Accounts & Finance Terminology

Debit: Incoming benefits or receiving benefits called debit.

Credit: Outgoing benefit or giving benefits called credit.

Debtor: A person who owing money to the business firm is called debtor. In other words a debtor one who received benefit from the firm and yet to repay it or purchased goods on credit basis.

Creditor: A person who lent money or sell goods on credit to the firm. In other words creditor means who gave benefit to the firm and yet to receive the equaling benefit from the firm.

Account: Account is a summarized statement of Debit and credit.

Accounting: The method of identifying, analysing, and passing on the required financial information to the decision-makers in the business.

Goods: Those with which the business concern does business. If a commodity is produced or purchased for the purpose of sale. It is called goods.

Capital: The amount invested by the 0wner for running the business is called capital. This can be in the form of goods / cash.

Asset: Asset means conglomeration of benefits. Assets are which essential and beneficial for running the business operations.

Fixed Assets: Those which provides long-term benefits for the running the business.

Floating Asset: Which dedicate their benefits for running the business and which change in value with in a short span of time. Ex: Goods, debtors, cash and investments etc,.

Intangible assets: those having no physical existence and can not touch. Ex: goodwill, trademarks, etc..

Liabilities: The debts owned by the firm to outsiders and also to the investors’ i.e. owners are called liabilities. Ex: creditors, bank overdraft, bills payable and loan taken from others.

Contingent Liabilities: These are not the real liabilities. They are not actual liabilities at present. They might become a liability in future on condition that the contemplated even occurs. Ex: liability in respect of pending. This is not shown in balance sheet that may be shown as not under it.

Drawings: cash, goods or services drawn by the owner / investors for self-consumption are called drawings.

Expenditure: Account spent for acquiring goods / services for running business is known as expenditure. It may be capital / revenue expenditure.

Capital Expenditure: Spent for the acquisition of fixed assets which have long life and which are useful for the long-term benefit of the business.

Revenue Expenditure: All expenditure incurred for running the business for the current year is known as revenue expenditure. Ex: salaries, rent, interest etc.

Income: The amount earned by a firm out of its business transaction during a period is called income.

Capital Gain: Is the excess amount received over the book value of the asset owned by the firm ex: profit earned over sale of building.

Revenue Income: Revenue income is the income received during business transactions or sale and purchase of goods or on services render to outsiders.

Journal: This is called the book of prime entry. The word journal is derived from the Latin word Journ that means a day. Hence, journal is also termed, as a daybook where in the day to day transactions is recorded in chronological order.

Journal entry: The process of recording the business transactions in the journal is known as journalising.

Ledger: ledger means a set of accounts. This is also called a book of final entry. All the transactions from the journal entries are recorded in the ledger by opening separate accounts and their balances are found.

Cheque: Is an instrument, by means of which a depositor can order the bank to pay certain sum of money only to the order of a or to the bearer of the instrument.

Invoice: Is a statement by the seller to the purchaser which contains the details of the quantity of goods sold and price of the goods, terms and conditions of payment particulars.

Balance sheet: It is a statement prepared on a particular date to reflect the financial position of the firm with all assets and liabilities of the firm. This is prepared based on Accounting period concept.

P&L a/c: Has to be prepared to ascertain the net profit or gross profit or net loss of the firm for the accounting period. This is prepared based on Accounting period concept.

Trail balance: It is a statement prepared by putting all debts one side and all credits on the other side to check arithmetical accuracy of the ledger balance.


ACCOUNTING CONCEPTS:

Business Entity Concepts: In accounting language business is separate person i.e. business entity and the person who is investing money is that business are not the same. So who is investing money must be treated as loan giver. If the person invests money in business should be shown as capital.

Money Measurement Concept: Business records only those transactions, which are expressed in money terms. They will not record transactions if only expressed in other unit of measurement. Ex: expressed in kgs, liters, tones, etc..

Cost Concept: Transactions in books are recorded at cost i.e. at the actual amount incurred. Market value is not considered.

Going Concern Concept: It is assumed that every business will be running for future seeable years. That the business entity doesn’t have any intention to stop any business activities in year future. If we feel that the business will not run or have to be stopped in year foreseeable future. Them all the things have to be recorded at realisable values.

Dual Aspect Concept (Balance Sheet Concept): Every transaction has two activities
a) Power to receive some thing (goods purchased).
b) Duty to pay some thing (duty to pay money).

Accrual Concepts: Not only cash items are recorded in the books but also credit items are to be recorded. Ex. Credit sales made are also even before cash is received.

ACCOUNTING CONVENTIONS:

In order to bring the results of accounting perfectly in practice & to know and compare the accounting practices of various business concerns, the following accounting conventions are also useful.

1. Consistency: Business concern should follow uniform accounts for all years. This is useful as and when the entrepreneur wants to compare the present year performance with that of last year or with different firms. This does not mean that adjustments are not possible. Any change or deviation in the practice & its impact should be clearly defined in advance. For ex: if the a/c year is 1st April – 31st March in one year, that should not be changed to 1st April – 31st December in another year, without clearly defining its objective.

2. Discloser: The results of the business have to be disclosed from time to time to the shareholders and creditors of the business, Govt., employees etc., However, it is the prime responsibility of the Board of Directors of the company to disclose the business results in a systematic and comprehensive way to all concerned. It is essential to disclose even, every minute information, which has a clear-cut impact on assets, debts and profits of the business.

3. Relevance: According to this convention, the firm should give relevant accounting information as and when required documentary proof like invoices, vouchers, cash memos etc.,

4. Feasibility: The practice of comparing expenses incurred for the business transactions with that of the income received during the year by the firm is called feasibility. According to this convention expenditure should be less than the income.

5. Conservation: According to this convention the accountant has to record the actual financial position. While recording the accounts, the accountant should not give different picture of the business either by inflating or deflating, the value of transaction. In this convention, to be on the safe side, the accountant record all the anticipated losses, however ignores the anticipated profits. For ex: While taking the value of the closing stock, the market cost or actual cost whichever is less is taken in to the books of accounts.

Cash: The purchasing power in hand is called cash.

Cash expenses: cash is paid for expenses incurred.

Non- cash expenses: It is a expenditure, there is no cash involvement. Expenses are incurred but cash is not paid (that cash is not going out of the business). Ex. Depreciation.

Prepaid expenditure: The amount paid for the expenditure. Relation to the future years.

O/S expenses: Expenditure incurred but the payment for which is not yet paid and will be shown in the balance sheet liability side.

Recurring expenses: Items, which are repeated. Ex: sales and wages.

Non- Recurring expenses: which are not regular and repeated. Ex: buying of fixed assets, legal exp. Profit/ loss on sale of asset, insurance.

Promisory Note: Sec – 4 of the negotiable instrument act, 1881 defines promissory note as “ an instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money only to the order of a certain person or to the bearer of the instrument”.

Bill of Exchange: Sec – 5 of the negotiable instrument act, 1881 defined a bill of exchange “ as an instrument in writing containing an unconditional undertaking signed by the maker the order of a certain person or to the bearer of the instrument”.

Parties: Drawer: He is the person who draws the bill. He is usually creditor or seller.
Drawee: He is the person on whom the bill is drawn, He is also known as acceptor as he accepts the bill.
Payee: He is the person who is entitled to receive payment.

Consignment: The dispatch of goods from one place to another place for the purpose of the sake through an agent is called consignment. The person who sends goods is called consignor, the person whom the goods sent is known as consignee.

Joint venture: A joint venture is practically partnerships between two are more persons confined to a particular venture or piece of business.

Bad debts: The businessmen may be tempted to sell goods on credit just to increase sales volume. But owing to variety of reasons the debtor may not be in a position to repay the debt. In this way, the debt or claim from debtors, which becomes unrealisable is called a bad debt.

Depreciation: nothing but a decreasing in value of an asset caused due to constant use of the asset, lapse of time and technical advancement. Depreciation charged based on Going concern concept.

Depletion: A measure if exhaustion of wasting asset represented by periodic write of cost another substituted value.

Amortisation: writing of intangible assets. Ex: patents, goodwill.

Preliminary Expenses: Expenditure relating to the formation of an enterprise. There include legal accounting and share issue expenses incurred for formation of the enterprise.

Operating Profit: The net profit arising from the normal operating of an enterprise without taking accounting of extraneous transactions and expenses of a purely financial nature.

