Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev

Business Mathematics and Logical Reasoning & Statistics

Created by: Sushil Kumar

CA Foundation : Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev

The document Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev is a part of the CA Foundation Course Business Mathematics and Logical Reasoning & Statistics.
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Summary

  • An index number is a ratio or an average of ratios expressed as a percentage, Two or more time periods are involved, one of which is the base time period. 
  • Issues Involved in index numbers
    (a ) Selection of Data
    (b) Base period
    (c) Selection of Weights:
    (d) Use of Averages:
    (e) Choice of Variables

Construction of Index Number
Price Index numbers
(a) Simple aggregative price index = Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
(b) Laspeyres’ Index: In this Index base year quantities are used as weights:
Laspeyres Index = Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
(c) Paasche’s Index: In this Index current year quantities are used as weights:
Passche’s Index  Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev(d) The Marshall-Edgeworth index uses this method by taking the average of the base year and the current year
Marshall-Edgeworth Index  = Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev

  • Fisher’s ideal Price Index: This index is the geometric mean of Laspeyres’ and Paasche’s.
    Fisher’s Index = Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
  • Weighted Average of Relative Method: Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
  • (h) Chain Index = Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev

Quantity Index Numbers:

  • Simple aggregate of quantities: Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
  • The simple average of quantity relatives: Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
  • Weighted aggregate quantity indices:
    (i) With base year weight : Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
    (ii) With current year weight : Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
    (iii) Geometric mean of (i) and (ii) : Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
  • Base-year weighted average of quantity relatives. This has the formula Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
  • Value Indices Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
  • Deflated Value = Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
    or

Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev

  • Shifted Price Index = Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev
  • Test of Adequacy
    (1) Unit test (2) Time reversal Test (3) Factor reversal test (4) Circular Test
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