27 December 2017

History and how concept of accounting developed?

December 27, 2017

History and how concept of accounting developed?

Accounting has a remarkable heritage. The history of accounting is as old as civilization. The seeds of accounting were most likely first sown in Babylonia and Egypt around 4000 B.C. who recorded transactions of payment of wages and taxes on clay tablets.

Historical evidences reveal that Egyptians used some form of accounting for their treasuries where gold and other valuables were kept. The incharge of treasuries had to send day wise reports to their superiors known as Wazirs (the prime minister) and from there month wise reports were sent to kings. Babylonia, known as the city of commerce, used accounting for business to uncover losses taken place due to frauds and lack of efficiency.

In Greece, accounting was used for apportioning the revenues received among treasuries, maintaining total receipts, total payments and balance of government financial transactions. Romans used memorandum or daybook where in receipts and payments were recorded and wherefrom they were posted to ledgers on monthly basis. (700 B.C to 400 A.D).

China used sophisticated form of government accounting as early as 2000 B.C. Accounting practices in India could be traced back to a period when twenty three centuries ago, Kautilya, a minister in Chandragupta’s kingdom wrote a book named Arthashasthra, which also described how accounting records had to be maintained. Luca Pacioli’s, a Franciscan friar (merchant class), book Summa de Arithmetica, Geometria, Proportion at Proportionality (Review of Arithmetic and Geometric proportions) in Venice (1494) is considered as the first book on double entry bookkeeping.

Debit comes from the Italian debito, Credit comes from the Italian credito

A portion of this book contains knowledge of business and book-keeping. However, Pacioli did not claim that he was the inventor of double entry book-keeping but spread the knowledge of it. It shows that he probably relied on then–current book-keeping manuals as the basis for his masterpiece. In his book, he used the present day popular terms of accounting Debit (Dr.) and Credit (Cr.). These were the concepts used in Italian terminology. Debit comes from the Italian debito which comes from the Latin debita and debeo which means owed to the proprietor. Credit comes from the Italian credito which comes from the Latin ‘credo’ which means trust or belief (in the proprietor or owed by the proprietor. In explaining double entry system, Pacioli wrote that ‘All entries… have to be double entries, that is if you make one creditor, you must make some debtor’. He also stated that a merchants responsibility include to give glory to God in their enterprises, to be ethical in all business activities and to earn a profit. He discussed the details of memorandum, journal, ledger and specialised accounting procedures.

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25 December 2017

What is a Contract Note in Share trading?

December 25, 2017

What is a Contract Note in Share trading?

Contract Note is a confirmation of trades done on a particular day on behalf of the client by a trading member. It imposes a legally enforceable relationship between the client and the trading member with respect to purchase/sale and settlement of trades. It also helps to settle disputes/claims between the investor and the trading member. It is a prerequisite for filing a complaint or arbitration proceeding against the trading member in case of a dispute. A valid contract note should be in the prescribed form, contain the details of trades, stamped with requisite value and duly signed by the authorized signatory. Contract notes are kept in duplicate, the trading member and the client should keep one copy each. After verifying the details contained therein, the client keeps one copy and returns the second copy to the trading member duly acknowledged by him.

22 December 2017

What is a Stock Swap?

December 22, 2017

What is a Stock Swap?

First it is need to be known Who is an acquiree and acquirer.

Acquiree is the company that is being acquired or purchased in a merger or acquisition process.

Acquirer is the company that is purchasing another company in a process of merger or acquisition.

Acquiring a business or company may be paid in various forms, such as cash, securities or by taking over the liabilities of the acquiree. When the share-holders in the acquiree company are given shares of the acquirer company as part of the acquisition, it is called a stock swap.

A benefit of stock swap is that the cash outflow for the acquirer company is minimized. Higher the value of the acquirer company’s shares, the fewer the shares it needs to issue for the acquisition. However, the share issue does cause dilution of promoter’s stake in the acquirer company. Further, even earnings per share (EPS) of the acquirer company may be diluted, if the earnings of the acquiree company are not adequate.