Extra-ordinary items in the P & L a/c:

The transaction, which is not related to the business, is termed as ex-ordinary transactions or extra-ordinary items. It is as well as called exceptional items and prior period items. Ex: Loss due to earthquake, Profit or losses on the sale of fixed assets, interest received from other company investments, profit or loss on foreign exchange, unexpected dividend received.

Debenture: A formal document constituting acknowledgement of a debt by an enterprise. Debenture is a document bearing the common seal.
Which creates or acknowledges a debt.
It need not be secured (it may/may not).
It does not carry any voting right, but it carries interest.

Convertible Debenture: A debenture, which gives the holder a right to conversion wholly or partly in shares in accordance with term of issue.

Debenture Redemption Reserve: A reserve creates for the purpose of redemption of debentures at a future date.

Redemption: Repayment as per given forms normally used in connections with preference share and debenture.

Redeemable Preference Share: The preference share that is repayable either after a fixed or determinable period or at any time dividend by the management. Under certain credit any prescribed by the instrument of incorporation on the terms of issues.

Cumulative Preference Shares: A class of preference shares entitled to payment of cumulative dividends. Preference shares are always deemed to be cumulative, unless they are expressly made non- cumulative preference shares.

Sweat Equity Shares: Equity shares issued by the company to employees or directors. Such issue should be authorized by a special resolution passed by the company in general meeting.

Dividend: Dividend is a return on the investment to the shareholders. It is paid out of the divisible profits of the company. Dividend is normally expressed in terms of percentage of the face value of the share.

Types: 1. Dividend on preference shares. 2. Dividend on equity shares 3. Interim-dividend.
Dividend Equalisation Reserve: A reserve created to maintain the rate of dividend in future years.

Unclaimed Dividend: Dividend, which has been declared by a corporate enterprise and a warrant or a cheque in respect where has been dispatched but has not been En- cashed by the shareholders connected.

Unpaid Dividend: Dividend, which has been declared by a corporate enterprise but has not been paid. In respect where has not been dispatched with in the prescribed period.

Scrip Dividend: A scrip dividend promises to pay the shareholders at a future specific date.
The objective of scrip dividend is to postpone the immediate payment of cash.

Stock Dividend: It means the issue of bonus shares to the existing shareholders.

Cash Dividend: The payment of dividend in cash to shareholders is called cash dividend. Payment of dividend in cash results in out flow of funds and reduces the company.

Annual Report: Annual Reports shows the financial position of the company and the performance of the company during the last year. It contains B/S, P&L a/c and notes to accounts.

Notes to Accounts: It gives the information about:

Fixed assets & dep., R&D expenditure, foreign exchange transactions, excise duty, interim dividend/ Proposed dividend, investments, miscellaneous expenditure inventories.

Bankrupt: A statement in which affirm is unable to meet its obligations and hence, it is assets are surrendered to court for administration.

Bridge Loan: Temporary finance provided to a project until long term arrangement are need.

Differed revenue expenses: The benefit of the expenditure will be differed to the future periods for which the expenditure is charged. Differed revenue expenditure known as asset in balance sheet. Ex: Preliminary expenses.

Sinking Fund: A fund created for the repayment of a liability or for the replacement of an asset.

Mortgage: A transfer of interest in specific Immovable property for the purpose of securing a loan advanced or to be advanced. An existing on future debt or the performance of an engagement which may give rise to a percipiency liability.

Differed Revenue income: which is a income differed to the future periods. That means it is not related to one period related to more than one period.

Called of share capital: That part of the subscribed share capital which shareholders has been required to pay.

Capital Assets: Assets, including investments not held for sale, conversion or redeemable preference share of a corporate enterprise out of its profits which could other wise gave been available for distribution as dividend.

Capital W.I.P.: Expenditure on capital assets, which are in the process of construction as completion.

Capital receipts: Amount received on capital items. Amount received by selling fixed assets. Show the balance sheet in liability side.

Revenue Receipts: Amount receives on revenue items. Amount received by sale of goods or services show the trading and p& l a/c credit side.

Capital profits: capital profits are, profits realised on sale of fixed assets or on disposal of investments. They may be distributed by a way of dividend.
Revenue Profits: revenue profits are, the profits earned by the company through its ordinary activities.

General Reserve: G.R. is a reserve, which is to meet any future unknown liability. It can be utilised as dividend.

Capital Reserve: profits in the nature of capital or profits in the form of capital nature ex: share premium, share forfeiture.

