ACCOUNTANCY

BASIC ACCOUNTING TERM

Transaction : An economic activity that affects financial position of the business and can be measured in terms of money e.g. sale of goods, paying for expenses etc.
Voucher : The documentary evidence in support of a transaction is known as voucher. For example, if we buy goods for cash we get cash memo, if we buy on credit we get an invoice, when we make a payment we get a receipt and so on.
Capital : Amount invested by the owner in the firm is known as capital. It may be brought in the form of cash or assets by the owner.
Assets : Assets are economic resources of an enterprise useful in its operations. Assets can be broadly classified into two types :

1. Fixed Assets are assets used for normal operations and held on a long-term basis, such as land, buildings, machinery, plant, furniture and fixtures etc.
2. Current Assets are assets held for a short-term and converted into cash within one year such as debtors, stock etc.

Liabilities : Liabilities are obligations or debts that an enterprise has to pay at some time in the future. Liabilities can be classified as :

1. Long-term liabilities are those that are usually payable after a period of one Year e.g. a long term loan from a financial institution.
2. Short-term liabilities are obligations that are payable within a period of one year, for example, creditors, bills payable, bank overdraft etc.

Sales : Sales are total revenues from goods sold or services provided to customers. Sales may be cash sales or credit sales.
Revenues : Revenue means the income from any source. It should be of regular nature. For example sales of goods/providing services to customer, commission, interest, dividends etc.
Expenses : Costs incurred by a business for earning revenue are known as expenses. For example rent, wages, salaries, interest etc.
Expenditure : Spending money or incurring a liability for acquiring assets, goods or services is called expenditure. The expenditure is classified as

1. Revenue expenditure : If the benefit of expenditure is received within a year it is called revenue expenditure e.g. rent, interest etc.


2. Capital expenditure : If any expenditure lasts for more than a year, it is treated capital expenditure such as purchase of machinery, furniture etc.

Profit : The excess of revenues over its related expenses during an accounting year is profit.
Profit = Revenue- Expenses.
Gain : A non-recurring profit from events or transactions incidental to business such as sale of fixed assets, appreciation in the value of an asset etc.
Loss : The excess of expenses of a period over its related revenues its termed as loss. e.g., cash or goods lost by theft of fire etc. Loss = Expenses - Revenue
Discount : Discount is the rebate given by the seller to the buyer. It can be classified as :

1. Trade discount : The purpose of this discount is to persuade the buyer to buy more goods. It is Offered at an agreed percentage of list price at the time of selling goods. This discount is not recorded in the account books as it is deducted in the invoice/cash memo.


2. Cash discount : The objective of providing cash discount is to encourage the debtors to pay the dues promptly. This discount is recorded in the account books.

Goods : The products in which the business deal in. The items that are purchased for the purpose of resale not for use in the business are called goods.
Drawings: It the owner withdraw money and/ or goods from the business for personal use it is known as drawings.
Purchases: The term Purchases is used only for the goods procured by a business for resale. In case of trading concerns it is purchase of final goods and in manufacturing concern this is purchase of raw materials. Purchases may be cash purchases or credit purchases.
Closing Stock: It is the value of the goods lying unsold at the end of accounting year. Closing stock of one year becomes the opening stock of next year.
Debtors  Debtors are persons and/ or other entities to whom business has sold goods and services on credit and amount has not received yet. These are assets of the business.
Creditors: If the business buys goods/ services on credit and amount is still to be paid to the persons and/ or other entities, these are called creditors. These are liabilities for the business.

ACCOUNTANCY

INTRODUCTION TO ACCOUNTING

Meaning of Accounting :

Accounting is an information system that provides accounting information to the users for correct decision-making.
‘‘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 at least, of financial character, and interpreting the results thereof.’’

The American Institute of Certified Public Accountants
ACCOUNTING CYCLE :

	Transaction (identification)		Journal/Subsidiary books (Recording)
	Ledger (Classifying)		Trial Balance (Summarizing)
	Final Accounts  (Results)		Analysis (Interpretation)

Objectives of Accounting :

1. To provide useful information to various interested parties.
2. To Maintain systematic and complete Records of Business Transactions
3. To Calculate Profit and Loss
4. To ascertain the financial position of the business.

Interested Users of Information :

There are number of users interested in knowing about the financial soundness and the profitability of the business.

Users	Classification	Information the user want
Internal	Owner	return on their investment, financial health of their company/business
	Management	to evaluate the performance, to take various decisions
External	Investors and potential Investors	safety and growth of their investments, future of the business
	Creditors	Assessing the financial capability, ability of the business to pay its debts
	Lenders	Repaying capacity, credit worthiness
	Tax Authorities	assessment of due taxes, true and fair disclosure of accounting information
	Employees	Profitability to claim higher wages and bonus, whether their dues (PF, ESI etc.) deposited regularly.
	Others	Customers, Researchers etc. may seek different information for different reasons.

Qualitative Characteristics of Accounting Information :

Accounting information is useful for interested users only if it possess the following characteristics :

1. Reliability: Means the information must be based on facts and be verified through source documents by anyone. It must be free from bias.


2. Relevance: To be relevant, information must be available in time and must influence the decisions of users by helping them form prediction about the outcomes.


3. Understandability: The information should be presented in such a manner that users can understand it well.


4. Comparability: The information should be disclosed in such a manner that it can be compared with previous years’ figures of business itself and other firm’s data.

Limitations of Accounting :

The accounting information suffers from the following limitations:

1. Based on historical data
2. Biasness
3. Qualitative information not shown
4. Ignores price level changes

ECONOMY

INDIAN ECONOMY ON THE EVE OF INDEPENDENCE

NOTES

Introduction

The main purpose of this Topic is to make you familiar with India’s economy in 1947 and present some important factors that leads to underdevelopment and stagnation of the India’s Economy.

The structure of India’s present day economy is not just of current making, It  has it’s root steeped in the history specially British India.