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21 December 2017

Why do companies need to issue shares to the public?

December 21, 2017

Why do companies need to issue shares to the public?

Stock Markets are important financial hub in modern world. Thousands of companies are established through stock exchanges. But why companies issue shares and use stock market to raise money.

Most companies are usually started privately by their promoter(s). However, the promoters’ capital and the borrowings from banks and financial institutions may not be sufficient for setting up or running the business over a long term. So, companies invite the public to contribute towards the equity and issue shares to individual investors. The way to invite share capital from the public is through a ‘Public Issue’.

Simply stated, a public issue is an offer to the public to subscribe to the share capital of a company. Once this is done, the company allots shares to the applicants as per the prescribed rules and regulations laid down by SEBI.

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What is Systematic Investment Plan (SIP)?

December 21, 2017

What is Systematic Investment Plan (SIP)?

Through an SIP, an investor commits to invest a constant amount periodically. For instance, 5,000 per month. The investment is normally made in a mutual fund scheme or a gold fund of fund. As the market fluctuates, the scheme’s Net Asset Value (NAV) too will fluctuate. For the same investment of 5,000, when the NAV is higher, investor will receive fewer units; more units will be allotted when the NAV is lower.
In the example below, investor received the units at an average NAV of 11.375 per unit, during the period that NAV fluctuated between 11.25 and 11.50. Therefore, this investment approach is also called Rupee Cost Averaging.

Month

Investment (₹)

NAV (₹)

Number of Units

1

5000

11.25

444.44

2

5000

11.30

442.47

3

5000

11.35

440.52

4

5000

11.40

438.59

5

5000

11.45

436.68

6

5000

11.50

434.78

Total/Avg

30000

11.375

2637.48

SIP creates a habit of investment among an individual. It helps in long term wealth creation, while keeping the client away from the dangerous investment style of timing the market. It is important to note that SIP offers some downside protection, by averaging the cost at which the units are acquired. But SIP cannot prevent losses, if the market keeps falling. Investor can do SIP through post-dated cheques, Electronic Clearing service (ECS) facility offered by banks, or standing instructions given to the bank.

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Golden Rules of Accounting

December 21, 2017

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Accounts is all about understanding the Golden rules. From a journal entry the process of accounting starts and for this, it is basic necessary to understand the golden which is a handy formula for you. The rule is as follows:

1.Personal

           Debit - The receiver

           Credit - The giver
2. Real

          Debit - What comes in

          Credit - What goes out
3. Nominal

          Debit - All expenses and losses

          Credit - All incomes and gains

I. Personal Accounts is the accounts which relate to persons. Personal accounts include the following.
a) Natural Persons : Accounts which relate to individuals. For example, Vijay’s A/c, Dawood’s A/c etc.
b) Artificial persons : Accounts which relate to a group of persons or firms or institutions. For example, Reliance Ltd., IDBI Bank, Jamal Mohamed College, etc.

c) Representative Persons: Accounts which represent a particular person or group of persons. For example, outstanding salary account, prepaid insurance account, etc. The business concern may keep business relations with all the above personal accounts, because of buying goods from them or selling goods to them or borrowing from them or lending to them. Thus they become either Debtors or Creditors. The proprietor being an individual his capital account and his drawings account are also personal accounts.

II. Real Accounts is relating to properties and assets which are owned by the business concern. Real accounts include tangible and intangible accounts. For example, Advertisement, Land, Building, Goodwill, Purchases, Sales, etc.

III . Nominal Accounts do not have any existence, form or shape. They relate to incomes and expenses and gains and losses of a business concern. For example, Salary Account, Dividend Account, Rent, etc.

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16 December 2017

Some Basic Accounting Terms

December 16, 2017

Some Basic Accounting Terms

One need to grasp the following common expressions always used in business accounting.
Transaction: It means an event or a business activity which involves exchange of money or money's worth between parties.

Goods/Services: These are tangible article or commodity in which a business deals. These articles or commodities are either bought and sold or produced and sold.


