The act of preparing a report is a special and difficult task. It requires enough skill, knowledge and experience. The report writer must have formal and reliable source of information relating to the subject or case. It is a main basis for administrative decision. Thus, it should be prepared by considering the various points. Following are the main considerable points for preparing a report:  The heading should be mentioned on the top or on the cover page including problem, subject and a brief introduction.  The objectives for writing report and the time duration required for its completion should be mentioned clearly.  The language should be simple, clear and polite so that the readers can understand easily.  The confusing symbolic words and codes should not be used as far as possible. If needed, the meaning of such symbol and code should be stated clearly.  All the facts, data, information and findings of the study or investigation should be presented in orderly manner.  The figure, table, chart, picture and diagram etc should be presented whereever needed to make the report meaningful.  The report writer should give the suggestions and opinions separately.  Finally, the report writer should make the signature and mention the date for validity of the report. Office Procedure 19

Resolution Resolution is a written form of subject matter presented in assembly or meeting for further discussion and making final decision. It is considered as an important office procedure because the matters presented by means of resolution are discussed and passed by the majority of the members. In the process of making decision by way of resolution, at first, the chairman or any other member must forward it, then another member second it. After the proposal is seconded, chairman puts it for mutual discussion and after the discussion is over, the chairman puts the resolution for voting. Finally, the chairman declares result saying either it is passed or rejected. If it is passed or accepted by the majority of the members, it becomes rules which should be followed by all for the implementation of plans and policies. Resolution is the written proposal of subject matter or problem presented by any member in assembly or meeting for open discussion and taking decision by the majority of the members or shareholders. Importance of resolution Following are the main importance of reSolution:  It helps to formulate rules and regulations for smooth operation of office.  It acts as the basis for taking various administrative decisions in office.  It fulfils the legal formality to the official decisions.  It facilitates for amendment of prevalent rules, regulations and procedures.  It provides guidelines to the personnel to solve the problems on the related matter.  It acts as the legal evidence and helps to settle the disputes and misunderstanding between or among the parties.  It introduces the system of making decision in democratic manner.  It helps to clear any unclear law, rules and regulations. Types of resolution Resolution may differ according to the nature and type of assembly or meeting. According to Nepal Company Act 2063, resolution is divided into the following two types: 20 Office Management and Accountancy

Figure 1.3 Types of resolution Resolution Ordinary resolution Committee report Ordinary resolution When a resolution is presented and passed for the general purpose, it is called ordinary resolution. All the resolutions submitted and passed by an ordinary and regular assembly or meeting of the company come under this category. Generally, the following matters are presented and passed under ordinary reSolution:  Presentation of audited income statement and financial statement for previous year.  Declaration of dividend.  Appointment of directors and auditor. The resolution presented in ordinary meeting which can be passed by the simple majority of the members is known as ordinary resolution. Special resolution When a resolution is presented and passed in company’s urgent or special assembly or meeting for the important subject, it is called special resolution. Such type of resolution cannot be passed by simple majority. It requires special majority i.e. at least acceptance of 75% of the members or shareholders presented for voting. Special resolution is decided by the company as per the provision made in memorandum and article of association. Following are the subject matters that can be presented and passed under special reSolution:  Change in the name and objectives of the company etc.  Amendment in the provision of memorandum and article of association.  Increase or decrease in the amount of capital.  Conversion of company from private to public or public to private.  Issue of bonus share.  Change in the name and objectives of the company etc. Office Procedure 21

The resolution presented in urgent or special meeting which can be passed only by the special majority of the members is known as special resolution. Short Notes to Remember (SNR 1.2)  Memorandum of association is the main document of a company which defines its constitution, objectives and basic terms and conditions needed for formation of company.  Article of association is the document of a company which defines internal rules, regulations and laws of company for its operation and also contains the rights and power of the shareholders. Similarities and dissimilarities between ordinary resolution and special resolution Similarities  Both resolutions are presented in written form.  Both resolutions are presented with a view to share, discuss and pass proposal in democratic manner.  Both resolutions require certain majority for approval. Dissimilarities Basis of difference Ordinary resolution Special resolution a. Matters It is presented for regular It is presented for extra matters. ordinary matters. b. Meeting It is presented in ordinary It is presented in special or c. Majority meeting or assembly. extra ordinary meeting or assembly. It can be passed by simple It can be passed only by special majority i.e fifty one percent majority i.e seventy five of present members. percent of members. d. Example Appointment of director Liquidation of company or and auditor is an example of change its name and objective ordinary resolution. is an example of special resolution. 22 Office Management and Accountancy

Key Terms Article of association – rules governing the company. Constitutional body – office established under the provision of constitution. Descriptive – explained in detail. Irregularities – activities done against the acts and rules. Legal validity – state of being legally or officially acceptable. Memorandum – main law of the company. Office procedure – systematic process of taking administrative decisions and its Report implementation. – descriptive and analytical statement prepared by an individual or Resolution group of individuals on a subject by presenting the related facts, Tippani information and findings. – written proposal presented on meeting or assembly for further discussion and decision. – statement prepared and forwarded by a lower level officer on an administrative problem to take decision from the authorised level. A. Very short answer questions 1. What is office procedure? 2. Mention any two types of office procedure. 3. Who drafts a tippani? 4. What is meant by report? 5. Name any two types of report. 6. Define resolution. 7. State the types of resolution. 8. Who prepares an audit report? 9. When is annual report prepared? 10. Write a difference between ordinary resolution and special resolution. Office Procedure 23

B. Short answer questions 1. Define office procedure and state its necessity for office. 2. What is tippani? State the importance of tippani as an office procedure. 3. State the considerable points for drafting a tippani. 4. Give the definition of report and Write any ten considerable points for drafting it. 5. What is resolution? State the objectives of resolution as office procedure. 6. Write any three similarities and three differences between ordinary resolution and special resolution. C. Long answer questions 1. What is office procedure? Why is tippani raised? State any eight points to be considered for drafting a tippani. 2. Define report and describe the types of report in brief. 3. Describe the types of resolution with the matters to be included in it. 4. Draft an imaginary tippani for an application submitted by a staff Neeta Joshi of Sunflower Academy, Balaju on 2074-11-20 requesting sick leave for 18 days to be treated as 10 days from her surplus leave of current session and 8 days to be adjusted from the coming session.  24 Office Management and Accountancy

