Monday, 7 September 2026

Accounting: Meaning, Difference Between Book-Keeping and Accounting, and Objectives

Q. Define Accounting. How is it different from Book-Keeping? Explain the objectives of Accounting. 

Ans. Definition of accounting: According to American Institute of Certified Public Accountants (A.I.C.P.A.), “Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part atleast, of a financial character, and interpreting the results thereof.”

Distinction between Book-Keeping and Accounting

Book-Keeping differs from Accounting in the following respects :
Sr. No. Basis Book-Keeping Accounting
1. Scope Book-Keeping includes :
(a) Identifying the transactions of financial nature;
(b) Measuring the identified transactions in terms of money;
(c) Recording the measured transactions, and
(d) Classifying them into ledger.
Accounting in addition to book-keeping includes:
(i) Summarizing the classified transactions;
(ii) Analysing and interpreting the summarised results; and
(iii) Communicating the results to parties interested in them.
2. Stage  Book-Keeping is primary stage. It is the secondary stage. Accounting starts where Book-Keeping ends.
3. Objective The main objective is of Book-Keeping is to maintain systematic records of transactions of financial nature. Its main objective is to ascertain the net results and financial position of the business and to communicate them to interested parties.
4. Nature of Job  The Book-keeping function is routine and clarical in nature. The Accounting function is analytical in nature.
5. Who Performs The Book-Keeping function is performed by junior staff. The Accounting function is performed by senior staff.
6. Knowledge Level It can be performed by person having limited level of knowledge. It is performed by persons having higher level of knowledge than that of Book-keeper.
7. Analytical Skill The Book-keeper is not required to possess analytical skill.   The Accountant is required to possess analytical skill.
8. Personal Judgement  In all enterprises transactions are recorded according to the principles of accountancy and personal judgement of the book-keeper is not required.  Methods of analysing, interpretation and reporting may differ in various enterprises. Hence, personal judgment of the accountant is essential.
9. Supervision and Checking Book-keeper cannot supervise and check the work of an accountant.  Accountant supervises and checks the work of a book-keeper.
10. Information for Managerial Decisions It does not provide any information for taking manerial decisions. It provides information for taking managerial decisions.

Objectives of Accounting: The following are the main objectives of accounting :—

(1) Maintenence of systematic record of business transactions: The main objective of accounting is to maintain complete record of business transactions according to specified rules. Complete record of business transactions helps to avoid the possibility of ommission and fraud. For this purpose, all the business transactions are first of all recorded in Journal and Subsidiary books and then posted into ledger.

(2) Calculation of profit or loss: The second main objective of accounting is to ascertain the net profit earned or loss suffered on account of business transactions during a particular period. For this purpose Trading and Profit & Loss Account of the business is prepared at the end of each accounting period. All the items relating to purchases, sales, expenses and revenues (incomes) of the business are recorded in Trading and Profit &Loss Account. If the amount of revenue exceeds the expenditure incurred in earning that revenue, there is said to be profit. In case the expenditure exceeds the revenue, there is said to be loss. In addition, a businessman is able to get the following information by preparing a trading and profit & loss account:—
I. How much goods have been purchased during a particular period?
II. How much goods have been sold during a particular period.
III. How much goods have remained unsold and what is its value.
IV. How much amount has been spent on various heads of expenditure and how much amount has been earned by various heads of revenues. 
By attaining these informations a businessman can keep effective control on expenditure.

(3) Depiction of financial position of the business: For a businessman, merely ascertaining profit or loss of the business is not sufficient. The businessman must also know the financial health of the business. For this purpose, after preparing the Profit & Loss Account, a statement called ‘Balance Sheet’ is prepared which shows the assets and their values on the one hand and the liabilities and capital on the other hand. A Balance Sheet is actually a screen picture of the financial position of the business. At one glance, one would know the following by looking at the Balance Sheet :—
I. How much the business has to recover from debtors.
II. How much the business has to pay to creditors.
III. How much the business has in the form of (a) Cash in hand (b) Cash at Bank (c) Closing Stock, and (d) Fixed Assets.

(4) To portray the liquidity position: Another objective of accounting is to provide information about how an enterprise obtains and spends cash. For this purpose it prepares a cash flow statement depicting inflows and outflows of cash from operating, investing and financing activities. 