Profit: The excess of Revenue Income over expense is called profit. It could be calculated for each transaction or for business as a whole.


Loss: The excess of expense over income is called loss. It could be calculated for each transaction or for business as a whole.

Asset: Asset is a resource owned by the business with the purpose of using it for generating future profits. Assets can be tangible and intangible. Tangible Assets are the Capital assets which have some physical existence. The capital assets which have no physical existence and whose value is limited by the rights and anticipated benefits that possession confers upon the owner are known as intangible Assets. They cannot be seen or felt although they help to generate revenue in future.


Liability: It is an obligation of financial nature to be settled at a future date. It represents amount of money that the business owes to the other parties.


Contingent Liability: It represents a potential obligation that could be created depending on the outcome of an event.


Capital: It is amount invested in the business by its owners. It may be in the form of cash, goods, or any other asset which the proprietor or partners of business invest in the business activity. From business point of view, capital of owners is a liability which is to be settled only in the event of closure or transfer of the business. Hence, it is not classified as a normal liability.


Drawings: It represents an amount of cash, goods or any other assets which the owner withdraws from business for his or her personal use.


Debtor : The sum total or aggregate of the amounts which the customer owe to the business for purchasing goods on credit or services rendered or in respect of other contractual obligations, is known as Sundry Debtors or Trade Debtors, or Trade Payable, or Book-Debts or Debtors.


Creditor: A creditor is a person to whom the business owes money or money's worth. E.g. money payable to supplier of goods or provider of service. Creditors are generally classified as Current Liabilities.


Trade Discount: It is the discount usually allowed by the wholesaler to the retailer computed on the list price or invoice price.

Cash Discount: This is allowed to encourage prompt payment by the debtor. This has to be recorded in the books of accounts. This is calculated after deducting the trade discount.

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15 December 2017

Various branches of Accounting

December 15, 2017

Various branches of Accounting

Financial Accounting
It is commonly termed as Accounting. The American Institute of Certified Public Accountants defines Accounting as "an art of recoding, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character, and interpreting the results thereof."

Cost Accounting
According to the Chartered Institute of Management Accountants (CIMA), Cost Accountancy is defined as "application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control and the ascertainment of profitability as well as the presentation of information for the purpose of managerial decision-making."


Management Accounting
Management Accounting is concerned with the use of Financial and Cost Accounting information to managers within
organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions.

Social responsibility Accounting
Social responsibility accounting is concerned with accounting for social costs incurred by the enterprise and social benefits created.

Human Resource Accounting
Human resource accounting is an attempt to identify, quantify and report investment made in human resource of an organisation that are not presently accounted for under conventional accounting practice.

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14 December 2017

Need of banks in a Country

December 14, 2017

Need of banks in a Country | Sulthan Academy

We all have a bank account these days. Specially after demonetization and digital cash initiatives in India the number are increasing. But the question is why there is a need of Bank. A sound banking system is necessary to achieve the following objectives:
1. Savings and capital formation

Bank plays a vital role in mobilizing the savings of the people and promotes the capital formation for the economic development of the country.

2. Canalization of savings

The mobilized savings are allocated by the banks for the development of various fields such as agriculture, industry, infrastructure, communication, transport etc,.


3. Implementation of Monetary Policy

A well-developed banking system can easily implement the monetary policy because development of the economy depends upon the control of credit given by the banks. So, banks are necessary for the effective implementation of monetary policy.


4. Encouragement of Industries

Banks provide various types of financial services such as granting cash credit loans,issuing letter of credit, and bill discounting etc., which encourages the development of various industries in the country.

   
5. Regional development

Banks,by transferring surplus money from the developed regions to the less developed regions reduces regional imbalances.

   
6. Development of Agriculture and other neglected sectors

Banks are necessary for the farmers. It also encourages the development of small-scale and cottage industries in rural areas.

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Who use Accounting Information?

December 14, 2017

Who use ACCOUNTING INFORMATION?