2 FILING AND Chapter INDEXING Learning Objectives After studying this chapter, the readers will be able to :  define filing and explain its importance to the office,  define the different methods of filing with their advantages and disadvantages,  explain the traditional filing systems with their advantages and disadvantages,  define horizontal and vertical filing system and mention their advantages and disadvantages,  define indexing and state its usefulness in filing system. Introduction There are a large number of letters, reports, bills and other written documents in an office. Some of them are created inside the office and some are received from outside. All types of document contain valuable information which may be needed in the future for various purposes. Such documents should be preserved systematically and scientifically which is known as filing. Filing ensures safety and availability of the official documents. There are different methods of filing. Some of them are alphabetical, numerical, subject wise and geographical filing. Similarly, filing system can be divided into traditional filing and modern filing. Box filing, misil filing etc are the system of traditional filing where as horizontal filing and vertical filing are the modern filing systems. As per the nature and requirement of office, any filing method and system can be adopted to ensure the effectiveness in job.In order to make the filing system effective indexing is also important in office. It indicates the physical location of the required file or documents. The main purpose of indexing is to locate the required file easily and promptly. Indexing and filing are complimentary to each other. Indexing without filing is meaning less and filing without indexing is incomplete. Thus, these both filing and indexing should be maintained properly. Filing And Indexing 25

FILING Concept and definition In simple sense, filing means to keep the official documents in file. However, in a broader sense, it is the act of arranging and preserving the official documents in a systematic and scientific way in order to obtain them whenever needed. It is the function of record management which facilitates the easy and quick availability of documents for future reference. Thus, filing is the systematic arrangement and preservation of past and present official records for future reference. The following are the main definitions of filing: “Filing is the process of arranging and storing records, so that they can be located when required.” J.C. Denyer “Filing means the systematic and scientific collection, store and arrangement of letters, documents and records of past and present for future reference so that they can be safe and easily obtainable at the time of necessity. George R. Terry “Filing is the process of classifying, arranging and storing records so that they will be obtainable quickly when needed.” Khan, Yerin and Steward Filing is the systematic and scientific act of collecting, classifying, arranging and preserving the official records and documents in a proper place to ensure their easy availability whenever needed. Need or importance of filing Filing is important for all types of office which need to create and preserve the records for the future. It is the part of record management which provides a number of benefits to an office. Its necessity or importance are explained below: a. Collection and classification of the documents Filing helps to collect the necessary documents Memory Tips like bill, voucher, letter, contract paper etc. for future reference. It also classifies the collected  Collection and classification of the documents on the basis of their nature. It documents facilitates the better preservation of such documents.  Arrangement and preservation of the documents b. Arrangement and preservation of the documents  Evidence for the future  Guidelines to the employees  Support to the management An office requires the various types of documents for future reference. It helps in planning, policy making and decision making. It helps to arrange the official 26 Office Management and Accountancy

documents and preserve them in systematic and scientific manner. It also protects the documents from various possible damages such as dirt, dust, insect, moisture, fire and theft etc. As a result, it ensures their quick identification. c. Evidence for the future Filing provides the past records and documents as proof for the future. It helps to settle the disputes and misunderstanding among different individuals and parties. It can also be presented as evidence to the court for settlement of the case. d. Guidelines to the employees Filing also acts as the guidelines for the future. It helps the employees to perform their job on the basis of past records and performance. Thus, it increases the job efficiency of the staffs by providing guidelines. e. Support to the management Filing provides the required data, information, facts and figure to the management relating to the past activities. It is the basis for formulating plan and policy. Thus, it helps the management in planning and decision making process. Methods of filing The method of filing means to select the broad heading under which the files are arranged and placed in the drawer or cabinet. The main objective of selecting the method under filing is to ensure the quick identification of files and documents. The method of filing depends on the nature and size of office, nature of documents or subject covered. No particular method will be suitable for all types of organization. Following are some of the methods which can be used to classify the files in an office: Alphabetical filing The method of arranging the files or folders in a drawer or cabinet in order of first letter of correspondents is known as alphabetical filing. Under this method, each folder or file is given a name and all the files or folders starting from the same letter are arranged in a place according to their alphabetical order. Thus, the letters A, B, C, D, E ….. in English or c, cf, to cM and s, v, u, to 1 in Nepali are considered for filing purpose. If several files or folders begin with the same letter, second letter of the file name is considered and so on. In order to follow this method, different rules like primary guide, individual folder, special guide and miscellaneous guide etc. are applied. Alphabetical filing is the way of arranging the files or folders in a drawer or cabinet according to the alphabetical rule of classification for the name of correspondents. Filing And Indexing 27

Rules for making order of name in the folder In alphabetical method of filing, the files are arranged in order of the first alphabet of the name of file or folder. Thus, it requires to know some rules for making order of name in the folder. Following are some rules to be followed for writing the name of the correspondents to arrange the files of individuals and organizations: a. For individual’s name The name of individual may be of one or two or three words. In case of three words, surname is written at first, then the first name and the middle name is written at last. In case of two words, surname is written at first and the first word is written thereafter. The name having single word is written as it is. All these cases are mentioned below: i) Ramesh Kumar Tamang – Tamang, Ramesh Kumar ii) Alisha Karki – Karki, Alisha iii) Supriya – Supriya b. For individual’s name with title and position If there is title or position before name of a person, The name of individual is arranged as in rules mentioned above. Then, the title or position is written at last using a bracket. It will be as follows: i) Dr. Deepa Bhandari – Bhandari, Deepa (Dr.) ii) Prof. Arun Kumar Bastakoti – Bastakoti, Arun Kumar (Prof.) iii) Captain Tilak Karki – Karki, Tilak (Captain) c. For organization’s name The name of organization is written as it is. It is shown below: i) Sunflower Academy – Sunflower Academy ii) Himal Trading Concern Ltd. – Himal Trading Concern Ltd. iii) Nepal Bank Limited – Nepal Bank Limited d. For individual’s as well as organization’s name with position If the name of individual having any position is joined with the name of an institution, it is arranged in order of surname, first name, the name of organization and the position of individual is mentioned lastly in bracket. It is given below: i) Dr. Anita Chhetri Medical Centre – Chhetri, Anita Medical Centre (Dr.) ii) Advocate Badri Poudel Legal Centre – Poudel, Badri Legal Centre (Advocate) 28 Office Management and Accountancy

