The Stock Exchange
…The Stock Exchange is a market in existing securities (shares, debentures, and securities issued by public
authorities). The main function of Stock Exchange is to provide a market for existing shares and securities. It aims to create a
free market where people wishing to dispose of shares can always find a buyer and people who wish to buy shares can always find a
seller…
…Although the shares in public companies are freely transferable, only shares in quoted public companies may be
traded on the Stock Exchange. A quoted company is one which has satisfied, the Stock Exchange Council requirement's with regard
to its financial structure, control, and disclosure of financial information. Some 10000 different shares and bonds are dealt with
on the London Stock Exchange…
Banking
…In most countries, commercial banks mainly serve as a depository of funds and as a source of credit for private
individuals, business companies, or other organizations. In our days they have enlarged the scope of their activities and maintain
not only checking accounts, but also savings departments, trust departments, and safe-deposit vaults. They are particularly active
in granting short-term loans to business in order to provide business with working capital or temporary funds needed for special
purposes. Commercial banks also deal in foreign exchange and letters of credit…
…The banking functions of an investment bank differ strongly from those of commercial banks. They do not accept
checking deposits or maintain savings departments or act as trustees for individuals or estates. They promote industry through the
sale of large issues of stocks and bonds to investors. In this way, they secure fixed capital for business and governmental projects
by means of long-term loans…
Budgeting
…Budgeting involves setting financial goals and standards for an enterprise. The primary objective of the budget
is to establish a financial framework for the operations of the business. The accounting period for the budget is usually either the
calendar year or the fiscal year…
…One of the activity budgets is the sales budget, which important entries are information about unit prices,
expected sales volume and others. Sales budgets are designed to be both flexible and complete. The sales figures are adjusted for
various reasons: some merchandise is returned for credit; a small but a significant volume is unusable because of spoilage and damage;
and further adjustment is necessary to account for allowances and discounts…
…After taking care of sales and purchases, the enterprise must calculate the expenses of conducting business.
This budget is commonly referred to as the operating-expenses budget. The preparation of the OEB reflects how important it is for
budgets to be based in well-defined organizational lines. The sales budget and the purchases budget must be used in formulating the
OEB because these two major activities provide the justification for the size of the selling and administrative expenses.
Once the sales budget and the OEB are prepared, the accountant is ready to determine the break-even point, the minimum volume of sales
the company needs to have, given the estimated operating expenses, in order not to occur a loss…
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