Accounting books gives us vital information about the company and in this post you will learn who make use of what information from a accounting book. The users are categorized in two types External and Internal. External users include Investors, Creditors, Customers, Suppliers, Employees, and Government organizations. Whereas Internal users includes Management and Managers of operations.

Investor

An Investor provide capital to business. They need information to assess whether to buy, hold or sell their investment/shares. Also they are interested to know the ability of the business to survive, prosper and to pay divided.

Employees

Growth of employees is directly related to the growth of the organisation and therefore, they are interest to know the stability, continuity and growth of the enterprise and its ability to provide remuneration, retirement and other benefits and to enhance employment opportunities.

Lenders

Lenders are interested to know whether their loan principal and interest will be paid when due.

Supplier and Creditors

They are also interested to know the ability of the enterprise to pay their dues that helps them to decide the credit policy for the relevant concern, rates to be charged and so on. Sometime, they also become interested in long term continuation of the enterprise if their existence becomes dependent on the survival of the business. Suppose, small ancillary units supply their products to a big enterprise, if the big enterprise collapses, the fate of the small units also becomes sealed.

Customers

Customers are also concerned with the stability and profitability of the enterprise because their functioning is more or less dependent on the supply of goods. Suppose, a company produces some chemicals used by pharmaceutical companies and supplies chemicals on three months credit. If all a sudden it faces some trouble and is unable to supply the chemical, the customers will also be in trouble.

Government and their agencies

They regulate the functioning of business enterprise for public good, allocated scarce resources among competing enterprise, control price, change excise duties and taxes, and so they have continued interest in the business enterprise.

Public

The public at large is interested in the functioning of the enterprise because it may make a substantial contribution to the local economy in many ways including the number of people employed and their patronage to local suppliers.

Management

On the basis of Accounts, management determine the effects of their various decisions on the functioning of the organisation. This helps them to make further managerial decisions.

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Types of Data Analysis

December 14, 2017

Types of Data Analysis

Analysis involves estimating the values of unknown parameters of the population and testing hypothesis for drawing inferences.

Types of Analysis
a. Qualitative analysis
b. Content analysis
c. Quantitative analysis
d. Descriptive analysis
e. Bivariate analysis
f. Sequential analysis
g. Casual analysis
h. Multivariate analysis
i. Inferential analysis

j. Statistical analysis

Qualitative Analysis
It is less influenced by theoretical assumption. The limitation of this type of analysis is that the findings tend to be unrealisable. The information categories and interpreted after, differ considerable from one investigator to another one. In this system researcher to go through, research cycle, to increase reliability, repeating the research cycle is of value in some ways, but it does not ensure that the findings will have high reliability. Qualitative analyses are carried out in several different kinds of study like
interview, case studies and observational studies.


Content Analysis
Content analysis is used where originally qualitative information is reduced to numerical terms. It is a method of analysis media output includes articles published in new papers, speeches made in radio, television and various type of propaganda. This method of analysis is applied to all most all form of communications.


Quantitative Analysis
The numerical data collected in study through descriptive statistics analysis can be conducted through measure of central tendency.

Descriptive Analysis
This analysis of one variable is called one dimensional analysis. This analysis measures condition at particular time.

Bivariate Analysis
The analysis in respect of two variables is called bivariate analysis. In this analysis collected data in placed into tabular form, so that the meaning of the data can be derived. In this method simple dimensional data is developed and put into two or more categories.


Sequential Analysis
When only factor is revel in the table at one time, this type of analysis is called sequential analysis is called sequential analysis. If we do the further analysis of the same data regard four going showed that person with leave travel concession facilities are more frequently going on tourism than those who are not gating facilities of casual analysis. It is concerned with study of one variable affecting another one.


Multivariate Analysis

With an advancement of computer application there is fast development of multivariate analysis, in which statistical method simultaneously analysis more than two variables.

Inferential Analysis

In order to decide the validity of data to indicate conclusion this analysis is concerned with tests for significance of hypothesis. One the basis of inferential analysis the task of interpretation is performed by estimating the population values.

