Pen-Write E-Library - Private

SCHEME OF WORK
WEEK:
1. Revision/Credit, meaning, types and sources.

2. Functions of credit to Retailer/Wholesaler and instrument.

3. Buying/Selling procedures and document used.

4. Trade Terms: Trade Discount, Cash Discount etc.

5. Means of Payment: Bank, Legal Tender, Cheques etc.

6. Consumers protection: Meaning, Rights of consumers, Need for Consumers protection and agencies used.

7. Instrument for consumers protection e.g Food and drug Acts 1955 etc.

8. Business Organisation: Joint Stock/Public and Private Limited Liability Company.

9. Insurance Policy: Insurable Risks, examples etc

10. Insurance Policy continues.

11. Revision

TOPIC: Credit
REFERENCE BOOKS:
a. Essential commerce for S.S. S by O.A. longe
b. Comprehensive commerce for S.S.S by Johnson Ugoji Anyaele
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. State the basic concept of credit
b. List various types of credit
c. Identify the sources of credit
d. Explain credit instruments


SUBTOPICS: Credit
CONTENT: Meaning of credit
- Factors to consider before granting credits
- Types of credit
- Sources of credit

Definition of credit: Credit is when a seller grant permission to a buyer to take possession and enjoy a commodity with a promise to pay in the future.
Seller (lender) buyer (borrower)
Factors/basis for credit sale
- income of the buyer (borrower)
- sources of payment
- the integrity of the buyer
- present employment
- availability of guarantors
- time of payment

Types of credit/sources
Mortgages - building societies
Loans / overdraft - banks
Hire purchase - wholesalers / businessmen

EVALUATION: Explain four (4) reasons why a trader would prefer the use of cheque to cash for large payments.

ASSIGNMENT: Give three(3) similarities between hire purchase and deferred payment





SUBTOPIC: Credit
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. State the advantages of credits
b. List the advantages of credit
c. Identify other types of credit

CONTENT: Other types /sources of credit
- Credit card
- Debit factorizing
- Book-me-down
- Hiring and leasing
- Budget account

Advantages of credit sales
- Increase in sales
- Increase in profit
- Enjoyment of good without payment
- Increase in standard of living
- Encourages bulk buying

Disadvantages of credit sales
- Increase in price
- Customers can overbuy
- Sellers can repossess
- Capital can be tied down

Credit instruments
- Bills of exchange
- Debentures, credit card, bound etc

EVALUATION: Explain the following types of credit
a. Monthly account
b. Club trading
c. Mortgage
d. Loan and overdraft

ASSIGNMENT: State 5 features of hire purchase

TOPIC: Credit
REFERENCE BOOKS:
a. Essential commerce for S.S. S by O.A. longe
b. Comprehensive commerce for S.S.S by Johnson Ugoji Anyaele
PERFORMANCE OBJECTIVES : At the end of the lesson the students would be able to;
i. State the meaning of Credit
ii. Defined Hire Purchase
iii. Mention sources of Credit


CONTENT : Credit is the situation when a buyer is in possession of goods yet to be paid for. This could be an individual or corporate organization getting certain products at a particular time in need but the cost price is not settled.
The use of credit in transaction has increase tremendously in recent time despite short coming and payment delay still, is making wave in business sector.

FACTORS THAT DETERMINED CREDIT FACILITIES
1. The salary of the buyer.
2. Where the person is working.
3. The time of pay back.
4. The integrity of the buyer
5. The availability of guarantor(s).

MERITS OF CREDIT SALE
i. It leads to increase in sale of goods.
ii. It increases profit.
iii. It reduce problem of stocking.
iv. The buyer enjoys the goods without payment.
v. It encourages bulk buying.

DEMERITS OF CREDIT SALE
i. There is always increase in the price of the goods.
ii. It encourages over budget
iii. The buyer can over pay without planning for it.
iv. It can lead to court action if the buyer fails to pay.
v. The seller capital is tied down.
vi. Seller can loss all items sold if the buyer change environment or die.
vii. It leads to business liquidation.


SOURCES OF CREDIT FACILITIES
1. MORTGAGE : This is a financial institution set up with the aim of building houses and acquired landed properties and lease them inform of short and long terms loans to their customers with interest charges on it.

2. LOAN/OVERDRAFT : An overdraft is the excess money a bank`s customer withdraw on his account when he does not have enough cash in the account on agreement of fixed interest rate charges by the bank serving as loan for a short time.

3. HIRE PURCHASE : This is the credit facility given to a worthy customer to have possession of goods with higher selling price than cash sale. Note that the goods owner can reclaim the goods back if payment is defaulted.