(5) To file Tax returns: One of the main objectives of accounting is to provide bases for filing tax returns relating to income tax, sales tax, value added tax, service tax, excise duty, etc.

(6) Communicating accounting information to various users: Another main objective of accounting is to communicate the accounting information to various interested parties like owners, investors, creditors, banks, employees and government authorities etc. The information helps them in taking sound and judicious decisions about the business entity.

Sunday, 6 September 2026

Cost Accounting: Branch of Financial Accounting and Key to Valuable Information

 Q. “Cost accounting is the branch of Financial Accounting and it has been evolved to do away the limitations of financial accounting and to meet the needs of the management.” Comment.


OR

“The ordinary trading account is a locked storehouse of most valuable information to which a cost system is the key.” Do you agree? Substantiate.


VK
[Ans. The cost Accounting need arouse because of the limitations of financial accounting. As the results of the financial accounts are provided for the whole organisation and that too after the end of the year (which means these results are nothing but the post-mortem of the dead body) and hence these are of very little use to the management in planning and control and decision-making under various conditions. These limitations can be explained as follows:

1. Financial Accounts show only the net results of the business: As we know that financial accounts (i.e. trading account, profit and loss account and baĺance sheet) are prepared at the end of the year and for the whole of the organisation and not the cost or profits of each product or cost centre or cost unit or process or job or batch etc, and hence financial accounts fail to provide day to day information regarding cost of product.

2. Financial Accounts do not make any difference between direct cost and indirect cost: As financial accounts fail to create any difference in direct and indirect expenses for the product, controllable or uncontrollable expenses or variable and non‐variable expenses so financial accounts fail to help in taking effective decision making under crucial circumstances like depression, low demand, competition or make or buy decisions etc.

3. Financial Accounts fail to reveal the weak points of the business: If an organisation is producing different products then it is difficult to analyse which product is profitable or not-profitable and why so? Whether a product, process or centre is running into losses or profit, this information is not revealed. 

4. Financial Accounts fail to help in fixation of selling price of a product: As the total cost incurred during the period dividend by total output is the only system of calculating cost of production per unit and that too at the end of the period thus it fails to help in fixation of selling price of the product specifically on the different stages of production of goods and under the various circumstances of business.

5. Financial Accounts fail to provide control on material, labour and other expenses: In financial accounts, the control on cash movement gets very heavy attention in comparison to the material, labour, and other expenses. While the losses of these elements result into increase in cost of production and thus more selling price, resulting into the failure to face competition and thus ultimately paading away from market of the business.

6. Financial Accounts lack to reveal operating efficiency or inefficiency: There is no system which can explain whether the organisation is running efficiently or not. The only judgement is through increase in profits or decrease in profits. But the increase in profits if takes place through controlling the cost of production or through controlling waste of material or wastage of time or by higher productivity of the labour that is what will be having positive effect on the working of the organisation and in that lies the real efficiency and improvement of the organisation. This can be revealed by cost accounting.

7. Financial accounts fail to provide comparison for cost of products: As financial accounts record the transition after the transiction takes place so cost of production cannot be compared with the expected cost or cost of different periods, different jobs, different departments or operations. Without comparison it is difficult to analyse whether the cost are rising or falling and the reasons responsible for this change. Efficiency of a department or of an organisation can be judged by comparison only.

8. Financial Accounts lack in performance appraisal of the organisation: There is no system in financial accounting which can help to judge the various alternatives to improve the performance and working of the different departments, products, markets or methods of production. Thus, the profitability of various alternatives may not be analysed and the organisation may fail to maximise the profits in the available circumstances.

9. Financial Accounts fail to analyse the losses: If during the period there are losses in the undertaking then there is no provision or system to analyse why the losses have taken place and if any reason is assigned then in future it may not be possible to control the same. But cost accounts can help to establish the reason of losses by applying management by exception and responsibility accounting. 

10. Financial Accounts fail to keep proper records regarding use of machinery: There is no system in financial accounts which the records of the working hours of the machinery and other factors of production, record regarding idle time and reasons of idle time are kept. Scrap, wastage of material or records, defective and spoiled outputs are not recorded and hence results into wastage of working machine hours.