It’s important for us to know country ‘s economic  conditions before Independence to understand present economic condition.

Two most important purpose of Britishers are-

• To reduce the India to being a feeder economy for Great Britain’s own rapidly expanding modern industrial base.
• To protect and promote economy interest’s of Britain than with the development of the Indian economy.

Overview of Indian economy during British rule

• Before Britishers-Independent economy, agrarian society, India famous for Handicraft Industries(silk, cotton, metal & precious stone works ).
• The above two main policy transformed India into a net supplier of raw material and consumer of finished Industrial product from Britain.
• Country’s growth rate-less than 2 %(percent)
• Per -capita  output-less than half percent.

Agriculture sector

• Indian society was mainly agrarian society about 85 % of population directly or indirectly involved in agriculture.
• Agriculture was continuously stagnated and deteriorated.
• Little growth in agriculture due to expansion of area under cultivation .

Cause for low productivity and stagnation of agriculture during British rule
Low productivity in agriculture during British period is due to land settlement system.

Zamindari system

• Profit which came from agriculture went into the hands of Zamindars instead of cultivators.
• Zamindars did nothing for the development of agriculture sector because there main aim was to gain profit ignoring whatever the economic condition of cultivators.
• Revenue settlement process-zamindars had to deposit fixed amount of money within given date if they fail to do this they lose their rights.

It is one of the reason for the more harsh attitude of  zamindars towards cultivators .

Ryotwari System

• Ryotwari System was introduced by Thomas Munro in 1820.
• British Government collected taxes directly from the peasants.
• ownership rights were handed over to the peasants.
• The revenue rates of Ryotwari System were 50% where the lands were dry and 60% in irrigated land.

Mahalwari System

• Mahalwari system was introduced in 1833 during the period of Warren Hastings.
• The villages committee was held responsible for collection of the taxes.

 However, the British officers hardly cared of these rules. This created widespread discontent among the Indians

Low levels of technology-There is negligible use of scientific techniques

Negligible use of fertilizers-fertilisers are rarely used

Lack of irrigation facility-irrigation facility and tools are not adequate .

Growth in Agriculture-commercialisation of agriculture results in high yield of cash crops in some areas but in no way help farmers because it was used by Britishers .

Partition-Highly irrigated and fertile land went to Pakistan this affects India’s output.

Industrial sector

• Like agriculture industrial sector could not develop during British rule.
• World-wide famous Indian handicraft Industries declined during British rule and to take it’s place no other modern industry was allowed to come.

Reason behind failure of industrial sector during British rule

British India wants to make India only exporter of raw material to Britain and feeder of the finished products from Britain .

Results of failure of industrial sector during british rule

Unemployment, demand in the Indian consumer market this result in more imports of cheap manufactured goods from Britain.

Hardly any Capital goods industry (which produce machine tools)
Lack of this lower the rate of industrial development in India.

Small growth rate-Growth rate of new industrial sector and it’s contribution to the GDP remained very small .

Limited area of operation-new industrial sectors confined only to the railways, communications, ports, power generation and some other departmental undertaking.

Positive Signs

• Modern industry began to grow during the second half of the 19 century but it’s progress remained very slow.
• In the beginning the major industry were cotton and textiles mills.
• In the starting of 20 century The Tata Iron and Steel Company(TISCO) was setup in 1907.
• After second world-war-Paper, sugar , cement etc industries also setup.

Foreign Trade

• Restrictive policies of commodity production,trade and tariff persuaded by the colonial government adversely affected the structure,composition and volume of India’s foreign trade.

Exports from India-raw silk,wool,sugar,jute, indigo etc

This export did not result in any gold or silver into India it is one way development and that is towards Britain

Imports to India-Finished goods like cotton, silk and woolen cloths and capital goods like machines.

Monopoly-Britain maintained monopoly control over India’s export and imports.

Demographic Condition

Neither the total population nor the rate of population growth rate was  very high during colonial rule.

• Overall literacy-16% (out of this female literacy was less than 7%)
•  Public Health facilities-Highly inadequate
• Mortality rate-overall mortality rate was  very high ,infant mortality rate was about 2018 per thousand in contrast to present infant mortality rate  of total: 44.6 deaths/1,000 live births
• Life expectancy –it is very low 32 years in contrast to the present 67.3 years(2014)
• Extensive poverty spread during colonial period .

Occupational structure

Agriculture sector accounted for the largest share of workforce,which is usually  remained at a high of 70-75 percent while the manufacturing and the services sector accounted for only 10 and 10-15 percent respectively.

Infrastructure

Under the British rule basic infrastructure develops such as railways, ports, water -transport, telegraphs and posts did develop, main motive behind it to serve various colonial interests instead of providing basic amenities to the people.

The British introduced the railway in India in 1850 most important contribution.

It helps the people to travel long distance within short time and help in the commercialisation of agriculture.

Conclusion-condition of economy during British rule is not very appreciating the agricultural output is very low due to wrong policies of colonial government ,Industrial sectors was crying for modernization, diversification, capacity building and increased public investment.

In nutshell , the social and economic challenges before the country were enormous.

- See more at: http://www.civilservicesias.com/2014/06/indian-economy-on-eve-of-independence.html#sthash.vQCOJXl8.dpuf

BUSINESS STUDIES

NOTES

NATURE AND PURPOSE OE BUSINESS

Business: An economic activity involving the production and sale of goods and services undertaken with a motive of earning profit by satisfying human needs in society is called business.

Economic Activity: An activity by which someone earns his livelihood is called economic activity.

Non-economic Activity: An activity which done because of sense of love or charity is called non-economic activity. Non-economic activity is not done with the motive of earning money.

Characteristics of Business

An economic activity: All business activities are economic activities and are done for the sole purpose of earning money. A business activity may be done on a small scale or on a large scale. For example; purchase and sale by a shopkeeper is done on a small scale but purchase and sale by a cooperative society may be done on a large scale. Nevertheless, both of them are doing business activity.