Advantages of alphabetical filing The advantages of alphabetical filing are as follows:  It is easy to understand and simple to use.  It is self indexed, so does not require separate index.  It is an economical method because a separate index and trained personnel are not needed.  It is flexible method because increasing or decreasing the number of files can be done easily.  It is suitable for both small and large scale organizations. Disadvantages of alphabetical filing The major disadvantages of alphabetical filing are as follows:  It is not possible to maintain secrecy because the detailed information is available from the files.  It is not suitable for those offices which have a large number of files or folders.  It creates confusion in arranging or searching the files of individuals or organizations having similar name.  It is unsuitable for those offices for which numbers are more important than name.  It creates difficulty in arranging the documents due to misspelling of name. Numerical filing The method of arranging the files or folders relating to individuals or organizations according to the numerals like 1, 2, 3, 4, 5 … etc is known as numerical filing. All the rules of arranging files under this method are similar to those of alphabetical filing method. But the numbers are used here instead of name of the individuals or organizations. Under this method, numbers are written on the folders and those folders are arranged in the drawer or cabinet in a numerical order. In order to apply this method, certain rules such as preparation of the entry book, index card etc are followed. The entry book is used to register the name of each person, subject or firm for assigning a number for filing purpose. The index card is a separate card prepared for each correspondent for writing details such as name, address, contact number, file number and other necessary information. All the cards prepared for each correspondents are arranged in a separate drawer in an alphabetical order. Numerical filing is adopted by the organizations having large number of files. Thus, it is suitable for bank, insurance company, traffic police office, transport management office etc. Numerical filing is the way of arranging and placing the files or folders in a drawer or cabinet in numerical order as per the numerals given to the particular file or folder. Filing And Indexing 29

Advantages of numerical filing The advantages of numerical filing are as follows:  It is possible to maintain secrecy because the file or folder contains only the number instead of name of the person or organization.  It becomes easy to find out the file because separate index cards are prepared and used.  It is more advanced and scientific method than the alphabetical filing.  It is more flexible method having unlimited scope for expansion because of unlimited numbers.  It is suitable for the organizations having a large number of files or folders. Disadvantages of numerical filing The disadvantages of numerical filing are as follows:  It is an expensive method because it requires separate index, filing equipments and technical staffs.  It is more time consuming method because it requires more time to arrange, search and use the files.  It cannot be used by the smaller organizations because of its high cost.  It is unsuitable for the organizations having more importance of name than number.  It is difficult method in comparison to alphabetical filing due to necessity of preparing entry book, referring separate index card etc. Subjective filing The method of arranging the files or folders in a drawer or cabinet according to their subject is called subjective filing. Under this method, all the documents of office are first classified into different groups according to their subject. Then, the folders containing a number of documents are arranged alphabetically as per their subjects. The subjects for the filing purpose are determined according to the nature of dealings to be made by the organization. Under this method, the priority is given to the subject rather than the name of the individuals or organizations. The different subjects may be computer, furniture, stationery, purchase etc. Again, the sub classification of the subject can also be made. For example, a subject computer can be divided according to its manufacturing company such as ‘Acer’, “Mercantile’, ‘Apple’, ‘Compaq’ etc. and a separate file can be made for each type of computer. The different rules such as primary guide, subject guide, out guide card, individual folders etc. can be applied to facilitate this filing method. Subjective filing is the way of arranging the files or folders in the drawer or cabinet according to the alphabetical order of the subjects of the various documents. 30 Office Management and Accountancy

Advantages of subjective filing The advantages of subjective filing are as follows:  It does not require special knowledge for operation of this filing method. Thus, it is easy to understand and use.  It is flexible method since the number of files can be increased or decreased as and when required.  It is easy to find the required document as all the papers and documents relating to the same subject are available in a file or folder.  It is suitable for the offices like court for which subjects are more important.  It provides quick identification of files due to use of primary guide, guide cards and other indexes. Disadvantages of subjective filing The disadvantages of subjective filing are as follows:  It does not maintain secrecy because each file contains the name of file.  It is difficult to obtain the documents relating to a single person or organization may be placed in different folders, if such documents are related to different subjects.  It is an expensive and time consuming method because it requires separate index, guide cards and filing equipments.  Sometimes, it becomes difficult to classify the documents into the particular subject.  It is unsuitable for large scale organizations having a large number of documents to be preserved. Geographical filing Geographical filing refers to the way of arranging the files or folders of individuals or organizations on the basis of geographical location or place. Under this method, all the documents to be filed are first classified according to their geographical location and the documents relating to a particular area are placed in a separate drawer. Thus, under this method, separate drawers are managed for different geographical places. The classification of geographical places or locations may be ward wise, town wise, district wise, province wise, country wise or even continent wise as per the necessity. For example, if the classification is made on the basis of districts like Kathmandu, Dhading, Solukhumbu, Nuwakot, Baitadi etc, separate drawers are made for these five districts. A district further can be sub-divided into smaller places like Balaju, Putalisadak, Chabahil, Thamel etc for Kathmandu. It should be remembered here that after the classification of documents as per geographical location, files can be arranged under alphabetical or numerical order. Geographical filing is the way of arranging the files or folders in the drawer according to the name of geographical places i.e. ward, municipality, province, country etc. Filing And Indexing 31