4. FINANCE HOUSES : They are set up to give loan to businessmen who need it for expansion with interest on it.

5. DEFERRED PAYMENT : This is the transfer of ownership to a customer who will pay for the goods in future. The seller cannot repossess the goods if the buyer did not pay.

6. CREDIT CARD : This is credit facility allowed to a buyer without cash to shop for, but with a limit to the amount on it. Examples: Value card, Euro card, smartcard, visa card etc.

7. FACTORING : This is when a company debts is sold for cash by a bank at a lower amount than the actual cost.

8. LEASING : The act of granting another person the right to use a property over a fixed period of time. This could be electronics, land, buildings etc. Other forms of or source of credit are, Club Trading, Book-Me- Down, Conditional Sale, Monthly Account, Budget Accounting.

CREDIT INSTRUMENT
These are written documents used in business transaction as evidence of repayment in credit.
i. Bill of exchange vi. I own You
ii. Promissory Note vii. Bonds
iii. Letter of credit viii. Hire purchase agreement
iv. Credit cards ix. Bank draft
v. Debentures

EVALUATION: Explain the functions of credit to a business man.

ASSIGNMENT: Differentiate between hire purchase and deferred payment





MAIN TOPIC(S) : FUNCTIONS OF CREDIT
SPECIFIC TOPIC(S) : To the Retailer and the Wholesaler
REFERENCE BOOK : Internet and Lesson note

PERFORMANCE OBJECTIVES : At the end of this lesson the students would be able to ;
i. State the functions of credit to Retailer and the Wholesaler
ii. List various credit instrument
iii. Name forms of payment
iv. Distinguish between the Bill of Exchange and Cheque

CONTENT : The following are the functions of credit to the retailer and the wholesaler.
1. It enables them to have capital to start their businesses.
2. It makes them functional.
3. It aids the expansion of their business coast.
4. They can stock varieties of goods.
5. They can be sure of all season's transaction.

FORMS OF CREDIT INSTRUMENT
1. Bill of Exchange: This is accepted when the drawee writes the word*ACCEPTED* on the face of the bill including his signature, date and place of payment.
There are two types of acceptance.
(1) General Acceptance which is issued without any condition.
(2) Qualified Acceptance it depend on conditions before payment can be made.

2. A Dishonored Bill: Is a bill presented for payment on maturity but was rejected.

SIMILARITIES BETWEEN BILL OF EXCHANGE AND CHEQUE
i. They are both unconditional order.
ii. They are both written.
iii. Address from one person to the other.
iv. Signed by the drawer requiring payment on demand.
v. Made payable to a specific person on it.

DIFFERENCES BETWEEN BILL OF EXCHANGE AND CHEQUE
Bill of Exchange..............................................Cheque
1. The drawer is the creditor.....................Drawer is the debtor
2. Drawee is the buyer.............................drawee is the bank
3. Payee is the seller................................Payee is the creditor
4. Payment is made in future.....................Payment done on demand
5. Does not need crossing.........................Does not need acceptance
6. Need stamp with value..........................Does not need stamp

EVALUATION :
i. What are the functions of the credit to the retailer?
ii. List the various forms of credit
iii. Distinguish between the bill of exchange and a Cheque.
iv. Mention the forms of payment.

HOME WORK : What is a Dishonored Bill?

TOPIC: Buying and Selling
REFERENCE BOOKS:
a. Essential commerce for S.S. S by O.A. longe
b. Comprehensive commerce for S.S.S by Johnson Ugoji Anyaele
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. List documents used in buying and selling
b. State procedures involved in buying and selling



SUBTOPIC: Documents used in buying and selling
CONTENT: Buying and selling
PROCEDURES: The buyer should make enquires and collect quotations from many sellers or suppliers. Documents required must be authentic. Again, it is also necessary for record purposes.
Document
- Letter of enquiry
- Trade journals
- quotation
- order
- invoice
- catalogue/ price list

EVALUATION: List five(5) contents of an invoice.

ASSIGNMENT: Explain the uses of the proforma invoice





SUBTOPIC: Documents used in buying and selling - uses
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. list the uses of the documents
b. state the content of each document listed below.

CONTENT: Uses of the followings
- debit note
- credit note
- advice note
- delivery note
- consignment note
- statement of account

EVALUATION: Differentiate between debit note and credit notes.