Production and procurement of goods and services: A business activity involves production or procurement of goods and services. A manufacturer is involved in production, while a shopkeeper is involved in procurement. A product needs to be manufactured before it can be made available to the end user. Sometimes, the same organization may be involved in both production and sale of product to the end consumer. Similarly, the same organization may be involved in production and sale of services to the end consumer. But in some other cases, the producer and seller are different entities. For example; Hindustan Unilever is involved in production of goods while the local retailer is involved in selling those goods to end users.

Sale and exchange of goods and services: The business dealing always involves transfer or exchange of goods or services for a value. If a goods or service is produced for personal consumption, it cannot be part of a business. For example; if someone cooks food at home for the family it cannot be termed as a business activity. But if the same person cooks at a restaurant, then it is a business activity.

Dealing in goods and services on a regular basis: One time dealing in goods or services cannot be termed as a business. The business should happen on a regular basis. Suppose you have sold your old cell phone through an online portal, it cannot be termed as business activity because it is a one off sale. But if one of your friends sells cell phones through his shop on a regular basis, his activity is a business activity.

Profit earning: Profit earning is the sole motive of doing a business. No business can survive for long term without earning profit. Hence, profit maximization is the prime motive of a business organization. A business organization does this by increasing the volume of sale or by reducing costs.

Uncertainty of returns: Returns can never be certain in business activity. Sometimes, the return can be more than expectations but it can also be less than expectations. This happens because of external factors which are outside the control of the business organization.

Element of risk: An element of risk is always present in business activity. A business organization does not function in isolation. It is influenced by the external environment. Different aspects of the external environment present various types of risk to a business. For example; labour unrest, political unrest, launch of a new competitor, etc. can present risks to a business.

Types of Business Activities

Business activities can be of two main types, viz. Industry and Commerce.

Industry

The term industry is used for those activities in which resources are modified for better usage by humans. Industry does some sort of value addition to the resource. For example; when flour is sent to a bakery, the bakery does value addition by converting flour into bread and cake. Similarly, a biscuit factory changes the same flour into biscuits.

Sometimes, the term industry means group of firms producing similar items. For example; electronics industry includes all those companies which produce any kind of electronic goods. Similarly, cotton textiles industry includes all the firms which are involved in processing cotton items.

Industry can be classified into three types

• Primary Industry
• Secondary Industry
• Tertiary Industry

Primary Industry: Activities which are concerned with extraction and production of natural resources and reproduction and development of living organisms are included in primary industry. Mining is a good example of primary industry. Rearing of animals and breeding of plants also come under primary industry. The primary industry can be further divided into two types, viz. extractive industries and genetic industries.

• Extractive Industry: The industries which draw out product from natural sources are called extractive industry. Extractive industries supply some of the basic raw materials which are mostly products of geographic or natural environment. Farming, mining, lumbering, etc. are examples of extractive industries.
• Genetic Industry: Activities which remain engaged in breeding of plants and animals for their further reproduction come under genetic industry. Nurseries, seed producing companies, cattle breeding farms, poultry farms, hatcheries, etc. are examples of genetic industries.

Secondary Industry: Industry in which some primary resources are processed is called secondary industry. Making steel from iron ore is an example of secondary industry. Construction also comes under the secondary industry. Secondary industry processes primary material either to make the final product or to make intermediary products which would be further processed to make the final product. Secondary industry can be further divided into manufacturing industries and construction industries.

• Manufacturing Industry: Manufacturing industries are involved in processing of raw materials to produce goods and thus enhance the value of the raw material. Manufacturing industries either make fully finished products which we consume or partly finished products which serve as intermediary for other industries. Manufacturing industry can be further classified as follows:
  • Analytical Industry: The industry which analyses and separates different elements from the same material is called analytical industry. Oil refinery is an example of analytical industry.
  • Synthetic Industry: The industry which combines various raw materials to make a product is called synthetic industry. Cement industry is an example of synthetic industry.
  • Processing Industry: The industry which involves successive stages of manufacturing finished products is called processing industry. Sugar and paper are examples of processing industry.
  • Assembling Industry: The industry which assembles different components to make a product is called assembling industry. Television and computer industries are examples of assembling industry. In these cases, no component is made by the manufacturer rather all the components are just assembled by the manufacturer.
• Construction Industry: This industry is involved in making houses, bridges, stadiums, road, etc.

Tertiary Industry: Tertiary industries provide support services to the primary and secondary industry. Banking, transport, warehousing, communication are examples of tertiary industry. The whole service sector comes under the tertiary industry. The activities of tertiary industry can be considered as part of commerce.

Commerce

Commerce facilitates business activities of industries. There are two types of commercial activities, viz. trade and auxiliary to trade. Trade involves buying and selling of goods. A factory needs to sell its goods to the end user. It is not possible for a company to directly sell goods to the end user. Wholesalers and retailers work as channel partners to facilitate trade. Insurance and advertising work as auxiliaries to trade. Advertising is a tool which motivates customers to buy a product. Banking and finance, transport, warehousing are also auxiliaries to trade.

Business

• For starting a business the decision of entrepreneur and other legal formalities are required.
• Business activity involves provision of goods and services.
• No minimum qualification is necessary for starting a business.
• Profit earned is the reward of business.
• Capital investment is as per the size of the business.
• Transfer of interest is possible in business; with some formalities.
• Profits are uncertain and irregular in a business and risks are always involved.
• No prescribed code of conduct is necessary for a business.

• Profession

  • For starting a profession one needs the certificate and membership of a professional body.
  • Nature of work involves rendering personalised and expert services.
  • For a profession; expertise and training in the related field is necessary.
  • Professional fee is the reward of a profession.
  • Limited capital is needed for starting a profession.
  • Transfer of interest is not possible because of intangible nature of professional expertise.
  • Risk is least as fee is generally regular.
  • Professional code of conduct needs to be followed in a profession.