Advantages of geographical filing The advantages of geographical filing are as follows:  It is simple to understand and easy to operate if the name of different places are known.  It is suitable for those organizations which are dealing with a large number of geographical places.  It provides quick identification because it uses different guides and indexes.  It can adopt both alphabetical or numerical order for arrangement of files or folders. Disadvantages of geographical filing The disadvantages of geographical filing are as follows:  It becomes difficult to arrange the files without knowledge of different geographical places.  It is very expensive method because it requires to use various guide cards, separate drawers and other filing equipments.  It does not maintain secrecy of the organization as the files can be easily identified because of the names written in the drawer.  It may be time consuming to search the file in case of sub division of geographical places.  It is not suitable to the smaller organizations having a limited number of files. Filing system The different offices maintain their files on different bases. It depends upon the size and nature of the organization and nature of documents as well. Following are the main systems of filing adopted by different offices: Figure: 2.2 Filing system Filing system Traditional Modern filing filing system system Box filling Misil filling Horizontal filing Vertical filing 32 Office Management and Accountancy

Traditional filing system Traditional filing system means the way of arranging the letters and documents using traditional filing equipments. It was introduced long ago and used since the very beginning of introduction of filing. However, this system is still in practice in some of the offices where the less number of documents and files are to be preserved. Traditional filing system may be of different types. Some of them are explained below: Box filing The traditional system of keeping the letters and documents in a box made up of wood or metal or card board is known as box filing. Under this filing system, all the documents are arranged and preserved in a box which may be of certain size. The documents are kept in the box in loose form according to the date of their occurrence. Thus, the documents of earlier dates are placed at the bottom and the latest dates are placed at the top of the box. This filing system is suitable for preserving the documents of temporary importance or useful till the completion of job. It can be used in houses for preservation of valuable documents related to movable and immovable properties Box filing is a traditional system of filing in which the written documents are collected and preserved in a box in loose form in order of date. Advantages of box filing Following are the main advantages of box filing :  It is very simple to understand and easy to operate in office or even in houses.  It is economical system because it does not require expensive filing equipments and trained staffs.  It ensures safety to the documents because they are kept inside the box.  There is no chance of disappearing the letters and figures in the documents as they are not punched.  It is easy to take out any required document as they are kept loosely in the box. Disadvantages of box filing Following are the disadvantages of box filing:  It is unsuitable for large scale organizations because a box cannot hold large number of documents and folders.  It is not suitable for preserving valuable documents having long term importance.  There is a greater chance of misplacing the documents as they are kept without punching.  It is not flexible as only a limited number of documents can be kept in a box. Filing And Indexing 33

 It consumes more time due to frequent opening and locking the box as well as getting the documents from the middle of the pile. Misil filing The traditional system of collecting and preserving all the letters and documents relating to a particular case or subject in chronological order is known as misil filing. Under this filing system, all the documents relating to a particular case or subject are accumulated in one file. Each file is called a misil. The written documents under this misil are piled in chronological order punching at the top corner and tied with lace like in box filing. The documents of the earlier date remain at the bottom and the documents of the latest date will be placed at the top one upon another. Each misil is given a separate misil number or code like misil number 1 for civil case, misil number 2 for criminal case etc. Such files are wrapped with a red piece of cloth and arranged in order of misil number. This filing system is suitable for the offices where different cases are handled. Such type of filing is still in practice in courts, police stations and land revenue offices of Nepal. Misil filing is a traditional system of filing used for preserving the documents in chronological order under a misil number given as per the subject. Advantages of misil filing Following are the main advantages of misil filing:  It is easy to operate without specialised knowledge and skill.  It is economical system as it does not require any guide card, drawer, cabinet and other filing equipments.  It provides availability of all the documents related to a particular case or subject in a file.  It provides easy location of the particular misil because separate misil or code number is given for each case or subject.  It is flexible system because any written document can be added or removed easily. Disadvantages of misil filing Following are the main disadvantages of misil filing:  It is difficult to take out the document placed in the middle or at the bottom from a big pile because of punching each document.  It consumes more time for classifying, punching and arranging the documents.  It is unscientific, unsuitable and impracticable for the offices other than court, police station and land revenue offices.  The words or figures may disappear while punching the document that may cause wrong or negative meaning. 34 Office Management and Accountancy

 Due to frequent use of the documents till the clearance of certain case, some of the documents may get lost or dropped out. Modern filing system Traditional filing systems are unscientific and unsuitable to manage the large number of letters and documents. They cannot fulfil the growing need of modern offices. Thus, in order to remove the demerits of such traditional filing, modern filing system have been developed with several benefits. Modern filing equipments are used under these systems to preserve a large number of documents in systematic and scientific manner. The main modern filing systems are explained below: Horizontal filing The system of filing in which the individual files or folders are kept and arranged in the drawers in sleeping position one upon another is known as horizontal filing. Under this system, all the documents are kept in the files in chronological order. They are punched and tied with a lace or by pressing with a metal clip attached with the file. Each file contains the details of correspondent i.e. name, address, contact number, subject etc on its face that helps to identify the files. The files are arranged in alphabetical order so that the particular file can be identified and located easily. Horizontal filing is also known as flat filing. Horizontal filing is a system of modern filing in which the files or folders in a drawer are arranged in sleeping position making a pile one upon another. Advantages of horizontal filing Following are the main advantages of horizontal filing:  It is suitable for all types of offices.  It is simple and thus it can be adopted even without special knowledge.  It is economical system as it requires less filing equipments and also does not require trained manpower.  It provides quick location of the documents as they are arranged in chronological order.  It ensures safety to the documents because they are punched and tied with lace or clip.  It occupies less space because the folders are placed in flat position one upon another. Disadvantages of horizontal filing Following are the disadvantages of horizontal filing:  It is more time consuming system because it requires punching, arranging, fastening and opening the lace or clip frequently. Filing And Indexing 35

