Chapter 1 – Commercial Mathematics

The following Topics and Sub-Topics are covered in this chapter and are available on MSVgo:

Introduction

Commercial Mathematics is a vital chapter of ICSE Class 10th Mathematics because it forms the basis of advanced mathematics. It covers all the critical topics related to banking, taxation, and shares. These topics will also be used in the following math chapters. Many real-life problems are asked from this chapter, so a clear understanding of commercial mathematics will help you solve problems faster and assist you in actual situations.

Chapter’ Commercial Mathematics’ covers the following topics:

• Introduction to Commercial Mathematics
• Goods and Services Tax (GST)
• Banking
• Shares and dividends

Introduction to Commercial Mathematics

Commercial mathematics is an essential branch of mathematics that involves fundamental life concepts used in businesses like taxation, banking, shares, dividends, compound interest, profit and loss, etc. Commercial mathematics includes necessary topics related to businesses, so it is also known as business mathematics. Following are the few topics of commercial mathematics:

• Money
• Compound Interest
• Banking
• Shares and Dividends
• Ratios
• Profit and Loss
• Proportions
• Percentages
• Taxation

Goods and Services Tax (GST)

Goods and Services Tax is an example of indirect tax charged by the government directly from the customers on goods and services. It is charged by both state and central governments. Commercial mathematics provides methods to calculate the tax amount. GST is of 3 types:

• State GST: The local state government charges state goods and services tax on intra-state transactions.
• Central GST: The central government charges central goods and services tax on intra-state transactions.
• Integrated GST: Central and state governments charge integrated goods and services tax on inter-state transactions. IGST is also charged on imports and exports of goods.

Steps to calculate GST:

1. The selling price of the goods or services is calculated by subtracting the discount from the cost price.
2. If the transaction is intra-state, then the GST amount is calculated by dividing it into CGST and SGST. For example: If GST is 24%, then the CGST is 12%, and SGST is 12%.
3. If the transaction is intra-state, like Punjab to Delhi, then the GST is calculated as IGST.
4. The final selling price is calculated by adding the tax amount to the discounted price.

Banking

A bank is a financial institution that performs the vital function of depositing and loaning money. Following are the essential functions performed by the banks:

• Deposit money of customers in savings and current accounts who, in return, receive interest.
• Give Loans to borrowers who need money. They pay interest on borrowed money.
• Transfer money from one person to another and one place to another.
• Collect taxes like income tax, property tax, etc.
• Collect payments for utility bills like electricity bills, water bills, etc.
• Providing cheques’ vital service is an unconditional order to pay or receive payments payable on demand.

Cheques are of 3 types:

• Bearer cheques: Cheque amount is payable to anyone who presents the cheque to the bank.
• Crossed cheques: Cheque amount cannot be received in cash. It is transferred directly to the payee’s bank account.
• Order cheques: Cheque amount is payable only to the person whose name is written on the cheque.

Banking problems in commercial mathematics are asked in the following ways:

• Find the maturity amount which the person will receive.
• Calculate the compound interest and simple interest amount.
• Find the value of each instalment of the loan borrowed.
• Calculate the monthly instalments for recurring bank deposits.

Shares and Dividends

The capital of any company is divided into smaller equal amount units which are known as shares. A person or organisation who purchases such shares are referred to as shareholders. They receive dividends by the company as the return of the investment and risk taken. Companies that earn reasonable amounts of profit often declare dividends for the shareholders who are a source of profit.

Following are how shares and dividends questions are asked in commercial mathematics:

• Calculate the market value of the shares by adding premium or subtracting discounts offered on shares.
• Calculate the amount of dividend, which is expressed in the form of a percentage of shares’ value.
• Find the total number of shares and total income and dividend earned from the shares.

Significant shares and dividends formulas used in commercial mathematics:

• Total investment = Number of shares × Market value of each share
• Dividend per share = Dividend percentage × Market value of the share
• Annual share income = a Total number of shares × income per share.
• Total number of shares = Total investment in shares/ Market value of the share

Conclusion

The chapter’ Commercial Mathematics’ is an essential topic for class 10th mathematics and a necessary concept for advanced mathematics and real-life situations. This chapter’s sound knowledge will smoothen your journey through the upcoming mathematics chapters and real-life business situations.

FAQs

1. What are the different GST slabs imposed by the government?
There are five slabs of GST imposed by the government:

• 0.25%
• 5%
• 12%
• 18%
• 28%
2. What is the difference between commercial mathematics and maths?
Maths is a broader concept that includes commercial mathematics and geometry, algebra, numbers, etc. Commercial mathematics is a part of maths that includes business mathematics concepts like profit and loss, banking, shares, dividends, etc.
3. What is the formula to calculate compound interest?
The formula to calculate compound interest is P(1 + R/100) ^ t, where p is the principal investment amount, r is the return rate, and t is the period.
4. Why should you always cross your cheques?
Even if the cheque gets lost and someone tries to put it in a bank, the crossed cheque amount is transferred to the payee’s bank and cannot be encashed.

‘Commercial Mathematics’ is an essential chapter of mathematics. So, the visual representation of this chapter is necessary. The MSVgo app is a video library platform that helps you comprehend topics through exploratory graphics and practical models. So, make sure to check out the explanatory videos at MSVgo for a better understanding of concepts.

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