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Observation - Methods Of Primary Data Collection

December 14, 2017

Observation - Methods Of Primary Data Collection

Observation is one way to collect primary data. It is a purposeful, systematic and selective way of watching and listening to an interaction or phenomenon as it takes place. There are many situations in which observation is the most appropriate method of data collection; for example, when you want to learn about the interaction in a group, study the dietary patterns of a population, ascertain the functions performed by a worker , or study the behaviour or personality traits of an individual. it is also appropriate in situations where full and/or accurate information cannot be elicited by questioning, because respondents either are not co-operative or are unaware of the answer because it is difficult for them to detach themselves from the interaction. in summary, when you are more interested in the behaviour than in the
perceptions of individuals, or when subjects are so involved in the interaction that they are unable to provide objective information about it, observation is the best approach to collect the required information.
Types of observation - there are two types of observation:
a.  Participant observation
b. Non-participant observation


Participant observation is when you, as a researcher, participate in the activities of the group observed in the same manner as its members, with or without their knowing that they are being observed.

For example, you might want to examine the reactions of the general population toward people in wheelchairs. you can study their reactions by sitting in a wheelchair yourself of you might want to study the life of prisoners and pretend to be a prisoner in order to do this.

Non-participant observation is when you, as researcher, do not get involved in the activities of the group but remains a passive observer, watching and listening to its activities and drawing conclusions from this.

For example, you might want to study the functions carried out by a worker in a Railway station. As an observe, you could watch, follow, and record the activities as they are performed. After making a number of observation, conclusions could be drawn about the function carry out in the railway station. Any occupational group in any setting can be observed in the same manner.

Problems with using observation as a method of data collection
The use of observation as a method of data collection may suffer from a number of problems, which is not to suggest that all or any of these necessarily prevails in every situation. But as a beginner you should be aware of these problems.

When individuals or groups become aware that they are being observed, they may change their behaviour. Depending upon the situation, this change could be positive or negative – it may increase or decrease, for example, their productivity and may occur for a number of reasons. When a change in the behaviour of person or groups is attributed to their being observed it is known as the Hawthome Effect. The use of observation in such a situation may introduce distortion: What is observed may not
represent their normal behaviour.


There is always the possibility of observer bias. If an observer is biased, she/he can easily introduce bias and there is no easy way to verify the observations and the interference drawn from them

The interpretation draws from observations may vary from observer to observer. There is the possibility of incomplete observation and/or recording, which varies with the method of recording. an observer may watch keenly but at the expense of detailed recording. The opposite problem may occur when the observer takes detailed notes but in doing so misses some of the interaction. Situations in which observations can be made observations can be made under two conditions:
 a. Natural
 b. Controlled
Observing a group in its natural operation rather than interviewing in its activities is classified as observation under natural condition. Introducing a stimulus to the group for in to react to and observing the reaction is called controlled observation.


Recording of Observation
There are many ways of recording observation. The selection of a method of recording depends upon the purpose of the observation. Keep in mind the each method has its advantages and disadvantages.

Narrative – in this form of recording the researcher records a description of the interaction in his/her own words. Usually, he/she makes brief notes while observing the interaction and soon after the observation makes detailed notes in narrative form. In addition, some researchers may interpret the interaction and draw conclusions from it. The biggest advantage of narrative recording it that it provides a deeper insight into the interaction. However, a disadvantage is that an observer may be biased in his/her observation and, therefore, the interpretations and conclusions drawn from the observation may also be biased. Also, if a researcher’s attention is on observing, he/she might forget to record an important piece of interaction and, obviously, in the process of recording, part of the interaction may be missed. Hence, there is always the possibility of incomplete recording and/or observation> In addition, with different observers the comparability of narrative recording can be a problem.

Scales – at times some observers may prefer to develop a scale in order to rate various aspects of the interaction or phenomenon. The recording is done on a scale developed by the observer/researcher. A scale may be one, two or three directional, depending upon the purpose of the observation.