Reserve Capital: reserve capital is called up only at the time of liquidation. If assets held are not sufficient to meat the liabilities.

Subsidiary company: A company, which is selling more than 51% of shares to another company, is called subsidiary company.

Holding company: A company, which is buying more than 51% of shares from another company, is called holding company.

A Company shall be deemed to be a subsidiary of another company.
If that another company,
Controls the composition of its board of directors.
Holds more than 50% of the voting power or paid up capital in the other company.
Is the subsidiary of any other company, which is the subsidiary of holding company.

Minority Interest: In a subsidiary company the majority share holding is held by holding company (say suppose 80% or so, the remaining 20% is held by sum other people who are little interested in the company. This little interest is called as minority interest). These people are called as minority interest shareholders.


BOOK KEEPING
Means the method of recording the business transactions in an order for providing information that may be required to the business in future.
ACCOUNTING
Means recorded information is to be summarised, analysed and submitted in the form of financial results.

ABSORBTION COSTING Vs MARGINAL COSTING
1. A.C. is the practice of charging all costs both fixed & variable, to operations, processes or products. Variable or fixed cost are treated as product costs in the absorption costing.
2. The stick of finished goods & W.I.P. is valued at total cost, which include both variable & fixed. 3.In A.C. marginal decision-making is based up on profit. Which is the excess of sales value over variable cost. Which is the excess of sales value over variable cost.
In marginal costing, only variable costs are treated as product costs, fixed cost is treated as period cost and is charged to P & L a/c for that period.
In marginal costing such stock are valued at marginal cost i.e. variable cost.
In marginal costing, the managerial decisions are guided by contribution.

JOURNAL Vs LEDGER

1. Journal in the book of first or original entry. It is also called the book of first entry.
2. When once the entries are posted to ledger the journal looses its importance.
3. In the preparation of final accounts journal is not useful.
4. The authorities generally may not depend on journal.
The ledger is the book of second entry.
It will never loose importance as it is the main book of accounts which is relied upon permanently.
In the preparation of trial balance and final accounts ledger is a must.
In the finalisation of income tax to be paid, the tax authorities depend on ledger.

PROFIT & LOSS A/C Vs BALANCE SHEET

1.Objective of preparing of p&l a/c to ascertain the net profit /loss of the business during the year.
2. Is an account having debit ad credit, does as such TO and BY are used.
3. Revenue expenditure and incomes are recorded in the P&L a/c.
4.Balancing figure of this account either net profit or net loss.
The objective of preparing balance sheet is to show the financial position of the business on a specific date.
Balance sheet is a statement and balance TP and BY are not used.
Capital incomes and expenditures are shown in the balance sheet.
Balance sheet will not show any balancing figure. A total of liabilities and assets side should always be equal.

JOINT VENTURE Vs CONSIGNMENT

1.Parties associated are called co- ventures.
2. Capital is contributed by all the ventures.
3.Profit and losses of the joint ventures are shared by all the ventures at agreed ratio.
Parties associated are called consignor and consignee.
Capital is contribution only by consignor.
The consignor receives only commission at a fixed rate & the consignor enjoys all the profits of the consignment.

TRAIL BALANCE Vs BALANCE SHEET

The trail balance is prepared to check the arithmetical accounting of the books of accounts.
Trail balance does not show the financial position of the business.
The trail balance is prepared based on ledger accounts.
The preparation of trail balance is not compulsory.
Trail balance can not shown as documentary evidence.
Balance sheet is prepared to know the true position of assets and liabilities on a particular date.
The financial position can be known from balance sheet.
The balance sheet prepared on the base of information from trail balance.
The preparation of balance sheet is must.
But balance sheet will be accepted as a documentary evidence by a tax authorities and courts.

COMPANY Vs PARTNERSHIP

1.Company comes in to existence only when it is registered under the companies act 1956.
2. Membership: Min. Private- 2 members Public - 7 member Max. 50 & no limit.
3. A company on its incorporation enjoys a separate legal entity.
In case of company members the liability is limited.
A firm is created by mutual agreement between partners. Registration is optional.
Min. firm : 2 members
Max. banking – 10,
Others- 20.
A firm does not have any separate legal entity.
In case of firms the partners are jointly and severally liable.