ASSIGNMENT: State the uses of the delivery note and consignment note





MAIN TOPIC(S): BUYING & SELLING, PROCEDURE & DOCUMENTS USED.
SPECIFIC TOPIC(S) : Procedure and Documents used in Buying and Selling.
REFERENCE BOOK : Essential of Commerce by A. O. Longe, page 118

PERFORMANCE OBJECTIVES : At the end of this lesson the students would be able to;
i. Explain the procedure in buying and selling of goods.
ii. Mention the various documents used in buying and selling

CONTENT : Buying and selling of goods and services have to do with the exchange of money for goods between the seller and the buyer.
The following are the procedures and documents used in buying and selling.
1. LETTER OF ENQUIRY : This is a letter sent from the buyer to the seller asking for goods available for sales with reference to the price, term of sale, payment, delivery, quantity, time etc before buying.

2. TRADE JOURNAL: These are publications which serve as source of information to the buyer to make choice from. It contains data about the products price, terms of sales, description and delivery.

3. CATALOGUE: This is a pictorial presentation of goods and articles available for sale, especially in mail order business.

4. PRICE LIST: It shows the current price of goods for sales. It is sent from the wholesaler to the retailer which is used to compare prices and a guide to customers to make choice.

5. QUOTATION, INVOICE, ORDER: These are documents indicating prices, quantity, description, amount and terms of sale sent from seller to the buyer along discount granted.

6. DELIVERY NOTE: This is a document that accompanies goods sent to the buyer to confirm the goods arrival and an evidence of delivery.

7. ADVICE NOTE : This is sent ahead of time to inform the buyer about goods to be expected from the seller coming on the way and time of arrival.

8. CONSIGNMENT NOTE : This is a document used to carried goods from one place to another as evidence showing details, packages, weight, name and address of the sender and consignee.

9. PROFORMA INVOICE: Is a document used to request for payment in advance when seller is not willing to sell on credit. It serves as a quotation, when dealing with a customer for the first time, as a reply to enquiry.

10. RECEIPTS: This document to prove that payment has been made from the buyer when the customer receives the goods and sent money for the actual cost. It is use for auditing purpose and evidence of payment.

EVALUATION:
i. What are the procedures for buying and selling of goods?
ii. Explain briefly some of the documents used in buying and selling.

HOME WORK : Write a letter of enquiry to Jon Doe Company limited.

TOPIC: Trade terms
REFERENCE BOOKS:
a. Essential commerce for S.S. S by O.A. longe
b. Comprehensive commerce for S.S.S by Johnson Ugoji Anyaele
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. Identify trade terms
b. State reason for granting discount



SUBTOPIC: Terms of trade and abbreviations
CONTENT: Discount
Terms of Trade: are the terms of agreement between buyers and sellers regarding the supply of goods. Payment - cash or bank, or payment after delivery
Discounts: Is the reduction in the price of goods ( to encourage bulk purchases and prompt payment).

Types
- Cash discount
- Quantity discount
- Trade discount
- Seasonal discount

Reasons for granting discount
- To attract more customers
- To encourage prompt payment
- To encourage bulk purchase
- To provide the retailers profit margin

EVALUATION: Explain occasion when seasonal discount is given.

ASSIGNMENT: What are the reasons for granting discounts?






SUBTOPIC: Terms of trade and abbreviations
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. Give full meaning of the abbreviations
b. Write the abbreviations or acronyms in full
CONTENT:
FOB - Free on Board
FAS - Free Alongside ship
FOR - Free on Rail
CIF - Cost Insurance and Freight
FOQ - Free on Quary
CF - Cost and Freight
E and OE - Errors and Omission Exception

EVALUATION: Explain the terms
a. Carriage paid (c/pd)
b. Carriage forward

ASSIGNMENT: Give the meaning of the acronyms (i) EWO (ii) Cod






MAIN TOPIC(S): TERMS OF TRADE (TRADE TERMS)
SPECIFIC TOPIC(S): Trade Discount, Cash Discount etc
REFERENCE BOOK: Essential of Commerce by A. O. Longe, page 125.

PERFORMANCE OBJECTIVES: At the end of the lesson the students would be able to;
i. Define Trade Discount
ii. Explain Cash Discount
iii. State meaning of abbreviations e.g C.O.D, E.&O.E, C.W.O etc.

CONTENT: Trade terms are the various terms and abbreviations commonly used in Commerce. Among them we have the following.

1. TRADE DISCOUNT: This is allowance given to a g customer to buy goods less than the quoted cost as a motivation to keep him in business.

2. CASH DISCOUNT: This is a reduction on the cost price to enable the buyer pay up within a stipulated time.

3. QUANTITY DISCOUNT: Is a discount given in term of quantity of goods purchase by the buyer as an encouragement for ordering large quantity.

4. CARRIAGE FORWARD: Indicate that the buyer is to pay for the goods on receiving them.

5. AN ESTIMATE: This is a round of price on a piece of work contacted for.

6. TENDER: This is an order raise in respect to advert on the papers for a job or supply of goods.

7. EX-WARE HOUSE: Is a quotation of price of a commodity which excludes delivery charges. The buyer pays for cost of transportation.