  • Employment

    • Appointment letter and service agreement are necessary to start employment.
    • An employee has to perform work as per contracts or rules of service.
    • Salary or wages is the reward of an employment.
    • No capital investment is required to start working as an employee.
    • Transfer of interest is not possible because of intangible nature of an employee's expertise.
    • There is fixed and regular income and hence there is no risk in empployment.
    • An employee needs to follow the norms of behaviour laid down by the employer.

    • Business Objectives

      Importance of Profit for Business

      • It is a source of income for business persons
      • It can be a source of finance for meeting expansion requirements of business
      • It indicates the efficient working of business
      • It can be taken as society’s approval of the utility of business
      • It builds up the reputation of a business enterprise.
  • Market Standing: Position of a business enterprise vis-à-vis its competitors is called market standing. Market standing gives strong footing and better business compared to competitors. A brand leader is in a position to earn more profit.
  • Innovation: An innovative product gives an edge to a business enterprise. No business enterprise can survive in the market for long without innovation. Apple’s products are very good examples of innovation. The iPad launched by Apple was nothing but an MP3 players which was already existing in the market. Apple made intuitive design and interface for its MP3 player and created an altogether new niche for this product. All of this could be possible because of innovation.
    Productivity: Productivity means taking maximum output from available resources. A higher productivity can lead to a higher profit. As mentioned earlier, a higher profit indicates better productivity of a business organization. This can be achieved by various means; like better resource utilization, better human resource management and better marketing strategies.
    Physical and financial resources: A business enterprise always needs physical and financial resources at regular intervals. A part of profit always needs to be ploughed back into the business to acquire these resources.
  • Earning profit: Profit earning is very important to continue the business in the long run. No business can survive for long term in the absence of profit.
    Manager performance and development: Big businesses cannot be run by a single person, rather needs managers to manage different aspects of business. Managers’ performance and development are important goals of the business. Continuous management development is the key for sorting out succession issues in an organization.
    Worker performance and attitude: Workers need to perform to increase productivity in the business. Worker’s attitude is also important for business.
    Social responsibility: A business organization does not work in vacuum. It has some social responsibilities as well. For example; protection of environment and employment generation are important social responsibility of a business organization.

  • Business Risks

    Possibility of lower profit or possibility of loss is the crux of business risk. There are two types of business risks: speculative risk and pure risk. Speculative risk involves both the possibilities of loss and gain. Market factors form the part of speculative risk. Pure risk involves either profit or loss. For example; in case of fire in the factory there is always a chance of loss.

  • Nature of Business Risks

    Business risks arise due to uncertainties: Uncertainties refers to the lack of knowledge about what is going to happen in the future. Many surprising changes can happen in the future which may warrant the business strategy to be changed altogether. Changes can happen in technology, government laws, socio-economic situation or in political situation. Changes can also take place in the market with the entry of a better product or a more capable competitor.
    Risk is an essential part of every business: Every business faces some or other type of risk. No business can be isolated from risks.
    Degree of risk depends mainly upon the nature and size of business: Nature and size of business are the main factors of risk. For example; the models of cell phones keep on changing almost on a daily basis. A model which is supposed to be superb today may become obsolete tomorrow. A large business organization is usually at lower risk because of its financial muscle, whereas a small business organization is usually at a higher risk.
    Profit is the reward for risk taking: This is because of the risks involved that business persons are rewarded with profit. A person who is averse to risk would prefer employment rather than risking his lifetime’s savings on starting a business.

  • Causes of Business Risk

    Natural causes: Natural causes are beyond the control of human beings. Natural disasters can lead to huge losses in business. Let us take example of various small hotels which were wiped out during the massive floods in Uttarakhand. Nobody could do anything when the flood hit the hilly state.
    Human causes: Strikes, dishonesty, carelessness, etc. are examples of human causes of business risk. Labour unrest have often resulted in shutdown of many factories. The factory of Maruti at Gurgaon is an example of crippling operations due to labour unrest.
    Economic causes: Inflation, unemployment, economic slowdown, etc. are examples of economic causes of business risk. The recent economic slowdown has resulted in reduced demand for housing. According to leading newspapers, there is huge inventory in the housing sector which would take at least ten years to be sold. Luxury products suffer severe decline in demand during an economic slowdown.
    Other causes: Some political events can change the business scenario. A major policy change by the government can change the business environment. A very good example of effect of policy change on a business is the upsurge in mobile telephony market in India when the then telecommunications minister favoured CDMA by making some changes in policy. It is always seen that a stable government at the centre improves the business climate, while an unstable government is detrimental to the business climate.

