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🌐 Important Questions Class 12 Economics Chapter 2 - National Income Accounting ➡️ What is real flow? Answer: Real flow is the flow of services and goods between different sectors of an economy. For instance, flow sector services flow from the household to the enterprise and then vice versa, i.e., from the enterprise to the household again. ➡️ Differentiate between personal income and private income. Answer: Mentioned below are the points of differences between personal income and private income: Personal income It is the sum total of earned and transfer incomes received by the individuals from the income sources involved within and outside the nation. Personal income is calculated as follows: Personal income = Private income – Corporate tax – Corporate savings (undistributed profits) Private income It can be contemplated as the factor and transfer of the income received from all the private sources within and outside the country. ➡️ Define real GNP. Answer: Gross national product calculated at constant prices i.e., via base year price is known as real GNP in economics ➡️ What must be added to the domestic factor income to avail national income? Answer: Net factor income from abroad must be added to the domestic factor income to avail national income. ➡️ Providing the reason, explain whether the following are included in the domestic product of India. Profits earned by a branch of the foreign bank in India Answer: Profits earned by a branch of the foreign bank in India will be included in the domestic income of India because the profits are earned within the domestic territory of India ➡️ Providing the reason, explain whether the following will be included in the domestic product of India. Payment of salaries to its staff by an embassy located in New Delhi Answer: Payment of salaries to its staff by an embassy located in New Delhi will not be involved in the domestic income of India as it is not a part of the domestic territory of India. ➡️ Providing the reason, explain whether the following will be included in the domestic product of India. Interest received by an Indian resident from its abroad firms Answer: Interest received by an Indian resident from its abroad firms will not be included in the domestic income of India because it is the factor income from abroad. ➡️ What is national disposable income? Answer: National disposable income is the type of an income that is obtainable to the whole economy for the spending purpose or for disposition. It is computed as, NNP + Net current transfers from abroad (NDI)

🌐 Important Questions Class 12 Economics Chapter 1 - Introduction to Macro Economics ➡️ What is export? Answer: Exports are the goods and services manufactured in one nation and bought by the residents of another nation. It does not matter what the good or service is. It can be shipped, sent by email, or carried in personal luggage on a ship or a plane. If it is manufactured domestically and traded to someone in a foreign country, then it is known as an export. ➡️ Who is called the father of modern economics? Answer: Adam Smith ➡️ Differentiate between microeconomics and macroeconomics. Answer: ⏺ Microeconomics  ➖ The individual economic unit is studied. ➖ It deals with ascertainment of cost price and output in the individual markets.  ➖ Here, the main issues are ascertainment of price and allocation of resources. ⏺ Macroeconomics ➖ The aggregate economic unit is studied. ➖ It deals with ascertainment of general price and output in the whole economy. ➖ Here, the main issues are ascertainment of income level and tackling unemployment in the economy. ➡️ What are Macroeconomics and Microeconomics? What is the association between the two? Answer: Macroeconomics, like a discrete part of economics, surfaced after the British economist, John Maynard Keynes issued and published his book, ‘The General Theory of Employment, Interest and Money in 1936. The ascendant thinking in economics before Keynes was that all the workers who are willing to work would find employment and all the plants (factories) will be functioning at their comprehensive capacity. This school of notion is known as the classical tradition. Microeconomics is a branch of economics that contemplates the attributes of decision makers within the economy, such as households, individuals, and enterprises. The term ‘firm’ is generally used to refer to all sorts of trade. Microeconomics is distinct from the study of macroeconomics, which considers the economy as an entity. Whilst these two studies of the subject economics appear to look different, they complement each other and are interdependent, since there are several overlapping issues between these two segments. For instance, raised inflation (macro effect) would be the reason for the increase in the price of raw materials. ➡️ What is entrepreneurship? Answer: The meaning of entrepreneurship includes an entrepreneur who takes actions to create a change in the world. Whether startup entrepreneurs solve an issue that many struggle every day and bring people together in a way no one has before, or build something revolutionary that advances society, they all have one thing in common: action. ➡️ Define Great Depression. Answer: Economists usually attribute the beginning of the Great Depression to the sudden devastating collapse of the US stock market prices on October 29, 1929, known as Black Tuesday. However, a few conflicts have arisen and checked the stock crash as a symptom rather than a cause, which is known as the Great Depression. ➡️ What is an import? Answer: An import is goods or services that are brought into one country from another. The word import is derived from the word ‘port’ since the commodities are often shipped via boat to the abroad countries. Along with the exports, imports form the backbone of international trade. ➡️ What is the name of the John Maynard Keynes celebrated book? Answer: The name of the book is ‘The General Theory of Employment, Interest and Money’ which was published in the year 1936.