PARTNERSHIP Vs JOINT VENTURE

It is a going concern.
It always has a name.
Persons carrying a business are called partners.
Profits are ascertained at regular intervals i.e. annually.
Generally accrual basis of accounting is followed.
It is a terminable venture.
It may not bear a name.
Persons carrying on business are called co- ventures.
The profits are ascertained for each venture separately.
Cash basis of accounting is followed.

DEPOSIT Vs DEBENTURE

Deposits are amounts received by the company from the public.
Deposits are short term or middle term financial sources.
Deposits are unsecured.
It is easy to rise public deposits.
Debenture is a document which acknowledge debt which is issued by company.
Debentures are long term financial sources.
Debentures are generally secured.
Issue of debentures restricted by RBI.

PROMISORY NOTE Vs BILL OF EXCHANGE

In a promissory note there is a promise to pay.
In a p.n. there are two parties, i.e., the maker and payee.
A Pro. Note can not made payable to the maker himself.
The maker a pro.note is primarily.
A pro.note is signed by the person liable to pay. So no acceptance is needed.
In a bill there is an order to pay.
In a bill there are 3 parties i.e. Drawer, Drawyee, payee.
In a bill the drawer and payee may be the same.
The maker of a bill is liable only. When the drawee does not accept or pay.

SHARES Vs DEBENTURES

Shares are a part of the capital of the company.
Shares holders are members or owners of the company.
When recommended by the board dividend could be declared to share holders.
Shares do not carry on any charge.
Shares have a restrictions issue at a discount.
Shareholders have voting rights.
Dividend is payable when profits are there.
No fixed dividend.
Debentures constitute a loan.
Debenture holders are creditors.
Fixed amount of interest in debentures paid before dividend declaration.
Debentures generally have a charge on the asset of the company.
There are no restrictions to issue at a discount.
They don’t have any voting right.
Interest is payable whether profits are there or not.
Rate of interest is fixed.

SHARES Vs STOCKS

Has a nominal value.
May be fully paid or partly paid.
Can be transferred in whole numbers and not in fractions.
Each and every share shall be of equal denomination.
Shares are identifies with distinctive numbers.
Can be issued directly to the public.
No nominal value.
Always fully paid.
Can be transferred in fractions also.
May be unequal amounts.
Don’t have any distinctive numbers.
Only fully paid up shares can be converted in to stock and can not be issued directly.

SHARE CERTIFICATE Vs SHARE WARRANT

The holder is a registered member of the company.
The holder of a share certificate is a essentially a member.
For the issue of share certificate may not required of the central Govt.
All companies must issue share certificates.
Shares certification issued in partly paid or fully paid.
Share certificate is not negotiable.
The holder of a share certificate can present a petition for winding up.
The bearer of the share warrant is a not a registered member.
Can be a member if the articles so provided in AOA.(Articles Of Association).
If share warrant is issued, the central Govt. approval is must.
It is only issued by public companies.
Can be issued only fully paid shares.
It is negotiable.
Can not present a petition for winding up.

CAPITAL EXPENDITURE Vs REVENUE EXPENDITURE

These assets are shown at the asset side of the balance sheet.
Expenditure for the purchase and installation of asset.
The benefits will flow or enjoyed by the organisation for more than one year. Ex: Plant and Machinery.
Asset is purchased for utilisation in business.
5. Depreciation is considered for the life of the asset.
Expenses are shown in the debit side of the P&L a/c.
Expenditure is used for maintenance of asset.
The benefits for the expenditure will flow or enjoyed by the organisation for the current year only.
Ex: Salaries, printing and stationary, etc..
Goods are purchased with intention to sell.
There is no need of depreciation.

MEMBER Vs SHARE HOLDER

Name entered in the register of members.
Member is also a shareholder.
Shares warrant holder is not a member.
Name not entered in the register of members.
Shareholder is a not a member unless name is entered in the register of members.
Shares warrant holder is a shareholder.

PARTNER Vs DIRECTOR

1. Partner is one of the owners.
2. Partnership is Governed by partnership act 1932.
3. Partner has an unlimited liability.
Director is one of the members of the executive body.
Companies are governed by companies’ act 1956.
Director is generally not liable.

PROVISON Vs RESERVE

Provision is a charge against the profits.
Is made for known liability or expenditure.
It is used for that purpose only.
It shown above the line.
Above the line means P&L a/c.
Reserve is an appropriation on profits.
It is made for future unknown liability.
It can be utilised for future purpose.
It shown below the line.
Below the line means P&L appropriation a/c.