SNAPSHOTS

THE SUMMER OF BEAUTIFUL HORSE

SUMMARY

The Summer of the Beautiful White Horse” is narrated by nine-year-old Aram Garoghlanian, a member of an Armenian community living among the lush fruit orchards and vineyards of California. One morning Aram is awakened before dawn by his older cousin Mourad, who is thought to be demented by everyone except Aram and has a way with animals. Aram is astonished to see that Mourad is sitting on a beautiful white horse. Aram has always wanted to ride a horse, but his family is too poor to afford one. However, the Garoghlanian family is noted not only for its poverty but also for its honesty, so it is unthinkable that Mourad would have stolen the horse. So, Aram felt that his brother couldn’t have stolen the horse. Aram was invited to ride on the horse with Mourad. Then the idea about Mourad stealing the horse drained away from Aram’s mind as he felt that it wouldn’t become stealing until they offer to sell the horse. They enjoyed their riding on the horse for a long time. Mourad roared and sang songs with joy. It was as if they were somewhere out of this world. This crazy behaviour of Mourad was considered to be a natural descent from their uncle Khosrove even though his father, Zorab was a practical man. Uncle Khosrove was an enormous man who was always furious, impatient, and irritable. He would roar and stop everyone from talking and say It is no harm, pay no attention to it. When his son once came and told them that their house was on fire, he silenced him by roaring “Enough. It is no harm”. After a long time Mourad wanted to ride alone on the horse. Aram also had the same longing and also wished to ride alone. However, when he sat on the horse and kicked its muscles it reared and snorted and raced forward dropping Aram off its back. That afternoon, an Assyrian farmer named John Byro, who was a friend of the Garoghlanians came to Aram’s house. He reported to Aram’s mother that his white horse which had been stolen a month ago was still missing. Hearing this Aram concludes that Mourad must have had the horse for a long time. Khosrove, who was at Aram’s house when Byro came, shouted his dialogue “its no harm” to such an extent that Byro was forced to sprint out to avoid responding.Aran to Mourad to inform him of Byro’s arrival. Aram also pleads to Mourad to not return the horse until the former could learn to ride. Mourad disagrees saying that Aram would take at least a year to learn but promises he would keep it for six months. And this becomes a routine. Mourad comes daily to pick Aram to ride and Aram continuously falls off the horse’s back after every attempt. Two weeks later when they were going to take the horse back to its hiding place, they met Byro on the way. The farmer is extremely surprised. He recognizes his horse but refuses to believe his eyes. He says “the horse is the twin of my horse” and “a suspicious man would believe his eyes instead of his heart”. Thus the Garoghlanian’s fame of honesty saves them.The following day they return the horse before everyone(except the dogs) is awake. None of the dogs bark since Mourad has “a way with dogs”. Mourad gets extremely sentimental when he parts with the horse. The next day Byro arrives at Aram’s house to show the horse to his mother and report that “the horse is stronger” and better tempered. The story ends with Khosrove shouting at Byro to “pay no attention to it

ANIMAL FARM

CHARACTER SKETCH

Napoleon -  The pig who emerges as the leader of Animal Farm after the Rebellion. Based on Joseph Stalin, Napoleon uses military force (his nine loyal attack dogs) to intimidate the other animals and consolidate his power. In his supreme craftiness, Napoleon proves more treacherous than his counterpart, Snowball.From the very beginning of the novella, Napoleon emerges as an utterly corrupt opportunist. Though always present at the early meetings of the new state, Napoleon never makes a single contribution to the revolution—not to the formulation of its ideology, not to the bloody struggle that it necessitates, not to the new society’s initial attempts to establish itself. He never shows interest in the strength of Animal Farm itself, only in the strength of his power over it. Thus, the only project he undertakes with enthusiasm is the training of a litter of puppies. He doesn’t educate them for their own good or for the good of all, however, but rather for his own good: they become his own private army or secret police, a violent means by which he imposes his will on others.

Although he is most directly modeled on the Soviet dictator Joseph Stalin, Napoleon represents, in a more general sense, the political tyrants that have emerged throughout human history and with particular frequency during the twentieth century. His namesake is not any communist leader but the early-eighteenth-century French general Napoleon, who betrayed the democratic principles on which he rode to power, arguably becoming as great a despot as the aristocrats whom he supplanted. It is a testament to Orwell’s acute political intelligence and to the universality of his fable that Napoleon can easily stand for any of the great dictators and political schemers in world history, even those who arose after Animal Farm was written. In the behavior of Napoleon and his henchmen, one can detect the lying and bullying tactics of totalitarian leaders such as Josip Tito, Mao Tse-tung, Pol Pot, Augusto Pinochet, and Slobodan Milosevic treated in sharply critical terms.

Snowball -  The pig who challenges Napoleon for control of Animal Farm after the Rebellion. Based on Leon Trotsky, Snowball is intelligent, passionate, eloquent, and less subtle and devious than his counterpart, Napoleon. Snowball seems to win the loyalty of the other animals and cement his power.

Orwell’s stint in a Trotskyist battalion in the Spanish Civil War—during which he first began plans for a critique of totalitarian communism—influenced his relatively positive portrayal of Snowball. As a parallel for Leon Trotsky, Snowball emerges as a fervent ideologue who throws himself heart and soul into the attempt to spread Animalism worldwide and to improve Animal Farm’s infrastructure. His idealism, however, leads to his downfall. Relying only on the force of his own logic and rhetorical skill to gain his influence, he proves no match for Napoleon’s show of brute force.

Although Orwell depicts Snowball in a relatively appealing light, he refrains from idealizing his character, making sure to endow him with certain moral flaws. For example, Snowball basically accepts the superiority of the pigs over the rest of the animals. Moreover, his fervent, single-minded enthusiasm for grand projects such as the windmill might have erupted into full-blown megalomaniac despotism had he not been chased from Animal Farm. Indeed, Orwell suggests that we cannot eliminate government corruption by electing principled individuals to roles of power; he reminds us throughout the novella that it is power itself that corrupts.

Boxer -  The cart-horse whose incredible strength, dedication, and loyalty play a key role in the early prosperity of Animal Farm and the later completion of the windmill. Quick to help but rather slow-witted, Boxer shows much devotion to Animal Farm’s ideals but little ability to think about them independently. He naïvely trusts the pigs to make all his decisions for him. His two mottoes are “I will work harder” and “Napoleon is always right.”

The most sympathetically drawn character in the novel, Boxer epitomizes all of the best qualities of the exploited working classes: dedication, loyalty, and a huge capacity for labor. He also, however, suffers from what Orwell saw as the working class’s major weaknesses: a naïve trust in the good intentions of the intelligentsia and an inability to recognize even the most blatant forms of political corruption. Exploited by the pigs as much or more than he had been by Mr. Jones, Boxer represents all of the invisible labor that undergirds the political drama being carried out by the elites. Boxer’s pitiful death at a glue factory dramatically illustrates the extent of the pigs’ betrayal. It may also, however, speak to the specific significance of Boxer himself: before being carted off, he serves as the force that holds Animal Farm together.