🔰 Methods of Expressing Accounting Ratios 🔰 1. Proportion Ratio: In this form, the relationship between the two items is directly expressed in proportion. For e.g. Current Ratio explains the relationship between Current Assets and Current Liabilities. 2. Times: In this form, the ratio is expressed in a number of times, a particular item in comparison to other items. 3. Percentage: In this form, the relationship between the two items is expressed in percentage. For e.g. Net Profit expresses the relationship between Net profit and Revenue from Operations. Ratio Analysis ➖ Analysis of financial statement with the help of ratio can be termed as ratio analysis. ➖ Examination and interpretation of the relationship between numerical figures. 🔹 What Are the Objectives of Ratio Analysis? ➖ Provides analysis of profitability, liquidity, the solvency of the business. ➖ Traces the area which seeks more attention ➖ Helps in making estimates ➖ Supports in comparing the performance with best industry standards. 🔹 What Are the Advantages of Ratio Analysis? ➖ Assists in comparative studies. ➖ Simplifies complex figures. ➖ Supports financial analysis. ➖ Helpful in forecasting ➖ Helps in judging the operating efficiency of a business.

✅ Difference between Final Goods and Intermediate Goods

🌀 Balance Sheet vs Profit & Loss Account

🔰 Methods of Expressing Accounting Ratios 🔰 1. Proportion Ratio: In this form, the relationship between the two items is directly expressed in proportion. For e.g. Current Ratio explains the relationship between Current Assets and Current Liabilities. 2. Times: In this form, the ratio is expressed in a number of times, a particular item in comparison to other items. 3. Percentage: In this form, the relationship between the two items is expressed in percentage. For e.g. Net Profit expresses the relationship between Net profit and Revenue from Operations. Ratio Analysis ➖ Analysis of financial statement with the help of ratio can be termed as ratio analysis. ➖ Examination and interpretation of the relationship between numerical figures. 🔹 What Are the Objectives of Ratio Analysis? ➖ Provides analysis of profitability, liquidity, the solvency of the business. ➖ Traces the area which seeks more attention ➖ Helps in making estimates ➖ Supports in comparing the performance with best industry standards. 🔹 What Are the Advantages of Ratio Analysis? ➖ Assists in comparative studies. ➖ Simplifies complex figures. ➖ Supports financial analysis. ➖ Helpful in forecasting ➖ Helps in judging the operating efficiency of a business.

➡️ Balance Sheet vs Consolidated Balance Sheet

✅ Valuation of Goodwill Goodwill is an intangible asset that represents the value of a business beyond its tangible assets, such as property, plant, and equipment. It is often associated with the reputation and brand recognition of a business, and can include things like customer relationships, talented employees, and a favorable market position. Valuation of goodwill is the process of determining the value of a business's intangible assets. There are several methods used to value goodwill, including: ➖ Cost approach: This method values goodwill by calculating the cost of creating a similar business from scratch, minus any costs that could be saved. ➖ Market approach: This method values goodwill by comparing the subject company to similar companies that have been sold in the recent past, and using those sales prices as a benchmark for valuation. ➖ Income approach: This method values goodwill by projecting the future financial performance of the business, and discounting those future cash flows back to their present value. ➖ Relief from Royalty method: This method values goodwill by determining the amount of money that would have to be paid to a hypothetical third party in exchange for the right to use the intangible assets of the business. The method used to value goodwill will depend on the specific circumstances of each case, including the size and complexity of the business, the nature of its intangible assets, and the availability of data. It's important to note that the value of goodwill can change over time, and that a company's intangible assets may become less valuable if its reputation or brand recognition decreases. Additionally, goodwill is subject to impairment if the value of the business declines, which can result in a write-down of the asset's value on the company's balance sheet.