Meaning and Characteristics of Business

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Meaning of Business

An activity involving regular production or purchase of goods and services for sale, transfer and exchange with an object of earning profit defined as business.

Characteristics of Business

  1. Deals in goods and services: business people are engaged in production and distribution of goods or services. Goods categorized as consumer goods and capital goods. Services can be in form of transportation, banking, advertising etc.

  2. Sale/exchange of goods and services: if person produces or buys goods to sell he is engaged in business. In business goods and services produced/purchased must be exchanged for money.

  3. Regular exchange of goods and services: An isolated transaction is not treated as business activity. Production or buying-selling activities must be carried out on a regular basis.

  4. Investment required: Business activity requires some amount investment in terms of land, labour or capital. These resources are utilized in business.

  5. Aim to earn profit: Business activities are performed primarily to earn income by way of profit. Profit requires for growing and expanding business.

  6. Risk and uncertainty of income involves: Businessman who invests various resources expects a fair amount of return. In business future is unpredictable and business person has practically no control over certain factors. Sometimes he/she enjoys profits and may come when they suffer with loss.

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