 It is less flexible system because the file cannot hold a large number of documents.  It is difficult to locate the required file as they are placed horizontally and all information of file cannot be seen due to their sleeping position.  It is unsuitable for larger organizations having large number of correspondents.  It has greater possibility of disappearing the words and figures and causing wrong meaning while punching the documents. Vertical filing The system of filing in which the individual files or folders are kept and arranged in drawer in standing position with the support of one another is called vertical filing. Under this system, all the documents are kept in file chronologically in loose form. The individual files or folders are arranged in the drawer vertically under alphabetical, numerical , subjective or geographical order. The papers are not tied or fastened to the folder. This filing system is useful to those offices which have large number of documents. It also uses some guide cards for quick location of files. Vertical filing is a system of modern filing in which the files or folders in a drawer are arranged in standing position with the support of one another. Advantages of vertical filing Following are the main advantages of vertical filing:  It provides quick location of the files or folders due to use of guide cards and other information.  It is less time consuming because no punching and fastening is required.  It is suitable for larger offices because it holds a large number of documents.  It ensures safety to the documents as they are preserved in special drawer with locking facility.  It has no possibility of losing or disappearing the words or figures because it is not necessary to punch the documents.  It can adopt alphabetical, numerical, subjective or geographical classification for arrangement of files or folders. Disadvantages of vertical filing Following are the disadvantages of vertical filing:  It has greater chance of losing and misplacing the documents because they are not punched and tied with the folder. 36 Office Management and Accountancy

 It occupies more space in an office because of using big drawers or cabinets to manage the folders.  It is expensive than horizontal filing because it requires separate indexing and more filing equipments.  It is complex system as it requires special knowledge for preparation of guide and index cards.  It is not suitable for the offices having limited number of documents and folders. Differences between horizontal and vertical filing system Following are the differences between horizontal filing and vertical filing system: Basis of difference Horizontal filing Vertical filing 1. Position of files Files are arranged in sleeping Files are arranged in standing 2. Position of position one upon another. position with the support of documents one another. 3. Cost The documents are kept in file by punching and The documents are kept in 4. Space fastening with lace or clip. file without punching in loose It is an economical filing form. method as it does not require trained manpower and more It is an expensive method filing equipments. due to necessity of trained manpower and more filing It occupies less space. equipments. It occupies more space. 5. Flexibility It is not much flexible as it has It is more flexible because each limited capacity to hold the folder has a greater capacity to 6. Safety of documents. hold the documents. documents 7. Time The documents are safer as The documents are not safe they are punched and tied as they are kept loosely i n a with lace or clip. folder or file. It is more time consuming It is less time consuming filing filing system. system. 8. Suitability It is suitable for smaller It is suitable for larger offices offices having limited having large number of number of documents and documents and files. files. Filing And Indexing 37

INDEXING Concept and definition An office creates a number of documents daily in the form of notice, circular, letter, report and statements which are more useful for the future. All types of official documents created in an office and received from outside should be preserved well by keeping them in a drawer, a cabinet or in similar places. It is difficult to find the particular document from a large number of files or documents. So, in order to facilitate the quick location of such files or documents, the indicative list of their name, subject and location is prepared which is known as indexing. It is a guide or indicator to show the location and position of a particular file or document. It is the function of record management and process of determining the name, subject and topic under which the particular documents are to be filed. The table of contents given in a book and alphabets mentioned in a telephone diary are the examples of indexing. Some of the definitions of indexing are given below: “An indexing is anything that points out. Its prime function is to act as guide to a body or to a collection of records.” J. C. Denyer “ Indexing means a system by which the location of any information can be easily created.”Y.K. Bhusan “Indexing is a system which helps to locate the position of files quickly and easily.” Saxena Indexing is a guide, indicator or indicative list of alphabets, numbers or other information which helps to locate the particular file in a drawer or cabinet. Usefulness of indexing Indexing is very important guide or indicator to all types of office for locating the required file or document. It supports the filing system of office. Its need and importance can be explained in the following points: a. Helps to locate the files Indexing facilitates to locate the required file Memory Tips or folder in the drawer or cabinet easily. It has the collection of summarized information and  Helps to locate the files location of the files. Thus, it helps to obtain the  Ensures the rapidity in job required file whenever required.  Saves cost, time and labour  Increases efficiency b. Ensures the rapidity in job  Facilitates in decision making  Makes filing scientific and efficient Indexing helps to find the required paper and documents easily and quickly. The quick finding of such documents ensures the completion of job easily, quickly and efficiently. Thus, it ensures the rapidity in job. 38 Office Management and Accountancy

c. Saves cost, time and labour Indexing helps to locate the required file or folder without wasting time and effort. It ensures the completion of job at minimum cost, time and effort. Thus, it saves the valuable time and efforts of the human resource. d. Increases efficiency The efficiency of employees for doing job depends upon the availability of information. Indexing provides information to the employees relating to the management, customers, suppliers and the government easily. It helps them to do the job smoothly without delay and difficulty. As a result, it increases the efficiency of the employees. e. Facilitates in decision making Indexing provides all types of required information easily and quickly. With the help of such information, the decision maker can make the appropriate decision on time. Thus, it facilitates in decision making process. f. Makes filing scientific and efficient Indexing helps to improve the efficiency and effectiveness of record management. It ensures the easy availability of the files and folders. Thus, it makes the filing system more scientific and efficient. Key Terms Chronological – act of arranging the documents in order of date. Document – an official paper giving information about something that can be Filing used as proof in the future. – act of arranging and preserving the official documents into a file for Flexible future reference. Guide card – having benefit of expansion and contraction, changeable. – a card that gives instruction to locate the required papers and Horizontal documents. Indexing – going across and parallel to the ground. Misil – act of guiding or indicating the location of a particular file. Pile – a particular subject or case. – huge collection of a number of things made by keeping one upon another. Rapidity – being very quick. Record management – act of creating, classifying, using and disposing the official Reference records in a systematic manner. Vertical – act of consulting something and getting information. – going straight up or down from the level. Filing And Indexing 39