Squealer -  The pig who spreads Napoleon’s propaganda among the other animals. Squealer justifies the pigs’ monopolization of resources and spreads false statistics pointing to the farm’s success. Orwell uses Squealer to explore the ways in which those in power often use rhetoric and language to twist the truth and gain and maintain social and political control.

Throughout his career, Orwell explored how politicians manipulate language in an age of mass media. In Animal Farm, the silver-tongued pig Squealer abuses language to justify Napoleon’s actions and policies to the proletariat by whatever means seem necessary. By radically simplifying language—as when he teaches the sheep to bleat “Four legs good, two legs better!”—he limits the terms of debate. By complicating language unnecessarily, he confuses and intimidates the uneducated, as when he explains that pigs, who are the “brainworkers” of the farm, consume milk and apples not for pleasure, but for the good of their comrades. In this latter strategy, he also employs jargon (“tactics, tactics”) as well as a baffling vocabulary of false and impenetrable statistics, engendering in the other animals both self-doubt and a sense of hopelessness about ever accessing the truth without the pigs’ mediation. Squealer’s lack of conscience and unwavering loyalty to his leader, alongside his rhetorical skills, make him the perfect propagandist for any tyranny. Squealer’s name also fits him well: squealing, of course, refers to a pig’s typical form of vocalization, and Squealer’s speech defines him. At the same time, to squeal also means to betray, aptly evoking Squealer’s behavior with regard to his fellow animals.

Old Major -  The prize-winning boar whose vision of a socialist utopia serves as the inspiration for the Rebellion. Three days after describing the vision and teaching the animals the song “Beasts of England,” Major dies, leaving Snowball and Napoleon to struggle for control of his legacy. Orwell based Major on both the German political economist Karl Marx and the Russian revolutionary leader Vladimir Ilych Lenin.

As a democratic socialist, Orwell had a great deal of respect for Karl Marx, the German political economist, and even for Vladimir Ilych Lenin, the Russian revolutionary leader. His critique of Animal Farm has little to do with the Marxist ideology underlying the Rebellion but rather with the perversion of that ideology by later leaders. Major, who represents both Marx and Lenin, serves as the source of the ideals that the animals continue to uphold even after their pig leaders have betrayed them.

Though his portrayal of Old Major is largely positive, Orwell does include a few small ironies that allow the reader to question the venerable pig’s motives. For instance, in the midst of his long litany of complaints about how the animals have been treated by human beings, Old Major is forced to concede that his own life has been long, full, and free from the terrors he has vividly sketched for his rapt audience. He seems to have claimed a false brotherhood with the other animals in order to garner their support for his vision.

Clover -  A good-hearted female cart-horse and Boxer’s close friend. Clover often suspects the pigs of violating one or another of the Seven Commandments, but she repeatedly blames herself for misremembering the commandments.

Moses -  The tame raven who spreads stories of Sugarcandy Mountain, the paradise to which animals supposedly go when they die. Moses plays only a small role in Animal Farm,but Orwell uses him to explore how communism exploits religion as something with which to pacify the oppressed.

Mollie -  The vain, flighty mare who pulls Mr. Jones’s carriage. Mollie craves the attention of human beings and loves being groomed and pampered. She has a difficult time with her new life on Animal Farm, as she misses wearing ribbons in her mane and eating sugar cubes. She represents the petit bourgeoisie that fled from Russia a few years after the Russian Revolution.

Benjamin -  The long-lived donkey who refuses to feel inspired by the Rebellion. Benjamin firmly believes that life will remain unpleasant no matter who is in charge. Of all of the animals on the farm, he alone comprehends the changes that take place, but he seems either unwilling or unable to oppose the pigs.

Muriel -  The white goat who reads the Seven Commandments to Clover whenever Clover suspects the pigs of violating their prohibitions.

Mr. Jones -  The often drunk farmer who runs the Manor Farm before the animals stage their Rebellion and establish Animal Farm. Mr. Jones is an unkind master who indulges himself while his animals lack food; he thus represents Tsar Nicholas II, whom the Russian Revolution ousted.

Mr. Frederick -  The tough, shrewd operator of Pinchfield, a neighboring farm. Based on Adolf Hitler, the ruler of Nazi Germany in the 1930s and 1940s, Mr. Frederick proves an untrustworthy neighbor.

Mr. Pilkington -  The easygoing gentleman farmer who runs Foxwood, a neighboring farm. Mr. Frederick’s bitter enemy, Mr. Pilkington represents the capitalist governments of England and the United States.

Mr. Whymper -  The human solicitor whom Napoleon hires to represent Animal Farm in human society. Mr. Whymper’s entry into the Animal Farm community initiates contact between Animal Farm and human society, alarming the common animals.

Jessie and Bluebell -  Two dogs, each of whom gives birth early in the novel. Napoleon takes the puppies in order to “educate” them.

Minimus -  The poet pig who writes verse about Napoleon and pens the banal patriotic song “Animal Farm, Animal Farm” to replace the earlier idealistic hymn “Beasts of England,” which Old Major passes on to the others.