11. Financial Accounts fail to reveal profits product wise: Which department, cost centre, process is more profitable or less profitable or unprofitable, also this information is not revealed by financial accounts and hence if any of the products or processes is running into loss then it is reducing the overall profits of the whole organisation.

12. Financial Accounts fail in helping decision making:  The management has to take the various critical and strategic decisions in the interest of the organization like, make or buy, product mix, change in method of production, change in selling price, change in quality of product and change in material used etc. These all\nAre critical decisions which affect the whole of the organisation’s working and functioning. There must be some system in the accounts on which the management may depend while taking these critical and strategic decisions.]

Thus, we can say that cost accounting has overcome the limitations of financial accounting with the help of techniques like budgeting, marginal costing, standard costing, etc. 

OR

(SBP) L.W. Hawkins has rightly said, “The ordinary trading account is a locked storehouse of most valuable information to which a cost system is the key.” It means that a number of valuable information exist in trading account but they can be understood and analysed in a useful manner only with the help of cost system. 

Limitations of Financial Accounting OR Need for Cost Accounting: Financial Accounting is considered as the oldest system of accounting. This accounting system is regarded as historical in nature and provides post-mortem of past records. It suffers with various limitations which led to the development of cost accounting. The following are the limitations or deficiencies of financial accounting:

1. Lack of details of materials: Financial accounting failed to provide information about the value and quantity of direct and indirect material used in various jobs, activities or departments the cost and quality of normal and abnormal loss of material, scrap or spoilage of material during the manufacturing process, the share of material cost in the total cost of product or job, etc

2. Lack of Analysis of Labour Cost: Financial accounting only discloses the total amount of wages paid during the year. It fails to provide information as regards to wages paid for specific jobs, activities, department or product. Further, it does not provide information as regard to direct and indirect wages, wages for idle time, over-time, cost for inefficiencies of labour, methods of remunerating labour. etc.

Financial Accounting is silent as regard to number of workers engaged in production and other activities, number of workers engaged on various jobs or departments, number of hours devoted by workers, rate of wages. It also does not provide information whether the increase in number of workers or increase in wage rate has led to corresponding increase in production or output or not.

3. Lack of Classification and Analysis of Overheads: One of the limitation of financial accounting is that it does not provide information as regards to expenses on various overheads department-wise, product-wise or activity-wise. Financial accounting even fails to provide information as regard to expenses on overheads nature-wise viz., variable overheads, semi-varible overheads and fixed overheads for the department, product, job or activity. These overheads are not expressed in financial statements into controllable or non-controllable overheads, basis of apportionment of overheads etc.

4. Lack of Details of Costs and its Elements: Financial accounting lacks in providing information as regards to ascertainment of cost of various products, jobs, activities or services rendered. It fails to provide direct and indirect cost incurred on various activities, cost at various stages of production. It also does not take into account and provide various costs, which are helpful in taking managerial decisions such as opportunity cost or imputed cost, etc.

5. Lack of Complete Information of Costs: Information available from financial statements are considered to be inadequate and meaningless for the purpose of cost control because financial accounting does not record the cost data as required for the purpose of application of various cost control techniques viz., budgetary control or for standard costing. These techniques require information of actual or budgeted cost as regard to each element of cost viz., material, labour and overheads but in quantitative terms and monetary terms for the purpose of comparison of results. Financial accounting system has no provision of laying down standards in regards to material, labour or overheads in order to make actual costs comparable.

6. Difficulty in Fixation of Selling Price: As financial accounting does not ascertain cost of products or activities, hence fixation of selling price of product or activities becomes rather difficult especially in changing market conditions. Various managerial decisions require information as regard to cost and selling price viz., determination of BEP sales, quoting of tender prices, to accept or reject the special offer, fixation of minimum price, fixation of selling price while launching a new product. These decision-making becomes difficult from information provided by financial accounting. 

7. Lack of Details of Working of Machines: Financial accounting fails to provide the number of hours worked by a machine and the number of hours it remained idle. No record is kept of the hours worked by different machines in the manufacture of a product or the completion of a job. No proper check is applied to reduce wastage of time and materials occurring at the machines.

8. No Details of Production: In financial accounting, no proper system is adopted to control under-production or over-production. Daily/Montly/Weekly production charts are not prepared and compared with previous periods and budgets. 

