Meaning and Characteristics of Business | Inter first year commerce | Part 1 | Anjaneya Kumar Vemuri

Meaning and Characteristics of Business | Inter first year commerce | Part 1 | Anjaneya Kumar Vemuri Class 1: Classification of Human Activities    • Inter first year commerce | Classification...   1.DEFINE BUSINESS. EXPLAIN ITS CHARACTERISTIC FEATURES Features. (5 Marks) ANSWER: BUSINESS: The term Business literally means “State of being busy”. But, in Economic sense, it is an economic activity involving production, exchange, distribution and sale of goods and services with an objective of making profits and maximization of wealth. DEFINITION: L.H. Haney defined business as “a human activity directed towards producing or acquiring wealth through buying and selling of goods”. CHARACTERISTIC FEATURES OF BUSINESS: 1.DEALS WITH GOODS AND SERVICES: Every business enterprise produces or buys goods and services with the intention of selling them to others to earn profit. Goods may be consumer goods or producer / capital goods. Services may include facilities offered to consumers like transportation, banking, electricity, insurance, warehousing etc. 2.ECONOMIC ACTIVITY: Business is an Economic Activity. It is performed with the main motive of earning money. 3.PROFIT MOTIVE: The primary objective of business is to earn profits. Profits are essential for the survival as well as growth of any business. Profits must, however, be earned through legal and fair means. 4.CREATION OF UTILITIES: Business makes goods or services more useful by adding time, place, form and possession utilities to them. 5.SALE, TRANSFER OR EXCHANGE: All business activities involve transfer or exchange of goods and services for some consideration. The consideration, called price, is usually expressed in terms of money. For example, if a person cooks and serves food to his family, it’s not a business. But, when he cooks food and sells it others for a price, it becomes business.