ANIMAL FARM

ANIMAL FARM (CHAPTER -10)

SUMMARY

Years pass. Many animals age and die, and few recall the days before the Rebellion. The animals complete a new windmill, which is used not for generating electricity but for milling corn, a far more profitable endeavor. The farm seems to have grown richer, but only the many pigs and dogs live comfortable lives. Squealer explains that the pigs and dogs do very important work—filling out forms and such. The other animals largely accept this explanation, and their lives go on very much as before. They never lose their sense of pride in Animal Farm or their feeling that they have differentiated themselves from animals on other farms. The inhabitants of Animal Farm still fervently believe in the goals of the Rebellion—a world free from humans, with equality for all animals.One day, Squealer takes the sheep off to a remote spot to teach them a new chant. Not long afterward, the animals have just finished their day’s work when they hear the terrified neighing of a horse. It is Clover, and she summons the others hastily to the yard. There, the animals gaze in amazement at Squealer walking toward them on his hind legs. Napoleon soon appears as well, walking upright; worse, he carries a whip. Before the other animals have a chance to react to the change, the sheep begin to chant, as if on cue: “Four legs good, two legs better!” Clover, whose eyes are failing in her old age, asks Benjamin to read the writing on the barn wall where the Seven Commandments were originally inscribed. Only the last commandment remains: “all animals are equal.” However, it now carries an addition: “but some animals are more equal than others.” In the days that follow, Napoleon openly begins smoking a pipe, and the other pigs subscribe to human magazines, listen to the radio, and begin to install a telephone, also wearing human clothes that they have salvaged from Mr. Jones’s wardrobe.One day, the pigs invite neighboring human farmers over to inspect Animal Farm. The farmers praise the pigs and express, in diplomatic language, their regret for past “misunderstandings.” The other animals, led by Clover, watch through a window as Mr. Pilkington and Napoleon toast each other, and Mr. Pilkington declares that the farmers share a problem with the pigs: “If you have your lower animals to contend with,” he says, “we have our lower classes!” Mr. Pilkington notes with appreciation that the pigs have found ways to make Animal Farm’s animals work harder and on less food than any other group of farm animals in the county. He adds that he looks forward to introducing these advances on his own farm. Napoleon replies by reassuring his human guests that the pigs never wanted anything other than to conduct business peacefully with their human neighbors and that they have taken steps to further that goal. Animals on Animal Farm will no longer address one another as “Comrade,” he says, or pay homage to Old Major; nor will they salute a flag with a horn and hoof upon it. All of these customs have been changed recently by decree, he assures the men. Napoleon even announces that Animal Farm will now be known as the Manor Farm, which is, he believes, its “correct and original name.”The pigs and farmers return to their amiable card game, and the other animals creep away from the window. Soon the sounds of a quarrel draw them back to listen. Napoleon and Pilkington have played the ace of spades simultaneously, and each accuses the other of cheating. The animals, watching through the window, realize with a start that, as they look around the room of the farmhouse, they can no longer distinguish which of the cardplayers are pigs and which are human beings.

Analysis

The last chapter of Animal Farm brings the novel to its logical, unavoidable, yet chilling conclusion. The pigs wholly consolidate their power and their totalitarian, communist dictatorship completely overwhelms the democratic-socialist ideal of Animal Farm. Napoleon and the other pigs have become identical to the human farmers, just as Stalin and the Russian communists eventually became indistinguishable from the aristocrats whom they had replaced and the Western capitalists whom they had denounced. The significance of Napoleon’s name is now entirely clear: the historical Napoleon, who ruled France in the early nineteenth century and conquered much of Europe before being defeated at the Battle of Waterloo in 1814, originally appeared to be a great liberator, overthrowing Europe’s kings and monarchs and bringing freedom to its people. But he eventually crowned himself emperor of France, shattering the dreams of European liberalism. Rather than destroying the aristocracy, Napoleon simply remade it around himself. Similarly, the pig Napoleon figures as the champion of Animalism early on. Now, however, he protests to the humans that he wants nothing more than to be one of them—that is, an oppressor.Throughout the novella, Orwell has told his fable from the animals’ point of view. In this chapter, we see clearly the dramatic power achieved by this narrative strategy. The animals remain naïvely hopeful up until the very end. Although they realize that the republic foretold by Old Major has yet to come to fruition, they stalwartly insist that it will come “[s]ome day.” These assertions charge the final events of the story with an intense irony. For although Orwell has used foreshadowing and subtle hints to make us more suspicious than the animals of the pigs’ motives, these statements of ingenuous faith in Animal Farm on the part of the common animals occur just before the final scene. This gap between the animals’ optimism and the harsh reality of the pigs’ totalitarian rule creates a sense of dramatic contrast. Although the descent into tyranny has been gradual, Orwell provides us with a restatement of the original ideals only moments before the full revelation of their betrayal.Orwell uses emphatic one-line paragraphs to heighten the terror of this betrayal: the succinct conveyance of “It was a pig walking on his hind legs” and “He carried a whip in his trotter” drops this stunning information on us without warning, shocking us as much as it does the animals. Moreover, Orwell’s decision to tell the story from the animals’ point of view renders his final tableau all the more terrible. The picture of the pigs and farmers, indistinguishable from one another, playing cards together is disturbing enough by itself. Orwell, however, enables us to view this scene from the animals’ perspective—from the outside looking in. By framing the scene in this way, Orwell points to the animals’ total loss of power and entitlement: Animal Farm has not created a society of equals but has simply established a new class of oppressors to dominate the same class of oppressed—a division embodied, as at the opening of the novella, by the farmhouse wall.The final distillation of the Seven Commandments that appears on the barn—“all animals are equal, but some are more equal than others”—stands as the last great example of how those in power manipulate language as an instrument of control. At the beginning of the novella, the idea of “more equal” would not only have seemed contrary to the egalitarian socialist spirit of Animal Farm, it would have seemed logically impossible. But after years of violence, hunger, dishonesty, and fear, the spirit of Animal Farm seems lost to a distant past. The concept of inherent equality has given way to notions of material entitlement: Animal Farm as an institution no longer values dignity and social justice; power alone renders a creature worthy of rights. By claiming to be “more equal”—an inherently nonsensical concept—than the other animals, the pigs have distorted the original ideals of the farm beyond recognition and have literally stepped into the shoes of their former tyrannical masters

ANIMAL FARM

ANIAML FARM (CHAPTER-9)

SUMMARY

Wearily and weakly, the animals set about rebuilding the windmill. Though Boxer remains seriously injured, he shows no sign of being in pain and refuses to leave his work for even a day. Clover makes him a poultice for his hoof, and he eventually does seem to improve, but his coat doesn’t seem as shiny as before and his great strength seems slightly diminished. He says that his only goal is to see the windmill off to a good start before he retires. Though no animal has yet retired on Animal Farm, it had previously been agreed that all horses could do so at the age of twelve. Boxer now nears this age, and he looks forward to a comfortable life in the pasture as a reward for his immense labors.Food grows ever more scarce, and all animals receive reduced rations, except for the pigs and the dogs. Squealer continues to produce statistics proving that, even with this “readjustment,” the rations exceed those that they received under Mr. Jones. After all, Squealer says, when the pigs and dogs receive good nourishment, the whole community stands to benefit. When four sows give birth to Napoleon’s piglets, thirty-one in all, Napoleon commands that a schoolhouse be built for their education, despite the farm’s dwindling funds. Napoleon begins ordering events called Spontaneous Demonstrations, at which the animals march around the farm, listen to speeches, and exult in the glory of Animal Farm. When other animals complain, the sheep, who love these Spontaneous Demonstrations, drown them out with chants of “Four legs good, two legs bad!”In April, the government declares Animal Farm a republic, and Napoleon becomes president in a unanimous vote, having been the only candidate. The same day, the leadership reveals new discoveries about Snowball’s complicity with Jones at the Battle of the Cowshed. It now appears that Snowball actually fought openly on Jones’s side and cried “Long live Humanity!” at the outset of the fight. The battle took place so long ago, and seems so distant, that the animals placidly accept this new story. Around the same time, Moses the raven returns to the farm and once again begins spreading his stories about Sugarcandy Mountain. Though the pigs officially denounce these stories, as they did at the outset of their administration, they nonetheless allow Moses to live on the farm without requiring him to work.One day, Boxer’s strength fails; he collapses while pulling stone for the windmill. The other animals rush to tell Squealer, while Benjamin and Clover stay near their friend. The pigs announce that they will arrange to bring Boxer to a human hospital to recuperate, but when the cart arrives, Benjamin reads the writing on the cart’s sideboards and announces that Boxer is being sent to a glue maker to be slaughtered. The animals panic and begin crying out to Boxer that he must escape. They hear him kicking feebly inside the cart, but he is unable to get out.Soon Squealer announces that the doctors could not cure Boxer: he has died at the hospital. He claims to have been at the great horse’s side as he died and calls it the most moving sight he has ever seen—he says that Boxer died praising the glories of Animal Farm. Squealer denounces the false rumors that Boxer was taken to a glue factory, saying that the hospital had simply bought the cart from a glue maker and had failed to paint over the lettering. The animals heave a sigh of relief at this news, and when Napoleon gives a great speech in praise of Boxer, they feel completely soothed.Not long after the speech, the farmhouse receives a delivery from the grocer, and sounds of revelry erupt from within. The animals murmur among themselves that the pigs have found the money to buy another crate of whisky—though no one knows where they found the money.As members of the revolutionary era in Russia began to expect to receive some compensation for all of the terrible sacrifices they had made in the revolution and in the war with Germany, they became painfully aware of the full extent of their betrayal at the hands of the Stalinist leadership. The quality of life for the average citizen continued to decline, even as the ruling class grew ever larger and consumed ever more luxuries. Orwell uses Boxer’s death as a searing indictment of such totalitarian rule, and his death points sadly and bitterly to the downfall of Animal Farm. The great horse seems to have no bad qualities apart from his limited intellect, but, in the end, he falls victim to his own virtues—loyalty and the willingness to work. Thus, Boxer’s great mistake lies in his conflation of the ideal of Animal Farm with the character of Napoleon: never thinking for himself about how the society should best realize its founding ideals, Boxer simply follows Napoleon’s orders blindly, naïvely assuming that the pigs have the farm’s best interest at heart. It is sadly ironic that the system that he so loyally serves ultimately betrays him: he works for the good of all but is sold for the good of the few.The pig leadership’s treachery and hypocrisy becomes even more apparent in the specific manner of Boxer’s death: by selling Boxer for profit, the pigs reenact the very same cruelties against which the Rebellion first fights—the valuing of animals for their material worth rather than their dignity as living creatures. When a new crate of whisky arrives for the pigs, we can reasonably infer that the money for it has come from the sale of Boxer. Moreover, the intensely pathetic nature of Boxer’s fate—death in a glue factory—contrasts greatly with his noble character, and the contrast contributes to the dramatic effect of Boxer’s death, increasing the power of Orwell’s critique. Boxer’s life and death provide a microcosm for Orwell’s conception of the ways in which the Russian communist power apparatus treated the working class that it purported to serve: Orwell suggests that the administration exhausted the resources of the workers for its own benefit and then mercilessly discarded them.In order to defuse potential outrage at his blatant cruelty, Napoleon brings Moses back and allows him to tell his tales of Sugarcandy Mountain, much as Stalin made a place for the once-taboo Russian Orthodox Church after World War II. Moses’s return signals the full return of oppression to the farm. While the pigs object early on to Moses’s teachings because they undermine the animals’ will to rebel, they now embrace the teachings for precisely the same reason. Napoleon further hopes to appease his populace by means of his Spontaneous Demonstrations, which force the animals to go through the motions of loyalty, despite what they may actually feel. The name of the new ritual bears particular irony: these gatherings are anything but spontaneous and demonstrate very little beyond a fearful conformity. The irony of the title indicates the overriding hollowness of the event.Because the elite class controls the dissemination of information on Animal Farm, it is able to hide the terrible truth of its exploitation of the other animals. Fallible individual memories of Snowball’s bravery and Napoleon’s cowardice at the Battle of the Cowshed prove no match for the collective, officially sponsored memory that Squealer constructs, which paints a picture indicating completely the reverse. With no historical, political, or military resources at their command, the common animals have no choice but to go along with the charade