Schedules Sent Through Enumerators - Methods of Primary Data Collection

December 14, 2017

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Another method of data collection is sending schedules through the enumerators or interviewers. The enumerators contact the informants, get replies to the questions contained in a schedule and fill them in their own handwriting in the questionnaire form. There is difference between questionnaire and schedule. Questionnaire refers to a device for securing answers to questions by using a form which the respondent fills in him self, whereas schedule is the name usually applied to a set of questions which are asked in a face-to face situation with another person. This method is free from most of the limitations of the mailed questionnaire method.
Merits:
The main merits or advantages of this method are listed below:
1. It can be adopted in those cases where informants are illiterate.
2. There is very little scope of non-response as the enumerators go personally to obtain the information.
3. The information received is more reliable as the accuracy of statements can be checked by supplementary questions wherever necessary.
This method too like others is not free from defects or limitations. The main limitations are listed below:
Demerits:
1. In comparison to other methods of collecting primary data, this method is quite costly as enumerators are generally paid persons.
2. The success of the method depends largely upon the training imparted to the enumerators.
3. Interviewing is a very skilled work and it requires experience and training. Many statisticians have the tendency to neglect this extremely important part of the data collecting process and this result in bad interviews. Without good interviewing most of the information collected may be of doubtful value.
4. Interviewing is not only a skilled work but it also requires a great degree of politeness and thus the way the enumerators conduct the interview would affect the data collected. When questions are asked by a number of different interviewers, it is possible that variations in the personalities of the interviewers will cause variation in the answers obtained. This variation will not be obvious. Hence, every effort must be made to remove as much of variation as possible due to different interviewers.

Mailed Questionnaire Method - Methods of Primary Data Collection

December 14, 2017

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Under this method, a list of questions pertaining to the survey which is known as ‘Questionnaire’ is prepared and sent to the various informants by post. Sometimes the researcher himself too contacts the respondents and gets the responses related to various questions in the questionnaire.

The questionnaire contains questions and provides space for answers. A request is made to the informants through a covering letter to fill up the questionnaire and send it back within a specified time.

The questionnaire studies can be classified on the basis of:
a. The degree to which the questionnaire is formalized or structured.
b. The disguise or lack of disguise of the questionnaire and
c. The communication method used.

When no formal questionnaire is used, interviewers adapt their questioning to each interview as it progresses. They might even try to elicit responses by indirect methods, such as showing pictures on which the respondent comments. When a researcher follows a prescribed sequence of questions, it is referred to as structured study. On the other hand, when no prescribed sequence of questions exists, the study is non-structured.


When questionnaires are constructed in such a way that the objective is clear to the respondents then these questionnaires are known as non- disguised; on the other hand, when the objective is not clear, the questionnaire is a disguised one. On the basis of these two classifications, four types of studies can be distinguished:
1. Non-disguised structured,
2. Non-disguised non-structured,
3. Disguised structured and
4. Disguised non-structured.
There are certain merits and demerits of this method of data collection which are discussed below:

Merits:
1. Questionnaire method of data collection can be easily adopted where the field of investigation is very vast and the informants are spread over a wide geographical area.
2. This method is relatively cheap and expeditious provided the informants respond in time.
3. This method has proved to be superior when compared to other methods like personal interviews or telephone method. This is because when questions pertaining to personal nature or the ones requiring reaction by the family are put forth to the informants, there is a chance for them to be embarrassed in answering them.


Demerits:
1. This method can be adopted only where the informants are literates so that they can understand written questions and lend the answers in writing.

2. It involves some uncertainty about the response. Co-operation on the part of informants may be difficult to presume.
3. The information provided by the informants may not be correct and it may be difficult to verify the accuracy.
However, by following the guidelines given below, this method can be made more effective:
The questionnaires should be made in such a manner that they do not become an undue burden on the respondents; otherwise the respondents may not return them back.
a. Prepaid postage stamp should be affixed
b. The sample should be large
c. It should be adopted in such enquiries where it is expected that the respondents would return the questionnaire because of their own interest in the enquiry
d. It should be preferred in such enquiries where there could be a legal compulsion to provide the information.