8. EX-WORK: Means that the buyer is responsible for all delivery charges except loading onto the road or rail vehicle for which the seller pay for.

9. LOCO: This is used to indicate price of goods at the exporter ware house. The importer pays for all cost till delivery to his ware house.

10. FOR: It means free on rail up to the destination of the goods on board. The seller only pays to motor pack while he buyer continues from there.

11. CARRIED PAID: The seller bears the cost of transporting the goods to the buyer ware house.

12. E&OE: It means errors and omission excepted; meaning the details price on invoice can still be corrected in case of any mistakes.

13. PER PRO: It means (for and on behalf of).

14. COD: Cash on Delivery. The buyer pays the cost on the goods arrival at his ware house.

15. VAT: It stand for Value Added Tax which is charge in all sales as an increase in percentage to cost price.

EVALUATION: i. Define Trade Discount
ii.What is Cash Discount?
iii.Explain the terms below (COD, E&OE, LOCO,CWO, FOR)

HOME WORK: Give 5 reasons why Discount is granted.

SUBTOPIC: Means of payment
REFERENCE BOOKS:
a. Essential commerce for S.S. S by O.A. longe
b. Comprehensive commerce for S.S.S by Johnson Ugoji Anyaele
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. Identify various means of payment
b. State how they are used for payment



SUBTOPIC: Means of payment through the bank
CONTENT: Means of payment
Meaning: It is the process of settling financial transactions in business.
Factor that determines the method of payment
- Distance between the payment receive
- The total amount
- The cost of the means of payment
- The urgency of payment
- The safety of payment in due
The various means of payment
Legal tender to payment through the bank 3 by the post office for businessmen's means of payment
A Legal tender
- Coins
- Bank notes
B Through the bank
- Cheques
- Bank draft
- Standing order
- traveller's cheque
- Credit transfer (Bank Giro)
- Certificate cheque
EVALUATION: Identify any two means of payment under the following headings.
a. Legal tender
b. Banking system

ASSIGNMENT: Explain any five means of payment






SUBTOPIC: Means of payment by the post office
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. State means of payment by post office
b. Identify businessmen's means of payment

CONTENT: Means of payment
Means of payment provided by the post office
- Postage stamps
- Postal orders
- Money orders
- Telegraphic money order
- Postal giro
Businessmen's means of payment
- Bill of exchange
- I owe you (IOU)
- Promissory note

EVALUATION: Explain any three means of payment used by the post office.

ASSIGNMENT: Compare the use of currency notes and cheques as means of payment





MAIN TOPIC(S): MEANS OF PAYMENT
SPECIFIC TOPIC(S): Bank, Legal Tender, Post Office etc.
REFERENCE BOOK: Essential of Commerce by A. O. Longe, page 128-130.

PERFORMANCE OBJECTIVES: At the end of this lesson the students would be able to;
i. Explain the meaning of mean of payment
ii. Mention the means of payment
iii. State the examples of medium of payment used by bank and post office.

CONTENT: Means of payment can be defined as the process of settling financial transaction either as debt or payment for goods using either bank or post office.

FACTORS DETERMINING THE METHOD OF PAYMENT.
i. The total amount of money involved.
ii. The cost of the mean of payment.
iii. The urgency need of the payment.
iv. The safety of the money.
v. The date the payment is due.
vi. The distance between the payer and receiver.

THE VAROUS MEANS OF PAYMENT
1. LEGAL TENDER: This is the payment made and is compulsory for the creditor to accept it by the law using coins, bank notes.

2. CHEQUES: This is an order written by the drawer to a bank to pay on demand specified amount on it to the bearer.

3. STANDING ORDER:Is an instruction by an account holder to the bank to pay a certain sum of money on his behalf at a regular intervals to a named person or organization.

4. BANK DRAFT: This is a payment draw on debtor account to settle his creditor when cash is refused.

5. POSTAL ORDER: This is used by the post office to settle goods order for by the buyer which in turn can be converted to cash by the receiver.

6. MONEY ORDERS: Are used when amount involve is larger than postal order which attract interest payment in the post office.

7. TELEGRAPHIC MONEY ORDERS: It is used when payment need urgent remit to be made, the cost of delivery will be charge for the services.

8. POST GIRO: Here the parties open account to be used for the transfer with the post office.

9. I OWE YOU (IOU): This is a written document that the debtor owns the creditor certain amount of money.

10. PROMISSORY NOTE: This is an unconditional agreement made by the debtor to pay the creditor in future the debt.

11. BILL OF EXCHANGE: This is a written document by the seller requesting payment to be made by the debtor the amount involved unconditionally.

