Markets and its types

A market is a place where there are shopkeepers who sell their goods in exchange for money. People buy different types of goods from the market like clothes, eatables, groceries, clothes, electronic goods, and many others. Some shops have only single types of products while some provide a variety. For example, a cloth shop will have clothes only and people can buy clothes for themselves and their family. Similarly, grocery stores have many kinds of groceries. In economics, the market is defined as buyers and sellers coming together to buy and sell goods and services.

Features of market

A market has different features, which are described here.

  • In economics, the market is referred to as a place having either one or a set of the commodity.
  • A market covers a wide area and has no restriction of location.
  • A market must have a group of buyers and sellers.
  • Sellers and buyers both must know about the product to be bought or sold.
  • Price of products may change due to the competition.

Types of markets

There are many types of markets, which people can avail to purchase the goods they need. The main classification of the markets is the product market and factor market. Factor market includes buying and selling of land, capital, labor, and many other such things. Different types of classification are as follows.

Classification based on geographical location

The rating based on geographic location is as follows.

Local Market:

This type of market is restricted to a local region or area, and buyers have to come to that area to buy the required product. Mostly perishable goods are sold in this market.

Regional Market:

The area of these markets is more comprehensive than that of local markets. These regions can include a city or a state.

National Market:

This type of market is spread in the whole country.

International Market:

In this market, buying and selling of goods are done internationally, and the products that are allowed in a country can be sold.

Classification based on time

The rating of markets based on time is as follows:

Very Short Period Market:

In this type of market, the supply of goods done for a brief period. Such markets include fruits, vegetables, meat, etc.

Short Period Market:

The period of this market is little more than the previous one. Supply is adjusted for a little more time in this market.

Long Period Market:

In this market, supply can be changed easily as the goods here are not easily perishable.

Classification based on the nature of the transaction

Ranking of the market based on the deal is as follows:

Spot Market:

In this market, sales are completed at the spot.

Future Market:

In this type of market credit transactions are done. The promise of payment is made after a period.

Classification based on regulation

Ranking of the market based on the rule is as follows:

Regulated Market:

In this market, government authorities are also included to ensure whether any malpractice is being done or trade is being made relatively. Such types of exchanges include stock market.

Unregulated Market:

This market is free of any regulations, and everything is decided based on market forces.

Wrapping Up

In this article, we have discussed the market, its features, and types. Exchanges can be classified on any basis, but the main thing that is done here is the interaction between buyer and seller. The buyers come to the market and check the products they want along with quality and price, and the sellers tell about the features and provoke the buyers to buy the products.

Government and its types

Government is a system in which fate if the citizens depend. If the government is liberal, people may take advantage and if it is strict people may not feel comfortable. The governments are of different types and do not work in the someway. Various governments have various forms, and their functions are different. The different types of governments are discussed here.

Anarchy

This type of government was originated in Greece, and it means no rule. If there is anarchy in a state, it means that there are no rules and no laws. This is a theory in which people have to do nothing with any government. They can make a society in which each person can act freely according to his will. Anything will not be controlled in this type of government.

Democracy

Democracy also originated in Ancient Greece. It means the rule of the people. Now, this term is used in a political system in which governments are made by the people, or their representatives have the option of governing the country themselves. In this case, people have the right of taking decisions that may have a positive effect in their lives.

Monarchy

 It is a type of government in which a king rules a country and his successors are his sons or daughters. The ruler is called a monarch. The tenure of the king is for a lifetime, and he has varying powers, which are regulated with the help of the constitution. The ruler has unlimited powers and him males such laws that help to protect the rights of citizens.

Tyranny

This kind of rule originated in Latin, where the ruler is cruel and tyrant. The government of an absolute ruler rules the citizen of his country. Citizens have no right to question the government. Such type of rule results in violence.

Republic

This is a type of government in which citizens are the voters, and they have to elect a representative. Such kind of government is the opposite of monarchy and dictatorship government. People tell their problems to the representative who takes it to the government. If possible, the government makes a rule, which is passed through various houses for approval. If the law is approved, it has to be enforced.

Totalitarian

This is a government system in which there is a single political authority who has full control of the state or the country. This is a dictatorial type of government. Everything is under the power of the legislative influence.