Information from Correspondents - Methods of Primary Data Collection

December 14, 2017

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The investigator appoints local agents or correspondents in different places to collect information under this method. These correspondents collect and transmit the information to the central office where data are processed. This method is generally adopted by news paper agencies.

Correspondents who are posted at different places supply information relating to such events as accidents, riots, strikes, etc., to the head office. The correspondents are generally paid staff or sometimes they may be honorary correspondents also. This method is also adopted generally by the government departments in such cases where regular information is to be collected from a wide area. For example, in the construction of a wholesale price index numbers regular information is obtained from correspondents appointed in different areas. The biggest advantage of this method is that, it is cheap and appropriate for extensive investigation. But a word of caution is that it may not always ensure accurate results because of the personal prejudice and bias of the correspondents.

As stated earlier, this method is suitable and adopted in those cases where the information is to be obtained at regular intervals from a wide area.

Indirect Oral Interviews - Methods of Primary Data Collection

December 14, 2017

Indirect Oral Interviews - Methods of Primary Data Collection

Under this method of data collection, the investigator contacts third parties generally called ‘witnesses’ who are capable of supplying necessary information. This method is generally adopted when the information to be obtained is of a complex nature and informants are not inclined to respond if approached directly. For example, when the researcher is trying to obtain data on bribe or the habit of taking liquor, there is high probability that the bribed / addicted person will not provide the desired data and hence will disturb the whole research process. In this situation taking the help of such persons or agencies or the neighbours who know them well becomes necessary. Since these people know the person well, they can provide the desired data. Enquiry Committees and Commissions appointed by the Government generally adopt this method to get people’s views and all possible details of the facts related to the enquiry.

Though this method is very popular, its correctness depends upon a number of factors such as
1. The person or persons or agency whose help is solicited must be of proven integrity; otherwise any bias or prejudice on their part will not bring out the correct information and the whole process of research will become useless.
2. The ability of the interviewers to draw information from witnesses by means of appropriate questions and cross-examination.
3. It might happen that because of bribery, nepotism or certain other reasons those who are collecting the information give it such a twist that correct conclusions are not arrived at.


Therefore, for the success of this method it is necessary that the evidence of one person alone is not relied upon. Views from other persons and related agencies should also be ascertained to find the real position. Utmost care must be exercised in the selection of these persons because it is on their views that the final conclusions are reached.
 

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Direct Personal Interviews - Methods of Primary Data Collection

December 14, 2017

Direct Personal Interviews | Sulthan Academy

A face to face contact is made with the informants (persons from whom the information is to be obtained) under this method of collecting data.

The interviewer asks them questions pertaining to the survey and collects the desired information. Thus, if a person wants to collect data about the working conditions of the workers of the BHEL, Trichy, he would go to the factory, contact the workers and obtain the desired information. The information collected in this manner is first hand and also original in character.

There are many merits and demerits of this method, which are discussed as under:

Merits:

1. Most often respondents are happy to pass on the information required from them when contacted personally and thus response is encouraging.

2. The information collected through this method is normally more accurate because interviewer can clear doubts of the informants about certain questions and thus obtain correct information. In case the interviewer apprehends that the informant is not giving accurate information, he may cross-examine him and thereby try to obtain the information.

3. This method also provides the scope for getting supplementary information from the informant, because while interviewing it is possible to ask some supplementary questions which may be of greater use later.

4. There might be some questions which the interviewer would find difficult to ask directly, but with some tactfulness, he can mingle such questions with others and get the desired information. He can twist the questions keeping in mind the informant’s reaction. Precisely, a delicate situation can usually he handled more effectively by a personal interview than by other survey techniques.

5. The interviewer can adjust the language according to the status and educational level of the person interviewed, and thereby can avoid inconvenience and misinterpretation on the part of the informant.