12. CREDIT CARD: Is another means of payment acceptable which allowed the buyer to make transaction without cash deposit.

EVALUATION:
i. Defined means of payment
ii. Mentions the factors that determine the men of payment.
iii. List the various means of payment

HOME WORK: Under which conditions will a seller fulfill his money owns by a customer?

MAIN TOPIC: CONSUMER PROTECTION
SPECIFIC TOPIC(S): Meaning, Reasons, and means of consumer protection
REFRENCE BOOK: Essential of Commerce by O. A. Longe, page 112-117.
PERFORMANCE OBJECTIVES: At the end of this lesson the students would be able to;
i. Explain the meaning of consumer protection.
ii. Give reasons for consumer protection
iii. State the means of consumer protection with examples
CONTENT: The consumer protection is the process of guiding the consumers against exploitation by the seller who may offer low quality, high price, false information etc.
On this case the consumer have the right to enforce his rights in the law court.
A Consumer is the buyer of any product or services provided by company as the final user.
Consumerism: Is the efforts or action of a consumer to protect himself against the unfair practices of the seller injustices.
RIGHTS OF CONSUMERS
1. They have the right to make choices.
2. They have right to good thing of life.
3. They have right to safety.
4. They have right to be heard.
5. They have the right to seek for redress.
6. They have the right to be informed.
REASONS FOR CONSUMER PROTECTION
i. To avoid be cheated by greedy seller.
ii. To prevent high price.
iii. To avoid substandard goods in the market.
iv. To prevent false information.
v. To avoid misleading advertisement.
vi. To prevent wrong contract of credit facility.
MEANS OF CONSUMERS PROTECTION
1. By the formation of consumer association.
2. By the price control system.
3. Formation of standard board.
4. By the formation of rent edict tribunal.
5. By the formation of weight and measurement act.
6. By the formation of food and drug control unit.
Legislation is the act of making laws by the government to protect and guide the consumers of goods in the country through any of these acts below.
i. FOOD AND DRUG ACT 1955: To prevent fake drug and food harmful to the body not having access to the market.
ii. WEIGHT AND MEASURE ACT 1963: To ensures that no shortage is expected on items weight and measure.
iii. HIRE PURCHASE ACT 1975: To ensure that reclaimed of ¾ payment can only be collected by court action. Also the price must not be alter and that the buyer have right to terminate the contract.
iv. PRICE CONTROL DECREE 1970: To control all products price against cheating, and avoid exorbitant price.
v. TRADE DESCRIPTION ACT 1968: To prevent fake description of goods and quality.
vi. SALES OF GOODS ACT: To ensure that seller sell on any sales contract. The goods must be fit and meet the purpose and the bulk of the goods must be the samples.
vii. RENT EDICT: To curb over billing rent by landlords. To fix rent and ensure compliance and respect tenant rights.

AGENCIES RESPONSIBLE FOR CONSUMER PROTECTION
a. Consumer Association
b. Manufacture Association
c. Rent Tribunal
d. Price Control board
e. Food and drug department of the Ministry of Environmental Protection Agency of Health
f. Standard Organization of Nigeria (SON)
g. Ministry of Trade and Industry
h. Professional bodies (ICAN, CIBN) etc.
EVALUATION:
1. What is consumer protection?
2. Explain the reasons for consumer protection.
3. Mention some of the means used for consumers protection
HOME WORK: What is Consumerism? Give 5 reasons for the formation of the Rent Edict Tribunal.

MAIN TOPIC(S): BUSINESS ORGANISATION
SPECIFIC TOPIC(S): Meaning, Joint Stock/Public/Private Company
REFERENCE BOOK: Essential of Commerce by O. A. Longe, page 136-137

PERFORMANCE OBJECTIVES: The students would at the end of this lesson be able to;
i. State the characteristics of Joint stock company
ii. Differentiate between the private and public limited companies

CONTENT: A public limited liability company or joint stock company is a company that allows its shares goes to the public as a way of raising fund which must have a minimum of seven members without maximum limit.
It must have the abbreviation-PLC which means, Public Limited Company in the front. They are owns by private, government and organizations.

CHARACTERISTICS OF JOINT STOCK COMPANY
1. They have legal entity.
2. They have minimum of 7 members
3. They have no limit to membership of shareholders.
4. They can sell shares to the public
5. They are well organized and managed.
6. Their shares are quoted in the stock exchange market.
7. They can raise huge capital through sales of shares.

CHARACTERISTICS OF PUBLIC LIMITED COMPANY
1. Membership must be at least seven
2. Raise capital by sales of shares, loans and grants
3. Transfer of shares is easily done.
4. The ownership is separated from the name.
5. It has limited liability.
6. They carried out a specific business line by law.