A. Very short answer questions 1. What is filing? 2. Mention any two objectives of filing. 3. Name any two methods of filing. 4. State the rules for making order of name in the folder for individual’s name having three words. 5. State the types of traditional filing. 6. How is numerical filing secret than alphabetical filing method? 7. What is indexing? 10. Write any two importance of indexing. B. Short answer questions 1. What is filing? Explain in brief about the need and importance of filing. 2. What is alphabetical filing? State the advantages and disadvantages of alphabetical filing. 3. Give the meaning of numerical filing and state its merits and demerits. 4. Differentiate between alphabetical filing and numerical filing. 5. Give introduction to subjective filing and state its advantages and disadvantages. 6. Introduce geographical filing and write its merits and demerits. 7. Explain the types of traditional filing system briefly. 8. What is horizontal filing system? List out its advantages and disadvantages. 9. What is vertical filing system? List out its merits and demerits. 10. Write any five dissimilarities between horizontal filing and vertical filing. 11. What is indexing? Explain the usefulness of indexing in filing system. C. Long answer questions 1. What is modern filing system? Explain its types with advantages and disadvantages. 2. Describe the traditional filing system with their merits and demerits. 3. Describe the different methods of filing that can be used for classification of documents.  40 Office Management and Accountancy

3 TRADE Chapter Learning Objectives After studying this chapter, the readers will be able to :  define trade and explain its types,  explain the procedures of home trade and foreign trade,  mention the documents to be used in home trade and foreign trade,  explain the terms and conditions of trade,  define invoice, mention its importance and explain types,  mention the items to be disclosed in a general invoice.  describe the various means of payment used in trade Introduction The business activity can be classified into industry and commerce. Again, commerce can be classified into trade and aids to trade. People are involved in the activity of buying and selling of goods and services. Trade are of two types i.e home trade and foreign trade. Wholesale trade and retail trade are the types of home trade and import, export and entreport trade are the types of foreign trade. The parties involved in both types of trade have to follow the procedures and terms and conditions of trade. In order to facilitate the trade, there are different types of organizations at national and international level. SAFTA and WTO are the major organizations facilitating regional and international level trade respectively. Trade 41

Concept and definition The word trade refers to the activity of buying and selling of goods between individuals or organizations. It refers to the process of transferring ownership of goods from the seller to the buyer for earning profit. It makes link between producer or manufacturer and final users of the products. Thus, the trade is an integral part of business for economic development of a nation. It delivers the goods from manufacturer to the ultimate users. Trade helps the general people to fulfil their unlimited demands. The persons or parties engaged in trade are called traders. Following is a definition of trade: “Trade refers to the sale, transfer or exchange of goods and services.” A.N. Agrawala Trade is the activity of transferring ownership of goods from one person or party to another in and outside the country in order to earn profit. Types of trade On the basis of geographical area that it covers, trade can be classified into the following types: Figure:3.1 Types of trade Trade Home Foreign Trade Trade Wholesale Retail Import Export Entreport trade trade trade trade trade Home trade The act of buying and selling of goods within a country is called home trade. Home trade is conducted inside the country. It includes the purchase and sale of goods within the geographical boundary of the same country. It is performed between the persons of different states, towns or cities in a nation. Home trade is also known as domestic or internal or national trade. Under this trade, payment is received and made in local or national currency. The parties involved in home trade are called buyer and seller. 42 Office Management and Accountancy

The person or party who buys goods is called buyer and the person or party who sells goods is called seller. The trade performed between the merchant of Biratnagar and the merchant of Butwal is an example of home trade. The act of buying and selling of goods within the geographical boundary of the same country is known as home trade. Types of home trade Following are the types of home trade: a. Wholesale trade Under wholesale trade, large quantity of goods are purchased directly from the manufacturer or producer and resold to the retailers in smaller quantity. In this trade goods are transferred from producer to retailer. The person or organization involved in wholesale trade is called wholesaler. He acts as a middleman between manufacturer and retailer and deals in few specialized items of goods. b. Retail trade Under retail trade, goods are purchased from the wholesaler and supplied to the final consumers in required quantity. It is the act of transferring goods from wholesaler to the final users. The person engaged in retail trade is called retailer. The retailer provides an opportunity to the users for selection of varieties of the product. Short Notes to Remember (SNR 3.1)  Wholesale trade is the act of buying goods in large quantity directly from the producer and selling them to the retailer in smaller quantity.  Retail trade is the act of buying goods from wholesaler in smaller quantity and selling them to the final consumers in required quantity. Procedures of home trade In order to perform home trade, certain procedures should be fulfilled. Thus, the procedures which are to be followed in buying and selling of goods within a country are called procedures of home trade. It begins with the enquiry of goods and ends with the carriage of goods. Such procedures are also known as methods of home trade. They are explained below: a. Enquiry Enquiry is the first procedure of home trade. When the probable buyer desires to purchase the goods, he should collect the detailed information regarding the goods which is called enquiry. The information like quantity, quality, price, discount, system of payment, brand, means of delivery, charges and other terms and condition of trade etc. can be obtained from the enquiry. The main purpose Trade 43

of making enquiry is to find the best supplier. It helps to purchase the qualitative goods at reasonable price with favourable terms and conditions. In order to collect information, the probable buyer writes a letter and sends to the probable supplier which is called enquiry letter. The buyer may send enquiry letter to the various suppliers at a time. The name and address of the suppliers may be obtained from trade directory, trade magazines, newspapers, trade agents or relatives. b. Reply to enquiry or quotation Memory Tips It is the second procedure of home trade.  Enquiry When the supplier receives the enquiry letter  Reply to enquiry or quotation from the probable buyer, he sends a written  Purchase order reply to the enquiry made by him. The letter  Confirmation/Acknowledgement  Collection of goods sent by the seller for giving reply is called  Packing of goods quotation letter. Quotation letter is written  Preparation of invoic according to the enquiries made by the buyer.  Delivery of goods The seller must give reply to enquiry very  Carriage of goods correctly, honestly and skillfully giving true facts and information. According to the situation, sample of goods, catalogue, price list or other trade documents can be sent to the probable buyer. c. Purchase order After receipt of quotation letter from the various suppliers, the buyer compares them to select the best supplier. He compares the quality, price, discount, system of payment etc. and decides to make order for the goods. He then writes a formal order letter mentioning the details for required quantity of goods. Order letter is a formal agreement between the buyer and seller for delivery of goods under stated terms and conditions. The order letter should contain the detailed information like quantity and types of goods. It also needs to mention the quality, brand, discount, date, place and time of delivery, way of packaging as well as means of transportation. The clearly written order letter helps the supplier to deliver the goods as intended by the buyer. d. Confirmation/Acknowledgement The seller gives confirmation to the buyer for receipt of order after receiving the order letter. He forwards a letter for this purpose which is called confirmation letter. It is also called acknowledgement letter because the seller acknowledges the buyer through this letter. The seller assures the buyer that goods will be dispatched as early as possible as per the order letter. Thus, a confirmation letter is sent by the seller with a view to give confirmation for supply of goods and make enquiry, if any. e. Collection of goods After sending the confirmation letter to the buyer, the seller has to collect the goods to be delivered. If all the goods are available in his own warehouse, they are 44 Office Management and Accountancy