Oligarchy

This term has its roots from Greek, and it means rules of the few. It is a type of government in which power is in the hands of a family or faction of persons. A ruling group is formed by the people, and the group consists of rich and powerful people. The power of these people is transferred from one generation to the next.

Federation

It is a governmental system, which consists of a union of small states, groups, or parties. These states are self-governed but are united under a central government. The power is divided among the rules and the primary governing body. Such type of government has a constitutional structure, and the country and the central governments follow the constitution.

Theocracy

This is a type of government in which the state is ruled by priests in the name of God. Those persons can also be the rulers who are termed as divinely guided and are consistent with the doctrines of a particular religion.

Wrapping Up

These are different types of government that rule different countries. They have their systems of the ruling, and no other nation has the right to interfere with the decision of society.

Financial statements and their types

Financial statements are made to record all kinds of transaction that are going on in an organization. These statements let the organization know its position and also it’s business performance. There are various authorities that audit these statements, and these include government agencies, accountants, forms, and many others. Auditing is done to pay tax, ask investors to finance, and the like. There are three main types of financial statements, which include

  • Balance sheet
  • Income statement
  • Cash follows account

How to use information in the financial statements

The economic data is used by investors and financial analysts. They use this data to find the performance of the company. This data helps them to predict future performance and stock price. Annual reports of the company are the primary sources of all the financial statements. Let us know about each financial statement.

Balance Sheet

The balance sheet is a statement in which the details of assets, liabilities, and stockholders equities are recorded. The date mentioned on the report lets the people le know the time of the fiscal year in which the announcement was made. The steps below will show how the data in the balance sheet is calculated.

  • Get the details of all the assets and total them.
  • Get the liabilities of the company and total them.
  • Get the shareholders’ equity and total them.
  • The number of assets must be equal to the addition of the amount of liabilities and shareholders’ equity.

The items included in the balance sheet are as follows

Assets

  • Cash, Liquid assets, treasury bills
  • Account receivables which consist of the money that customers have to pay to the company
  • Inventory

Liabilities

  • Debts
  • Rent, utilities, taxes
  • Wages and dividends payable

Shareholders’ equity

The subtraction of assets and liability equals shareholders’ equity.

Income Statements

Income statements are created for a range of time, which can be quarterly, half-yearly, or yearly. The details in these statements include income, expenses, and earnings per share. Records included in the comments are as follows

Types of revenues

This includes operating and non-operating taxes.  Products and services sales are used to calculate operating revenues. Non-core business activities help in earning non-operating revenues. Such charges include interest, rental income, income through advertisements, etc.

Types of expenses

Primary and secondary costs are two kinds of costs. When revenue is earned from a primary activity, the expenses incurred are called primary expenditure. Secondary activities like loan payment, losses due to asset sale leads to secondary expenses.

Benefits of income statements

Income statements show whether profit has been increased or not. It also shows the reduction in costs in the current financial year.

Cash flow statement

The cash flow statement is a record that lets an organization know the amount of cash generation to pay the debt. This statement also tells about the funds needed for the organization’s expenses and investments. Data of balance sheets and income statements are used to make cash flow statements. Investors use these statements to know about the current operations of the company, along with the prediction of its future.

Wrapping Up

These are the statements, which a company requires so that it can run smoothly. All these financial statements help the company to reduce its costs and increase income and profits. These statements are used by various authorities to check the operations of the company. The reports can be made for a fixed period, which can be quarterly, half-yearly, or yearly. All these statements made for each period will make the organization and its employees successful.

Budget types and benefits

Every organization makes budgets to know about the present income and expenses and the ways to increase the revenue and reduce the expenses in the future.  Budgets help the companies to control their costs and increase their profit. So let us know what budgeting is.

Budget

A budget is a plan in which expected revenue and expenses of the company are calculated for the future. It can also be said that the budget refers to different types of financial statements made for a certain period to plan future revenue and expenses. There is a separate department in every organization known as the finance department that has the duty of making different types of financial statements and budget. The budget is prepared after having a consultation with the top management.

Financial and budget planning concept with calculator notebook and financial chart report on work desk

The preparation of budget helps in planning and developing the projects along with their testing and implementation. Various other things are planned based on the budget. The management can make easy decisions regarding the project and plan which projects should be promoted, put on hold, or close.