Demerits:

1. This method can prove to be expensive if the number of informants is large and the area is widely spread.

2. There is a greater chance of personal bias and prejudice under this method as compared to other methods.

3. The interviewers have to be thoroughly trained and experienced; otherwise they may not be able to obtain the desired information. Untrained or poorly trained interviewers may spoil the entire work.

4. This method is more time taking as compared to others. This is because interviews can be held only at the convenience of the informants. Thus, if information is to be obtained from the working members of households, interviews will have to be held in the evening or on week end. Even during evening only an hour or two can be used for interviews and hence, the work may have to be continued for a long time, or a large number of people may have to be employed which may involve huge expenses.

Though there are some demerits in this method still we cannot say that it is not useful. The matter of fact is that this method is suitable for intensive rather than extensive field surveys. Hence, it should be used only in those cases where intensive study of a limited field is desired.
In the present time of extreme advancement in the communication system, the investigator instead of going personally and conducting a face to face interview may also obtain information over telephone. A good number of surveys are being conducted every day by newspapers and television channels by sending the reply either by e-mail or SMS. This method has become very popular nowadays as it is less expensive and the response is extremely quick. But this method suffers from some serious defects, such as (a) those who own a phone or a television only can be approached by this method, (b) only few questions can be asked over phone or through television, (c) the respondents may give a vague and reckless answers because answers on phone or through SMS would have to be very short.

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Methods of Collecting Primary Data

December 14, 2017

12 December 2017

Important properties of the Normal distribution

December 12, 2017

clip_image018

The normal distribution was first described by Abraham Demoivre (1667-1754) as the limiting form of binomial model in 1733. Normal distribution was rediscovered by Gauss in 1809 and by Laplace in 1812. Both Gauss and Laplace were led to the distribution by their work on the theory of errors of observations arising in physical measuring processes particularly in astronomy. Here I will show you some important properties of Normal distribution

1. The normal curve is “bell shaped” and symmetrical in nature. The distribution of the frequencies on either side of the maximum ordinate of the curve is similar with each other.

2. The maximum ordinate of the normal curve is atclip_image002. Hence the mean, median and mode of the normal distribution coincide.

3. It ranges between clip_image004 to clip_image006

4. The value of the maximum ordinate is clip_image008

5. The points where the curve change from convex to concave or vice versa is at clip_image010

6. The first and third quartiles are equidistant from median.

7. The area under the normal curve distribution are:

a. clip_image012 covers 68.27% area

b. clip_image014 covers 95.45% area

c. clip_image016 covers 99.73% area

clip_image018

8. When μ = 0 and σ = 1, then the normal distribution will be a standard normal curve. The probability function of standard normal curve is

clip_image020

The following table gives the area under the normal probability curve for some important value of Z.

Distance from the mean ordinate in

Terms of ± σ

Area under the curve

Z = ± 0.6745

0.50

Z = ± 1.0

0.6826

Z = ± 1.96

0.95

Z = ± 2.00

0.9544

Z = ± 2.58

0.99

Z = ± 3.0

0.9973

9. All odd moments are equal to zero.

10. Skewness = 0 and Kurtosis = 3 in normal distribution.

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06 December 2017

Some Key Abbreviations used in Statistics

December 06, 2017


Untitled

FNR - False Negative Ratio
FPR - False Positive Ratio
iff  - if an only if
I.I.d. - independent and identically distributed
IRQ - inter-quartile range
pdf - probability density function
LSE - Least Square Error
ML - Maximum Likelihood
MSE - Mean Square Error
PDF – probability distribution function
RMS - Root Mean Square Error
r.v. - Random variable
ROC - Receiver Operating Characteristic
SSB - Between-group Sum of Squares
SSE - Error Sum of Squares
SSLF - Lack of Fit Sum of Squares
SSPE - Pure Error Sum of Squares
SSR - Regression Sum of Squares
xxiv - Symbols and Abbreviations
SST - Total Sum of Squares
SSW - Within-group Sum of Squares
TNR - True Negative Ratio
TPR - True Positive Ratio
VIF - Variance Inflation Factor

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