SIMILARITIES BETWEEN PUBLIC AND PRIVATE LIMITED COMPANIES.
a. They both elect shareholders known as board of directors.
b. They all plough back profit.
c. They are both legal entity.
d. Death of one member cannot affect the existence.

DIFFERNCES BETWEEN A PARTNERSHIP AND LIMITED COMPANY
Limited Company...........................Partnership Business
1. Have legal entity......................Have no legal entity
2. Death of does not affect it.........Death of member can affect it
3. Membership is 2-50..................Membership is 2-20
4. Control by board of directors......Control by partners

ADVANTAGES OF JOINT STOCK /LIMITED LIABILITY COMPANY
A. It has a legal entity
B. It has a limited liability among members.
C. It can easily raise huge capital.
D. Shares can be transfer without any notification.
E. They have assets to obtain loans from bank.
F. There is democracy management.
G. They always recruit experts.

DISADVANTAGES OF JOINT STOCK COMPANY
1. They lack privacy.
2. There is always conflict of interest.
3. Decisions are always over delay.
4. The ownership is separated from the control.
5. It needs huge capital to start it up.

SOURCES OF CAPITAL TO PUBLIC/JOINT STOCK COMPANY
A. Retained back profit.
B. Loans and overdraft from the banks.
C. Sales of shares to the members of the public.
D. Loans inform of debentures
E. Use of bill of exchange.
F. By hire purchase/leasing of properties.

ITEMS IN A COMPANY BALANCE SHEET
Fixed Assets:
Premises xxx
Land& Building xxx
Machinery xxx xxx
Current Assets:
Stock xxx
Debtors xxx
Bank xxx
Cash xxx
Investment xxx xxx
xxxx
Less Current Liabilities:
Creditors xxx
Loan interest owing xxx
Insurance incurred xxx xxx xxxx
Financed by:
Share capital: Authorised Issued
Ordinary shares of #1 each xxx xxx
Preference shares of #1 each xxx xxx xxxx
Reserves:
General reserve xxx
Revenue reserve xxx
Share premium xxx
Retained profit xxx xxxx
Loan Capital:
Debenture xxxx xxxx

This balance sheet items will be illustrated in the course of teaching with question involving it as shown on page 143 of the Essential of Commerce text book by O. A. Longe.

view sample company balance sheet below
http://www.moneycontrol.com/financials/ ... -sheet/TPC

SHARES
Meaning: Shares are the individual share or portion of profit make by an organization. It is the interest the person receives on it as a shareholder.

SHARE CERTIFICATE
A share certificate is an evidence of share allotment to a shareholder. It states the number of shares and the value of each category and the rights that accrue to each of them.

RIGHTS OF SHAREHOLDERS
1. Right to vote at a meeting.
2. Right to dividends.
3. Right to receive meeting information.
4. Right to appoint proxy.
5. Right to distribute asses in case of liquidation.

CLASSES OF SHARES
A. Preference shares: The owner has a fixed rate of dividends. They do not have right to vote at meeting. They receive dividends before others ad entitle to return of capital in case of any wind up.

B. Cumulative B. Preference Shares: They receive arrears of dividends not paid before others because their dividends will be carried forward when profit is not made.

C. Participating Preference Shares: They are entitle to extra after ordinary shares have received. They have right to participate in surplus apart from their fixed dividends.

D. Redeemable Preference shares: They have claim before others.
They can be bought back.
They are issue to finance a particular project.


ORDINARY SHARES
This is known as equities. They are the real owners of the business and the risk bearers who receive their dividends after all others have received.
They does not have fixed rate of dividends.
They cannot vote at meeting.
They are the real owners of the business.
They are the risk bearers.
They receive dividends last.


METHODS COMPANY ISSUE ITS SHARES
1. By prospectus publication.
2. By right issue to existing members only.
3. By introduction in the stock exchange for the public to buy
4. By placing via the brokers
5. By offer for sale via merchant bank and financial institutions.

STOCK: Stock can be defined as the bundle of shares or mass of capital which can be transferred in fractional amount.

DEBENTURES: This is a bond inform of loan with a fixed interest rate. The owners cannot share in the company profit.

MERGER: This is the coming together or amalgamation of two or more companies to become one new company.

REASONS FOR MERGING:
1. To remove competition.
2. To become one big company.
3. To acquire technical man power.
4. For business diversification.
5. To guarantee production and supply always.
6. To raise more capital.
7. To prevent liquidation.

EFFECTS OF MERGER
A. The firms become one.
B. All combining parties cease to exist.
C. The new company possesses assets.
D. The new company acquires both debts and duties.