collected at a place for packaging. If not, the required goods have to be collected from outsiders. It should be done in time otherwise it causes delay in delivery. f. Packing of goods After collection of goods from warehouse and outsiders, they should be properly packed. Some goods may be durable whereas others may be perishable or breakable. Thus, the seller has to pack the goods according to their nature. If the buyer has given any instruction regarding the packing, the seller should follow the same. Otherwise, he should pack them using his judgement. The packing should be done considering its attractiveness and safety of goods. It requires to give special care to the perishable and breakable goods by mentioning the words like “Handle with care”, “Breakable” or “Perishable”. Besides these, the brand name of goods and a brief introduction to the buyer may be written on the face of packing. g. Preparation of invoice An invoice is a written document prepared by the seller and sent to the buyer along with the goods delivered. It contains the details of goods like quantity, price, specification, discount, expenses incurred, amounts payable, terms of payment etc. After the goods are properly packed, the seller has to prepare an invoice. In home trade, invoice is prepared in three copies. The original copy is sent to the buyer, second copy is used for tax purpose and the remaining copy is kept by the seller for official reference. h. Delivery of goods After preparation of invoice, the seller has to deliver the goods to the buyer through the transportation company. If the buyer has given any instruction regarding the means of payment, the seller has to follow the same. If not, it is better to dispatch the goods through the fastest, cheapest and safest means of transportation. It should be acceptable for both. The nature of goods also determines the means of transportation to be used for delivery of goods. i. Carriage of goods After delivery of goods by the seller to the transportation company, it verifies the goods comparing the invoice and provides a receipt to the seller as proof which is called receipt of goods. It is an evidence for acceptance of goods by the transportation company. The transportation company then carries goods to the destination of the buyer in its own risk. The transportation company is fully responsible till the carriage of goods to the place of the buyer. Documents of home trade Documents refer to the written statements exchanged between two parties. Thus, the documents which are used by the buyer and seller under home trade are called Trade 45

documents of home trade. They act as an evidence to settle the disputes between the buyer and seller. Some of the important documents used in home trade are as follows:  Enquiry letter  Quotation letter  Order letter  Confirmation letter  Invoice  Receipt of goods Foreign trade The trade conducted between two or more countries in the world is called foreign trade. It is the act of buying and selling of goods between the individuals or organizations of two different countries. It is also called external or international trade. The payment of foreign trade is made on foreign currency. The parties involved in foreign trade are called importer and exporter instead of buyer and seller. It means the buyer is called importer and the seller is called exporter. The trade conducted between Nepal and China or Nepal and India are the examples of foreign trade. The act of buying and selling of goods between the individuals or organizations of two different countries is known as foreign trade. Types of foreign trade Following are the types of foreign trade: a. Import trade When a trader of one country purchases goods from the trader of another country, it is called import trade. Nepal imports machinery from America, Japan, Korea etc. and petroleum products from Arabian countries through India. b. Export trade When a trader of one country sells goods to other countries, it is called export trade. Nepal exports garments, handicrafts, herbs, carpets, vegetables etc. to different countries in the world. c. Entreport trade If the goods are imported from one country and exported to other countries for earning profit, it is called entreport trade. It is the act of buying goods from one country and selling them to other countries. Hongkong imports gold from Brazil and exports to Nepal and India. It is entreport trade for Hongkong. Short Notes to Remember (SNR 3.2)  Import trade is the act of purchasing goods from another country for domestic use.  Export trade is the act of selling goods to other countries with a view to earn profit.  Entreport trade is the act of buying goods from one country and selling them to other countries with a view to earn profit. 46 Office Management and Accountancy

Procedures of foreign trade Following are the common procedures to be followed in foreign trade : a. Enquiry Like home trade, in foreign trade also, the M Tprobable importer has to make enquiry to the exporter for receiving information about emory ips goods. He has to make enquiry regarding the quality and types of goods, price, discount,  Enquiry transportation charge, packing, insurance  Reply to enquiry or quotation  Purchase order  Confirmation or acknowledgement  Collection of goods  Packing of goods terms of payment etc. The importer writes  Preparation of invoice a letter and sends to the exporter which is  Delivery of goods known as enquiry letter. He may write letter  Carriage of goods to various exporters at a time so that the best one can be chosen. The information relating to the exporters can be obtained from websites, international magazines, trade agents and other channels. b. Reply to enquiry or quotation It is the second procedure of foreign trade. After receiving an enquiry letter from the importer, the exporter sends a written reply to the enquiries made by him. Such reply is known as reply to enquiry or quotation letter. The exporter has to give reply according to the enquiries made by the importer. The quality of reply attracts the importer and motivates him to forward the order of goods. Thus, the exporter should prepare it with much attention. c. Purchase order When the importer collects quotation letters from various exporters, he compares them and selects the best exporter. He has to consider the quality, price, discount, terms of payment and other terms and conditions of foreign trade while selecting the exporter. After selection of the suitable exporter, he has to write an order letter for the quantity of goods to be imported. It should include the details of goods so that the exporter can dispatch them easily. d. Confirmation or acknowledgement As soon as the order letter is received from the importer, the exporter has to give confirmation to the importer for the receipt of order, he has to write a letter which is called confirmation letter. It informs the importer about the acceptance of his order. In this letter, the exporter assures him for the delivery of goods as per the agreement as early as possible. If the exporter has any unclear matter in the purchase order, he can raise question through this letter. e. Collection of goods The exporter has to collect the goods as per the order letter of the importer. If all the goods as per the order are not available in the stock, they should be collected from the market and made ready for packaging. The exporter should collect the goods in time for timely delivery. Trade 47