9. Difficulty in analysing Profitable and Non-Profitable Activities: The financial accounting discloses the overall profit of the concern as a whole. It does not help in analysing the profitable and non-profitable activities, contribution made to profit by each department separately. Suppose, the profit for a year as disclosed by financial books is ₹70,000 but if we analyse this profit department wise, the following position is revealed.
Dept. A   +75000 (profit)
Dept. B    - 50000 (loss)
Dept. C    +25000 (profit)

Total       + 70000 (profit)

Now on analysis, the management can either plan to close down Dept. B or to improve its working. This analysis can be done with the help of cost accounting. 

10. Limitation in Analysing Efficiency: The efficiency of a department and persons involved can be judged by quantity produced, the quality of products, costs incurred and time saved. Due to lack of proper data, financial accounting does not help in rewarding the efficiency and punishing the inefficiency. The causes of inefficiency cannot be analysed and efficiency improved upon. 

11. Lack of Data required for Decision-making: The management has to take crucial decisions at times on several matters, such as, product selling, make or buy, plant installation, closure of departments, product mix, etc. These decisions can be taken on the basis of relevant and adequate data which financial accounting fails to provide in the systematic manner. 

It is worth mentioning to quote G.R. Glover and R.C. Williams that “The existence of an accurate system of financial accounts will reveal the general position of a business, but it will not furnish the special detailed information that is derived from an efficient costing system information that is necessary for the internal control and management of a business.”

Hawkins statement can be explained the help of following example.

A company manufactures and sells three products ‘A’, ‘B’ and ‘C’. The Trading and Profit and Loss Account of the company is as follows:


Trading and Profit and Loss Account shows the net profit of the company but the details of various products are locked in this account, which have been opened with the help of the key of the cost account. 

Thus, we can say that cost system is an important key for analysis of profit, reduction of cost and increase in efficiency. It has been rightly stated that “Cost accounts are key to economy in manufacture and are indispensable for the intelligent and economical management of a factory.” The key of cost accounting does help in providing the following information:
1. Separate cost of materials for each product or process.
2. Details of normal and abnormal wastage of material.
3. Separate cost of labour for each product or process.
4. Separate calculation of gross profit for each product and service. 
5. Separate calculation of net profit for each product or service. 
6. Total cost and per unit cost of each product.
7. Detailed analysis of various elements of cost for the calculation of tender price.
8. Information of relative efficiency of plants, machinery, labour and various departments.

Monday, 31 August 2026

Information Technology in Retailing: Types Used by Retailers

 Q. What is information technology? Describe in detail the types of information technology being used by retailers now-a-days. 

Ans. Meaning of Information technology: The Information technology means the use of tools such as computers and telecommunications for sending, receiving and retrieving information. 

In the words of Information Technology Association of America, “Information technology is the study, design, development, implementation, support or management of computer based information systems, particularly software application and computer hardware.”

Types of Information Technology used by retailers are as follows:

1. Computers: Today almost every retailer uses the computers. They use computers to make accounting entries, to store the data about the inventory, data about the customers, etc. Also all the records of the sales, the mode of payments by the customers, etc. are stored in the computers. 

2. Biometric System: Biometric system makes use of sophisticated technology which identifies special human characteristics such as finger prints, retina and iris, face recognition, size and shape of hand, etc. All these characteristics are specific to each individual and hence are very authentic proof of somebody’s identity. By using biometrics, the retailers have been able to reduce the credit card losses, etc. Hence it has increased customer’s confidence. Also, retailers are using biometric systems in order to record the entry and extra time of their employees. This has proved to be extremely useful as it has improved the attendance of the workforce and has also reduced so many frauds committed in the name of others.

3. Wireless Technology: By using wireless technology, the retailers are able to monitor the in-store operations very effectively. The retailers can have the knowledge about any area of the retail store. An effective medium by which the retailer can communicate with anybody around the store is walkie talkie. 