The type of budget made byte companies depend upon the factor of whether the company is a startup or a mature one. The startup companies adopt incrementally or zero budgeting, whereas the mature ones take bas budgeting or kaizen budgeting.

Types of Budgets

Companies depend on different kinds of budgets, and these types are discussed here.

Incremental budgeting

This type of budgeting is termed as the traditional style of budgeting in which budget f the current period is used. After that, additional amounts are added to the budget. In this way, a new budget is ready for a further period. In this type of budgeting, first, the expenses and income are taken from the previous budget. These amounts are then adjusted according to the inflation, market growth, and other factors as suggested by the management.

Zero Based Budgeting

In this type of budgeting, all the numbers are set to zero again, and a new budget is made for the products. To give a unique name to every product, justification is needed. This budget helps the management in avoiding such unnecessary expenses. Since the base of the budget is zero, so management can play from the starting about the costs of each item and save costs.

Base Budgeting

This budget is prepared to know how much expenses are needed for survival. If there is any incremental expense, it has to be justified so that management is benefitted from the budget. The companies who do not have enough money to operate and survive make this kind of budget. The unnecessary expenses are cut. Some of these expenses include training, picnic, celebrations, and many others.

Activity-Based Budgeting

This type of business is prepared for various kinds of costs that can be generated for the company. The budget also helps in reducing the values from the current level. Usually, organizations that have years of experience make this budget.  Making this budget is a tedious process as the cost of every activity has to be included in the budget. Such a budget helps an organization to reduce cost.

Kaizen Budgeting

The meaning of Kaizen is continuous improvement, and the budget is made to increase revenue and decrease costs. This budget is made to improve the working environment and practices, along with increasing the efficiency of the employees.

Wrapping up

These are various types of budgets that are made in small and big organizations. The budget helps the management to decrease the costs and increase profits. This helps in the survival of the business as well as improvement in the efficiency of the employees.

Shares and its types

Companies always need funds to carry out their operations, and that is the reason they issue stock in the form of dividends. People who purchase the shares get some ownership in the company. The shareholders get a certain amount of rights. There are many types of stocks provided by the companies, and people even get a share in their profits. These shares are called dividends whose payment is made at regular intervals every year. Shares are provided to the people by a public limited company.

Public Limited Company

A public limited company is a company that has the rights to offer shares and has limited liability. The shares of the companies can be purchased by anybody. The types of shares that the companies provide are as follows:

Ordinary shares

These types of stocks are most common and are issued by the public limited companies. These shares can be divided into two different forms like A and B all of them are available at different prices. If voting is needed for a specific corporate policy, the buyers of this share have the right to vote in favor o against it. These shareholders also have the right to become a member of the board of directors. This is the reason that the shares are also known as voting shares. Shareholders have the right to give one vote per share. Besides voting, no other rights are provided to the people who purchase ordinary shares. In case the company who has provided the ordinary shares goes bankrupt, the ordinary shareholders get their payments after all other types of shareholders have been paid.

Cumulative Preference Shares

The people who purchase this type of shares get their payment before the ordinary shareholders are paid.  The payment can be made early or late, but these shareholders get their cash for sure. If there is any due amount related to these shares that are also paid

Preference Shares

People who purchase this type of stock get their dividends before other types of shareholders. The rate of dividends is fixed. In this case, these shareholders get the same standard of bonus even if the profits of the company rise. People who purchase these shares do not have any voting right, nor do they have any share in the company’s success.

Redeemable Shares

People can purchase these shares, but in this case, the companies also have the right to repurchase the shares. The companies repurchase these shares either after a certain period or on a given date. The company fixes these dates. There are many variations in these shares, and either the shareholder or the company have the option of exercising the company buyback provision.

Non-Voting

These shares have the same value as that of the ordinary share, but people who purchase these shares do not have voting rights. These shareholders also do not have the right to attend any general meeting held by the company.  Usually, employees of a company can purchase this type of shares and dividends are given to them. The shares are typically purchased to benefit the company and employees from tax. The families of the upper management also have the right to acquire these shares.

Bearer Shares

These shares are available in the form of warrants, which are legal documents in which the shareholder can hold the shares in the way of order. Vouchers are available with these warrants, and the shareholders can claim for any payment if it is due.

Wrapping Up

These are various types of shares, which the people can buy and get the benefits of having stock in the company’s profit and the right to vote.