PROCEDURES FOR MERGER
1. The plan must be approved by all parties.
2. All documents must be submitted to the appropriate office.
3. There must be certificate of merger.
4. The board of both firms must adopt new name.

EVALUATION:
a. What are the characteristics of Joint Stock Company?
b. Differentiate between the public and private limited company.

HOME WORK: Give reasons for the winding up of a company.

TOPIC: Limited Liability Company
REFERENCE BOOKS:
a. Essential commerce for S.S. S by O.A. longe
b. Comprehensive commerce for S.S.S by Johnson Ugoji Anyaele
BEHAVIOURAL OBJECTIVE: At the end of the lesson, students should be able to:
a. List the advantages of limited liability company
b. State the disadvantages of limited liability company
c. State the classes of shares



SUBTOPIC: Advantages /disadvantages of public limited liability company
CONTENT: Advantages
- Legal entity
- Perpetual existence
- Limited liability
- Large capital
- Transferability of capital
- Loan facilities

Disadvantages
- Lack of privacy
- Conflict between shareholders and management
- Slow decision - making
- Hard or difficult to establish
- Payment of large corporate tax
- Large capital required

Classes of shares
- Preference shares
- Ordinary shares
- Deterred or founders shares
- Preferred ordinary shares

EVALUATION: List 3 advantages of the public limited liability company

ASSIGNMENT: State the 2 classes of shares





SUBTOPIC: Stock
BEHAVIOURAL OBJECTIVE: At the end of the lesson, students should be able to:
a. Differentiate between stock and shares
b. Explain debentures and the rights of debenture holder

CONTENT: Stock: is a bundle of shares or means of capital which can be transferred in fractional amount. They are always fully paid.
Differences between stock and shares
- Stock is a means of capital is a unit of capital
- Stocks are converted form shares shares are issued
- They are not numbered serially they are numbered serially
- They are fully paid they are partly paid
Debentures: A debenture is a bond, acknowledging loan under the company's seal having a fixed rate of interest.

Kinds of debentures
- Mortgage debentures
- Simple or naked debentures
- Redeemable debentures
- Irredeemable debentures

Rights of debentures holders
- Right to sue for repayment of any principal (loan) and interest which has accrued
- Right to present a winding up petition against the company
- Right to appoint a receiver

EVALUATION: State the differences between shares and stock

ASSIGNMENT: Explain 2 rights of debentures holder



TOPIC: Limited Liability Company
REFERENCE BOOKS:
a. Essential commerce for S.S. S by O.A. longe
b. Comprehensive commerce for S.S.S by Johnson Ugoji Anyaele
BEHAVIOURAL OBJECTIVE: At the end of the lesson, students should be able to:
a. Draw up the balance sheet of a company
b. State the terms used in preparing the balance sheet


SUBTOPIC: Balance Sheet of a Limited Liability Company
CONTENT: Layout of a balance sheet
Fixed Assets Cost Dep. Value
Premises 20,000 400 19,600
Land/building 23,000 2,300 20,700
Machinery 25,000 8750 16,250

Current Assets
Stock 12,500
Debtors 8,990
Bank 4,000
Cash 300
Investment 3,270 29,060
Less current liabilities
Creditors 8,000
Loan interest owing 200
Insurance accrued 1050 9250 19,710

EVALUATION: List 3 transactions recorded as current liabilities

ASSIGNMENT
a. What is a fixed assets
b. Give 3 examples of a fixed asset?





TOPIC: Limited Liability Company
Subtopic: Merger and liquidation of a company
BEHAVIOURAL OBJECTIVES: At the end of the lesson, students should be able to:
a. State reasons for merging
b. List various farms of liquidations
CONTENT: Merger - is the coming together or amalgamation of two or more firm to form one new company
Reasons
- To eliminate competition
- To obtain larger share of the market
- To prevent liquidation
- For the acquisition of technical know-how
- For large scale production
Liquidation is the process of winding up or bringing a company to our end
Form/ types of liquidation
- Voluntary liquidation
- Voluntary winding up subject to count order
- Compulsory winding up
- By order of the count without winding up
- Insufficient shareholders etc

EVALUATION: State 3 reasons for merging a company

ASSIGNMENT: Explain 4 forms of liquidation





MAIN TOPIC: INSURANCE
SPECIFIC TOPIC(S): Meaning, principles of Insurance and Marine Insurance
REFERENCE BOOK: Essential of Commerce by O. A. Longe, page 162-173

PERFORMANCE OBJECTIVES: The students would at the end of this lesson be able to;
i. State the meaning of Insurance
ii. Mention and explain principles of Insurance
iii. Defined Marine Insurance and give examples

CONTENT: Insurance can be defined as an agreement taken by the insurer and the insured against future lose to be compensated for by an insurance company. The payment is called premium. Insurance is a pool of risks policy.
Assurance: Is the policy taken against death. The benefactor will take the premium.