4. Integrated Electronic Security Management Solution: These types of systems are being increasingly used by the retailers these days. It includes the use of camera surveilliance popularly known as Close Circuit Television Cameras (CCTV cameras) in and around the retail store to notice the activities taking place. It also involves creating a video recording of both inside and outside of the store. There is an immediate accessibility to these recorded videos in order to use them at any time in future such as for evidences, investigations, etc. Also included in this is the remote viewing of the retailer’s shop. By using this feature, the retailer can view his shop live from any corner around the world by using internet. Also , there is a system of alarms set. The alarm will automatically ring and an e-mail will be sent to the retailer on the happening of a pre-defined event. For example, if the retailer has fed in the system that on someone trying to open the lock of the retail outlet illegitimately, then the alarm should ring. If someone tries to open the outlet illegitimately, the alarm will ring an e-mail will be automatically sent to the retailer. This system has proved to be extremely useful for the retailer against any possible thefts or shoplifting, etc. 

5. Database Management, Data Warehousing and Data Mining: These systems are used to organize retrieve stored and manage the data about the customers. All this data is stored in the database. Managing this data is known as database management. Data warehousing and data mining are the elements of database management.

Data warehouse is just like a simple warehouse. Just as a simple warehouse is used to store the goods, data warehouse is used to store the data regarding the customers. When the sales clerk swipes the customers loyalty card, all the information regarding the customer, his age, sizes, preferences, previous purchases, mode of payments, etc. appear and this information can be used to find customer’s loyalty to analyze the demand. 

Data mining means extracting the data about the customers for specific uses. This data is generally used for customer relationship management purposes. The data can be used to identify specific market segments, analyzing the customer’s behaviour and therefore is helpful in defining specific sales promotion campaigns for the target markets.

6. Bar Code Technology: This is a very common technology that is used by the retailers. Every product is assigned a unique bar code. Typically a bar code is a symbol consisting of many bars with some specific distance between them. A bar code contains information about the country code, the company code, the product code, the check digit, etc. When the bill is made, these bar codes are read by the bar code scanners and the details of the product are automatically loaded in the computer. This is very effective technology that helps in saving time while billing. Also if any article goes missing in the barcode series, it becomes easy to know the product details as all the information is already loaded in the computer. Also, bar codes are useful in stock taking and therefore any inventory shrinkages can be known.

7. Radio Frequency Identification (RFID): RFID is a technology that is increasingly being used by the retailers these days. It is replacing the barcode technology. RFID includes retrieving and storing information from the tag attached to the products through frequency modulated radio waves transmission. RFID technology helps in tracking the goods anywhere in the world as long as the RFID reader is within the range. This is an extremely useful technology and if used properly can help in tracking even the stolen products. But sometimes this technology is viewed as a disadvantage because it may sometimes be viewed as interference in individual’s privacy and can be used to track the movements of the customer inside and outside the store. 

8. Electronic Article Surveilliance: The electronic article surveilliance is another form of technology that is being used by the retailers. Under this technology, all the articles are attached with specific tags. When customer buys the articles, these tags are removed properly by the sales clerks. But if the articles are stolen by somebody and the price to move out of the store with the same, the alarms rings at the exist of the store and therefore the retailer is alarmed about the shoplifting. Also, various articles of the inventory can be tracked by using this electronic article surveilliance. All these have helped the retailer being prevented from the threat of goods being shoplifted. 

Sunday, 30 August 2026

Methods of Collecting Primary Data: Merits and Demerits

 Q. Explain the different methods of collecting primary data along with merits and demerits of each. 

Ans. Primary data are those which are collected by a researcher for the purpose of a specific study. Such data are original in character and are generated by survey conducted by individuals or research institutions or any organisation For example, if any researcher conducts a survey on the manufacturing industries operating in a particular area, then he will be collecting data from the industry operating in a particular area. Such data are called primary data. 

METHODS OF COLLECTING PRIMARY DATA:– The primary data may be collected by using any of the following methods:

1. Survey Method: In survey method, the data are collected by asking questions from respondents directly to get desired information. This is done by personal interview, telephone interview, mail questionnaire, schedule through enumerators. Survey method include 

I. Interview Method: Interviewing is one of the major methods of data collection. It may be defined as two ways systematic conversation between an investigator and an informant, initiated for obtaining information relevant to as a specific study. It involves not only conversation, but also learning from the respondent’s gestures, facial expressions and pauses, and his environment. Interviewing requires face-to-face contact or contact over telephone and calls for interviewing skills. It is done by using a structured schedule or an unstructured guide. Interview is often superior to other data collecting methods. People are usually more willing to talk than to write. Once rapport is established, even confidential information may be obtained. 