f. Packing of goods After collection of goods for exporting purpose, the exporter has to pack them properly. Packing of goods should be done as per their nature. If the importer has given any instruction regarding the packing, the exporter has to follow the same. Otherwise, it should be done by considering cost, safety and attractiveness of the goods. Some instructions like ‘Breakable’, ‘Perishable’, ‘Handle with care’ etc can be mentioned on the face or side that helps for loading and unloading of goods. g. Preparation of invoice Like home trade, the exporter has to prepare an invoice before delivery of goods in foreign trade. It contains the details of goods like quantity, type, price, discount allowed, expenses incurred, net payable amount, terms of payment and other terms and conditions. The exporter should send the invoice to the importer along with the goods delivered. Generally in foreign trade, four copies of invoice are prepared. A copy is sent to the importer through transportation company, next copy is kept by the exporter for official record and remaining two copies are sent through bank for getting payment. h) Delivery of goods After preparation of invoice, the exporter has to deliver goods to the transportation company. If the importer has given any instruction regarding the means of transportation, the exporter should follow the same. Otherwise, the safest, cheapest and the fastest means of transportation should be used. Generally in foreign trade, water transportation is used for carrying goods. Thus, the exporter delivers goods to shipping company to carry them to the destination of importer. Along with the goods delivered, the exporter gives a letter to the shipping company mentioning the details which is known as bill of lading. After receipt of bill of lading, an authorised person verifies the physical quantity and condition of goods. If all the goods are found as per bill of lading, a copy of it is signed by the concerned officer of shipping company and returned to the exporter which is known as receipt of goods. It is a proof of acceptance of goods by the exporter for carrying them to the place of importer. i. Carriage of goods After the goods are transferred to the shipping company, it carries them to the place of importer. During the carriage of goods, the transport company has to take whole responsibility of goods. Short Notes to Remember (SNR 3.3)  Bill of lading is a letter given by the exporter to the shipping company with the package of goods mentioning the details of goods and instruction for carriage of goods.  Bill of lading is called airway bill in air transportation, road consignment bill in road transportation and railway receipt under railway transport. 48 Office Management and Accountancy

Documents of foreign trade Like in home trade, foreign trade also requires to create some documents for successful completion of trade. Following are the important documents used in foreign trade:  Enquiry letter  Quotation letter  Order letter  Confirmation letter  Invoice  Bill of lading  Receipt of goods Similarities between home trade and foreign trade Following are the similarities between home trade and foreign trade:  Both types of trade involve the exchange of goods.  Both types of trade are performed with a view to earn profit.  Both types of trade require to follow the similar procedures.  Both trades are performed between two parties. Differences between home trade and foreign trade Following are the main differences between home trade and foreign trade: Basis of difference Home trade Foreign trade 1. Meaning It is the act of buying and It is the act of buying and selling of selling of goods between the goods between the traders of two 2. Use of word traders of same country. different countries. The words buyer and seller are The words importer and exporter 3. Types used for the parties involved are used for the parties involved in 4. Letter of credit in trade. trade. 5. Copies of Home trade are of two types i.e. Foreign trade are of three types i.e. invoice wholesale trade and retail trade. import, export and entreport. It does not require to open the It requires to open the letter of credit letter of credit. by the importer. Generally, three copies of Generally, four copies of invoice are invoice are prepared. prepared. 6. Modes of Generally, land transportation Generally, the water transportation transport is used to carry the goods. is used to carry the goods. Terms and conditions of trade Before conducting trade, it requires to have mutual agreement between the parties in both home trade and foreign trade. The buyer and the seller or the importer and the exporter must agree on some rules, terms and conditions. Such terms and conditions are the main bases for settlement of disputes in the future. Some important terms and conditions to be followed by the buyer/importer and the seller/exporter are explained below: Trade 49

a. Types of goods Memory Tips The buyer or the importer and the seller or  Types of goods the exporter must have clear understanding  Quantity of goods regarding the types of goods. It includes the  Price of goods name of goods, brand, size, colour, batch,  Insurance quality etc. All these information should be stated in the purchase order clearly.  Terms of payment b. Quantity of goods  Discount  Means of transportation The quantity of goods refers to the number,  Means of payment weight and measurement of the goods. The buyer or the importer should mention the required quantity of goods in the purchase order clearly. The seller or the exporter should also dispatch the goods as per the order letter. The dispatching of more or less quantity of goods creates disputes between two parties. c. Price of goods The seller or the exporter should mention the unit price of all kinds of goods clearly in quotation. While placing the order, the buyer/importer should also state the unit price of the goods properly. Later on, the seller/exporter should consider the same unit price for preparation of invoice. d. Insurance First of all, the buyer/importer and the seller/exporter must be clear regarding the need of insurance. If the insurance is done for the goods against the possible risks, the name of the party i.e. importer/buyer or the exporter/seller who pays of insurance premium should be mentioned clearly. e. Terms of payment The goods may be sold either in cash or credit. Thus, the buyer/importer and the seller/exporter should make an agreement regarding the terms of payment i.e. cash or credit. The payment can be made immediately in cash or after certain period of time. If the goods are sold on credit, the duration of time for the payment must be mentioned clearly. f. Discount Discount is the facility given by the seller/exporter to the buyer/importer. There are two types of discount i.e. trade discount and cash discount. Thus, both parties must be clear about the types and rate of discount. It affects the amount of receivable and payable while preparing invoice. If the discount facility is not available in quotation, the buyer/importer cannot claim for it later on. g. Means of transportation There are various means of transportation for carriage of goods. Both the buyer/importer and seller/exporter must be confirmed regarding the use of transportation to carry the goods. The goods can be dispatched through sea 50 Office Management and Accountancy