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Write the characteristic of business |
Answer» The characteristics of business are as under:An economic activityBusiness is considered to be an economic activity because it is undertaken with the objective of earning money orlivelihood and not because of love, affection, sympathy or any other sentimental reasons.Production or procurement of goods and servicesBefore goods are offered to the people for consumption, they must either be produced or procured by the businessenterprise. Thus, every business enterprise either manufactures the goods it deals in or it acquires them from producers,to be further sold to the end user.Sale or exchange of goods and servicesBusiness involves transfer or exchange of goods and services for value. If goods are produced not for the purpose of salebut say for internal consumption, it is not a business activity. Thus, the important characteristics of business is that thereshould be exchange of goods between the buyer or the seller.Dealing in goods and services on a regular basisBusiness is a ongoing activity. it involves dealings in goods or services on a regular basis. One single transaction of saleor purchase does not constitute business.Profit earningOne of the main purpose of business is to earn profits. No business can survive for long without earning profit. That iswhy businessmen make all possible efforts to maximize profits, by increasing the volume of sales or reducing costs.Uncertainty of returns\xa0Uncertainty of return refers to the lack of knowledge relating to the amount of money that the business is going to earnin a given period. Every business invests money to run its activities with the objective of earning profits. However, theamount of profits that can potentially be earned is not consistent. Additionally, there is a possibility of losses beingincurred, in spite of the best efforts put into the business.Elements of riskRisk is the uncertainty associated with an exposure to loss. It is caused by some unfavourable or undesirable event. Therisks are related with certain factors like changes in consumer tastes and fashions, changes in methods of production,strike or lockout in the work place, increased competition in the market, fire, theft accidents, natural calamities etc. | |