Types of Interviewing Method: The interviewing method may be classified into two types: 

1. Personal Interview: In a personal interview, the flow of information as multi-dimimensional. This method is suitable for intensive investigation. Under this method, person is interviewed and close personsl contact between the interviewer and the interviewee is established. There are various types of personal interview such as:

(i) Structured or Directive Interview: Structured interviews are those conducted when it is known in the beginning what information is needed. The interviewer has a list of predetermined questions to be asked to the respondents. The same questions will be asked to everybody in the same manner.

(ii) Unstructured or Non-directive interview: An unstructured interview is an interview in which questions are not pre-arranged, allowing for spontenity and four questions to develop during the course of the interview. It is the sort of discussion with the respondents. It allows the interviewer to build better rapport with the respondents.

(iii) In-depth interview: It is conducted usually on one to one basis. In-depth interview is undertaken with an individual.  It is designed to reveal the underlying motives of the respondent’s attitude, behaviour and perceptions.

(iv) Focus group interviews: It is undertaken with the group of people. In a focus group interview we explore the perceptions, experiences and understanding of a group of people who have some experience in common with regard to our situation. 

(v) Panel Interview: A panel interview may be composed of either individuals or corporate units. It is convenient method of obtaining information about the continuing behaviour of a group or a panel of respondents. 

(vi) Clinical Interview: In clinical interview, the researcher will have some pre prepared questions but will ask spontaneous ones as well. It is concerned with broad underlying feeling or with the course of individual’s life experience. 

2. Telephone Interview: In telephone interview, the information is collected from the respondent by asking the questions on phone. Telephonic interviews are best suited when information from a large number of respondents spread over a wide geographical area is to be obtained quickly and the likely duration of each interview is, say ten minutes or less.

Advantages of Interview Method: 
(i) It is very good technique for getting the information about the complex subjects.
(ii) It can be easily adapted to the ability of the person being interviewed.
(iii) it yields a good percentage of returns.
(iv) It yields perfect sample of the general population.
(v) Data collected by this method is likely to be more correct compared to the other methods. 

Disadvantages of Interview Method:
(i) It is a time consuming process.
(ii) It involves high cost.
(iii) It requires highly skilled interviewer.
(iv) It requires more energy.
(v) It may sometimes involve systematic errors.
(vi) It is more confusing and a very complicated method.

II. Questionnaire Method: Under this method, data are collected through a set of questionnaire. A questionnaire is a document prepared by the investigator containing a set of questions. These questions relate to the problem of enquiry directly or indirectly. Here first, the questionnaires are mailed to the informants with the formal request to answer the questions and send them back. For better response the investigator should bear the postal charges. The questionnaire show decary , a polite note explaining the aims and objectives of the enquiry, definition of various terms and concepts used there. Beside this, the investigator should ensure the secrecy of the information as well as the name of the informants, if required. Success of this method greatly depends upon the way in which the questionnaire is drafted. Show the investigator must be very careful while framing the questions. The questions should be: (i) Short and clear (ii) Few in number (iii) Simple and intelligible (iv) there should be provision for close check (v) impersonal, non-aggressive type (vi) Simple alternative, multiple-choice or open-end type. Questionnaire method is more suited when the area of the study is very wide and when the informants are educated. 

Advantages of Questionnaire Method:
(i) This method is economical in terms of time, money and efforts involved.
(ii) This method is original and therefore very reliable. This is because the information is supplied by the concerned persons themselves.
(iii) This method can cover wider areas.

Disadvantages of Questionnaire Method:
(i) Generally, the informance do not take in filing the questionnaires and fail to return the questionnaires. Those who return, often send incomplete answers.
(ii) This method lacks flexibility in the sense that when questions are not properly replied, these cannot be changed to obtain the required information.
(iii) This method has limited use as questionnaire are answered only by the educated informants. Thus, this method cannot be used when the informants are uneducated.
(iv) If the informants are biased, the informations will also be biased.
(v) The conclusions based on such investigation have only limited accuracy. This is because some questions may be difficult and accurate answers may not be possible.