PUBLIC Ltd.CO. Vs PRIVATE Ltd.CO.

Min. members 7.
Max. Unlimited.
Min. directors 3.
After getting business commencement certificate, they can do the business.(but not after incorporation).
Public ltd. Co. go for public issue.
Min. Members 2.
Max. Members 50.
Min. directors 2.
Can start after incorporation.
Private co. shall not issue its shares to outsiders.

Difference Between Charge and Appropriation:

An encumbrance on an asset to secure indebtedness or other obligations. It may be fixed or floating. Is termed as charge.
An account sometimes included as a separate section of the profit and loss statement showing application (Appropriation) of profits towards dividends, reserves etc.

Difference between Accumulated Depletion and Accumulated Depreciation:

The total to date of the periodic depletion charges on wasting assets.
The total to date of the periodic depreciation charges in depreciable assets.

Government Company: A Govt. co. is a company is a company in which not less than 51% of the paid up share capital of the company is held by 1.central Govt., 2. State Govt., 3. Partly by the central govt. and partly by one or more.

Cost: The amount of expenditure incurred on specified article, product on activity.
Direct cost: An item on that can be reasonably identified with a specific unit of product or which a specific operation or other cost center.

Direct costing: A method where by the cost is determined so as to trade appropriate share of variable costs only all fixed cost, all fixed costs being changed against revenue in the period in which they are incurred.

Prime Cost: The cost of direct materials, direct wages and other direct production expenses.

Marginal Cost: M.C. is the additional cost to produce an additional unit of a product.

Marginal Costing: It also be defined as the aggregate of variable costs or prime cost + variable overheads.

Absorption Costing: A method where by the cost is determined so as to include the appropriate share of both variable and fixed cost.

Contribution: The difference between sales and variable cost or marginal cost of sales.
It may also be defined as the excess of selling price over variable cost per unit.
It is also known as contribution margin or gross margin.

Standard cost: A predetermined cost, which is, calculated from managements standards of efficient operation and the relevant necessary expenditure.

Standard Costing: The technique of using standard costs for the purpose of cost control is known as standard costing.

Share Premium: The excess of issue of price of shares over their face value. It will be showed with allotment entry in the journal. It will be adjusted in the balance sheet on the liabilities side under the head of reserves and surpluses.

Capitalisation: Capitaliastion is a quantitative aspect of the financial planning’s of an enterprise. It is refers to the total amount of securities issued by a company.

Capital Structure: It is refers to the kind of securities and the proportionate amounts or the term capital structure is used to represent the proportionate relationship between debt and equity. Equity includes paid up share capital, share premium, reserves and surplus (retained earnings).

Financial Structure: It means the entire liabilities side of the balance sheet. It refers to all the financial resources marshaled by the firm short as well as ling term and all forms of debt as well as equity.

Capital Gearing: The term capital gearing refers to the relationship between equity and long term debt.

Cost of Capital: It means the minimum rate of return expected by its investment.

Bonus Shares: Bonus issue amounts to reduction in the amount of accumulated profits and reserves.

The residual reserves after the proposed capitalization should be at least 40% of the paid up capital of the company.
The bonus issue is permitted to be made out of free reserves and premium collected in cash.
The notice to accept right shares should not be less than 15 days.
Right is issue is also known as pre- emptive right.
Bonus issue is made to make the nominal value and the market value of the share of the company comparable.

ACRS = Accelerated cost recovery system.

FASB = Finanacial account standard Board.

Foreign Exchange Rate: The price of one currency expressed in terms of other.

Accrual: An Expenses that has been incurred but not yet paid.

Merchant Banking: “ An institution which covers a wide range of activities, such as management of customer services, portfolio management, credit syndication acceptance credit, counseling, insurance…etc.,
Any person who is engaged in the business of issue management either by making arrangements regarding selling buying or subscribing to the securities a manager, consultant, advisor or rendering corporate advisory service in relation to such issue management.

Function: The area of activity of merchant banker is equity and equity related finance, they deal with mainly funds raised through many market and capital market.

A merchant banker can claim a change 0.5% as the commission for the whole issue.
The direct sale of securities to investors is called private placement.
Merchant banks deal with funds raised through money market and capital market.