INSURABLE PRINCIPLES
1. INSURABLE RISKS: These are the risks or policies the insurance company can calculate their risks and pay the premium.

2. NON-INSURABLE RISKS: These are the risks the insurance company cannot insure against because they cannot be calculated in case of future losses. Examples are gambling, loss of profit, war etc.

3. IDEMNITY INSURANCE: This is the policy whereby the person is restored back to the position before the incident by receiving compensation.

4. INSURABLE INTEREST: This is the policy whereby the person must have interest on the policy and is not allow to insured what he cannot suffer the financial loss in future.

5. UTMOST GOOD FAITH (Uberrimae Fides): This policy stated that every information about it must be disclosed at the course of applying for the policy or else the insurance will not be reliable for the loss.

6. SUBROGATION: This is the right of the insurance to possess the property of the insurer once compensated to dispose off the remnant as a way of retrieving part of the cost paid by an insurance company.

7. PROXIMATE CAUSE: The policy stated that the insurance company can only pay for a direct cause of loss insured against and not related cause.

8. CONTRIBUTION: The policy stated that insurance company can only pay part payment once there is a proved that the person insured such policy in more than one insurance company. He can only receive payment from one and not all the insurance companies.

9. ABANDOMENT: Here the insurance may decide to abandon certain risk or damaged if the cost of repairing it will more than the value.

TYPES OF INSURANCE (INSURABLE RISKS)
i. Bad debt vi. Marine glass
ii. Goods in transit vii. Accident glass
iii. Burglary, robbery& theft viii. Plate glass
iv. Fire ix. Employer liability
v. Life assurance x. Aviation insurance etc

PROCEDURE FOR TAKING INSURANCE POLICY
A. By an inquiry
B. Discussion of the premium/Filling of the proposal form
C. Receiving cover note
D. Re-insurance negotiation incase of future coming.
E. This will be follow by the insurance policy

EVALUATION:
A. What is insurance Policy?
B. Mention the various insurable risks
C. What is Marine Insurance policy? Give examples.

HOME WORK: Give 5 reasons why an insurance company will not accept full responsibility when there is loss incurred by the insurer.

SPECIFIC TOPIC(S): Importance of Insurance, Agents and Marine Insurance policy
REFERENCE BOOK: Essential of Commerce by O. A. Longe, page 172

PERFORMANCE OBJECTIVES: At the end of this lesson the students would be able to;
i. State the importance of insurance policy
ii. Mention and explain insurance agents and terms
iii. Defined Marine insurance and examples

CONTENT: The following are the importance of insurance policy.
1. It gives a sense of security to the insurer.
2. It encouraged international trade.
3. It is a source of tax relief to those that take life policy.
4. It serves as a means of saving.
5. It is a source of collateral.
6. It motivates workers because they assumed safe.
7. Is an opportunity to investment in insurance shares.

INSURANCE AGENTS/TERMNOLOGIES
A. BROKER: Deals directly with customer on the floor of stock exchange.
B. JOBBER: Is the person that represents the broker and the company.
C. ACTUARY: Is the person that calculates insurance risks.
D. JETTISON: This is the throwing away of goods to prevent ship wreckage on the sea.
E. IINSURER: The insurance company that compensate the loser.
F. INSURED: The person with insurable risk that pay premium to the insurer.
G. SURRENDER VALUE: This is the amount of cash pay for the discontinuation of policy taken.
H. BARRATRY: Is when a ship captain go against the interest of the ship owner.
I. UNDERWRITING: The part taking in marine policy because of the cost by more than one insurance company.
J. REINSURANCE: The insurance of risk by another insurance company to reduce the cost.
MARINE INSURANCE POLICY: This is a branch of insurance that have to do with sea transportation which is the oldest form of insurance policy today.
Examples are;
i. Hull insurance: which covers the risk against storm, fire and collision.
ii. Cargo insurance: which covers goods on board by a ship.
iii. Ship Owner liability: This policy covers the owner or employee is at negligence.
iv. Freight Insurance: To cover the refusal to pay charges for goods to destination.
v. Time Policy: It covers a specific journey only.
vi. Voyage Policy: It covers a specific voyage by sea only.
vii. Floating Policy: Just to reduce cost insured in a gradual process. Fleet Policy: This covers fleets of ships own by one person.

EVALUATION:
1. What is the importance of insurance policy?
2. State the agents involved in insurance policy
3. Define marine insurance policy

HOME WORK: List 5 terms in insurance policy and explain 3 in detail.