III. Schedule Method: In case the informants are largely uneducated, data cannot be collected by the mailed questionnaire method. In such cases, schedule method is used to collect data. Here, the questionnaires are sent through the enumerators to collect information. Enumerators are persons appointed by the investigator for the purpose. They directly meet the informants with the questionnaire. They explain the scope and objective of the inquiry to the informments and solicit (obtain) their cooperation. The enumerators ask the questions to the informants and record their answers in the questionnaire and compile them. The success of this method depends on the sincerity and efficiency of the enumerators. So, the enumerators should be sweet-tempered, good-natured, trained and well-behaved. This Method is mostly used when field of investigation is large and the investigators are well versed in the local language.

Advantages of Schedule Method: 
(i) This method is capable of wider coverage in terms of the area involved. Even illiterates will also provide information.
(ii) There is the fair degree of accuracy in the results. This is because investigations are done by specialised enumerators.
(iii) Unlike in the case of mailing questionnaire, there is personal contact with the informants in this method.  According, accurate and right answers are obtained.
(iv) This method is impartial. This is because the enumerators themselves do not need the required information, so they are impartial to the nature of information they obtain.
(v) Schedules have the merits of completeness,  because these are filled in by the enumerators themselves. 

Disadvantages of Schedule Method:
(i) This is very expensive method of investigation because the involvement of faint investigators.
(ii) Competent enumerators may not be available. Accuracy of the information accordingly suffers.
(iii) Enumerators may need specialized training for particular investigators. The process of investigation thus becomes time consuming.
(iv) Since this method is very expensive, it is generally not suitable for private investigations. This method is generally used by the Government institutions.
(v) If the enumerators are bised, the data will not be accurate. 

2. Observation Method: Observation means viewing or seeing, hearing and perceiving as well. Under observation method, the researchers do not interact with the respondents, but simply observations are made and recorded with accuracy. This method is considered more suitable in certain situations like consumer’s behaviour. For example, instead of ask asking which brand of the product is preferred, the research may observe which brand people are being used most. Observations can be made manually or mechanically. While using this method , the researcher should keep in mind things like: What should be observed? How the observation should be recorded or how the accuracy of observation can be ensured?

Types of Observation Method: There can be a number of methods to observe a particular event or action. The\nObservation method can be:

(i) Participant – Non-Participant Observation: If the observer observes by making himself as a member of the group he is observing, so that he can experience what the members of the group experience, the observation is called as the participant observation. But if the observer observes silently without any attempt on his part to experience through participation what other feels, the observation of this type is termed as non participant. 

(ii) Disguised – Undisguised Observation: This is also referred to as indirect – direct observation. When the people being observed are not aware of the fact that they are under observation, the method is disguised or indirect observation. The researcher does not mix up with the group under this mode of observation and record the activities of the group silently. In the undisguised observation, the observer tells the group about his purpose and question the members whatever feels necessary by mixing up with the group directly.

(iii) Controlled – Uncontrolled Observation: If the observation takes place in natural setting, it may be termed as uncontrolled observation but when observation take place according to definite pre-arranged planned involving experimental procedures, the same is then termed as controlled observation. In uncontrolled observation, no attempt is made to used precision instruments whereas in controlled observation, we use precision instruments. 

(iv) Human – Mechanical Observation: Some observation are made by technically trained persons while mechanical observation is the result of mechanical devices (or tools). Various mechanical devices (or tools) such as psycho-galvanometer, electronic digital camera, audio meter and eye camera may be used for observing the actions or response of the people. Videos other mechanical devices such as tape-recorders, VCR, CCTV camera can also be used while making the observation in research. 

(v) Structured – Unstructured Observation: If the researcher is clear in his mind as to what he is to observe, it may be termed as structured observation. But when the observer is free to observe whatever comes to him without any clarity of the subject, it is termed as unstructured observation. Such observation not free from biased. 

Advantages of Observation Method 
(i) It is less costlier than survey method.
(ii) This method is independent of respondent’s willingness to respond.
(iii) This method is particularly suitable in studies which deal with subjects (i.e., respondents) who are not capable giving verbal records to their feelings for one reason or the other.

Disadvantages of Observation Method 
(i) It gives information only on ‘What’ but not why?
(ii) Unforeseen factors may interfere with the observational task. 
(iii) Sometimes observation suffers from biased considerations.

Accounting: Meaning, Difference Between Book-Keeping and Accounting, and Objectives

Q. Define Accounting. How is it different from Book-Keeping? Explain the objectives of Accounting.  Ans. Definition of accounting : Accordin...