Eorupa science & commerce Academy

Q. No. 1: ANSWER: Define Business? What are the characteristics & Functions of Business?

BUSINESS
INTRODUCTION: The word Business has been derived from Latin word Busy which means the state of being busy. A person may be busy in reading, writing, painting an playing because any of these activities may bring money for him. In economics this word means work, efforts and act of the people which are connected with the production of wealth. DEFINITION: The definition of business are as follows: JAMES STEPHENSON: Every human activity which is engaged in for the sake of earning profit may the called business. CLARKE & GOTTFRIED: any and all of those activities connected with the production and exchange of goods an services and the financial affairs connected with these activities. IN SIMPLE WORDS: Business is any activity which done to earn profit. FEATURES Following are the features of the business Involvement of Economic Activities: Purchase or Production Sale or Transfer To Earn Profit

Example: Trade Fisheries Agency Transportation

CHARACTERISTICS OF A BUSINESS
Following are the characteristics of a business. 1: Production/ Purchase of goods: Production or purchase of goods is an essential feature business. Without production or purchase, business activities cannot start. A business deals in production and purchase of goods, its basic aim to provide goods to the people for price. Sale/Transfer of goods: The goods must be purchased or manufactured so that they can be sale or transfer for price. Business involves sale and transfer of goods and services to earn money.

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Prepared By: H. ABDUL REHMAN

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Eorupa science & commerce Academy

3: 4: Regularity in Dealings: Business activity is the name of regular dealing. If a person sale or purchases for one time, it cannot be a business activity. Regularity is as important for business. Dealing in goods and services: Business consists of those transactions which are related to goods and services. The word goods mean, consumer goods and industrial goods and services means intangible item like, supply of electricity, transportation services, Doctor, Lawyer, Teacher Profit Motive: Any addition above the cost is called profit. Business is started only for the sake of profit. Profit is very essential for the survival and development of business. It is the reward of the business mans work. Risk Involvement: It is very important characteristics of the business. A business is not free from risk of loss. Loss may arise any time due to change in consumers taste, choice. Profit of business depends on may factors on which business may have no control. Hence business involve Risk. Economic Activity: Business is an Economic Activity. Economic Activity means to take part in different works for earning profit. Investment (Capital): Almost all business requires capital. The capital is required at every stage. fact, it is capital investment which leaves to risk of business.

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FUNCTION OF A BUSINESS
1: 2: Following are the functions of business. Production: Business produce goods and services for sale to other for price. If a man produce anything for his personal use it cannot be a business. Purchase: To start any business, the business man has to purchase some commodities or raw material. A trader buys goods on low price and sale than on high prices. Sale: Sale is also function of business. A manufacturer sells his own product, but a trader sells those products which are provided by other. The sale should must be regular and at reasonable price. Storing: Generally there is time gap between production and sale of goods so there is need of storing. Storing requires care and proper environment like godown this function provides the goods to the customer throughout the year. Transport: The goods and services have to be carried from one place to another. It is called transportation. For this purpose proper transportation facility is needed usually, business man try to select cheap and quick means of transportation. Insurance: During transportation there is risk of accident or loss. So to cover this loss business man insured his goods. Advertising: In order to promote sales, an entrepreneur has to advertise his products. Advertisement attracts consumers and gives information about the product.

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Prepared By: H. ABDUL REHMAN

0321-6485593

Eorupa science & commerce Academy

8: 9: Banking: In modern business, banks play very important functions. Because all the activities of business requires money. Money is provided by the banks. Middleman ship (Agent): There could a gap between the producer and consumer. This gap is filled by the middleman. He link between two parties and get remuneration for his work. Research: It relates to develop the business activities. People like new product. So, different methods and machinery is used to bring change in products. It may include shape, colour, taste or design of products.

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CONCLUSION
So after careful analysis of the function and characteristics of business we can conclude that all the activities which that all are aimed at earning profit can be called business.

Prepared By: H. ABDUL REHMAN

0321-6485593