After completing his MBA, Salman decided to set up his own business. He started manufacturing chocolates to earn income. The main job was to purchase raw material from the market and get the chocolates made in their factory. He sold the chocolates under the brand name CHOCO DELIGHT and earned a reasonable amount of profit @ 10% from the sale. He worked on a regular basis to make their business a success. His business was running very well. But one day, the flour mill caught fire and he had to suffer huge losses. Quoting lines from the above paragraph, explain the characteristics of the business.
Answers
Hello !
Characteristics of business :
(i) An economic activity : " After completing their grduation , Salman and Ram decided to set up a flour mill to earn income." Business is considered to be an economic activity because it is undertaken with the object of earning money or livelihood.
(ii) Profit earning " they sold theses under the brand name ' Desh ks Atta ' and earn a reasonable profit of 10%10% on cost." One of the main purposes of business is to earn money by way of profits . Profits is essential to cover costs and risks of the business . Every business must earn a reasonable profit to survive and grow.
(iii) Dealing in goods and services in a regular basis " They worked very hard to flourish the business on a regular basis. . . " Business involves dealings in goods or services on a regular or daily basis . One single transaction of sale or or purchase does not constitute business.
(iv) Element of risk " . . ., the flour mill caught fire ,and as a result they had to suffer a heavy loss" Risk impolies the uncertainty of reward or the possibility of loss . there is laways some element of risk involved in business , e.g ., fire , theft , accidents , etc.
Hope It Helps u :)
Answer:
(i) An economic activity : " After completing their grduation , Salman and Ram decided to set up a flour mill to earn income." Business is considered to be an economic activity because it is undertaken with the object of earning money or livelihood.
(ii) Profit earning " they sold theses under the brand name ' Desh ks Atta ' and earn a reasonable profit of 10%10% on cost." One of the main purposes of business is to earn money by way of profits . Profits is essential to cover costs and risks of the business . Every business must earn a reasonable profit to survive and grow.
(iii) Dealing in goods and services in a regular basis " They worked very hard to flourish the business on a regular basis. . . " Business involves dealings in goods or services on a regular or daily basis . One single transaction of sale or or purchase does not constitute business.
(iv) Element of risk " . . ., the flour mill caught fire ,and as a result they had to suffer a heavy loss" Risk impolies the uncertainty of reward or the possibility of loss . there is laways some element of risk involved in business , e.g ., fire , theft , accidents , etc.
Explanation: