Briefly explain Auxiliaries to trade(8marks)
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Auxiliaries to trade:
Auxiliaries to trade are those activities which facilities business. Transport, banking, insurance, warehousing, and advertising is regarded as auxiliaries to trade.
1. Transport and communication: Transport removes the hindrances of place. Transport facilitates through road, rail or coastal shipping facilitate movement of raw material to the place of production and the finished products from factories to the place of consumption.
2. Banking and finance: Business activities cannot be undertaken unless funds are available for acquiring assets and meeting the day-to-day expenses. Necessary funds can be obtained by businessmen from a bank. Thus, banking helps business activities to overcome the problem of finance.
3. Insurance: The risk of loss or damage to the factory building, machinery, furniture, goods held in stock or goods in course of transport due to theft, fire, accidents, etc. is removed by insurance of goods.
4. Warehousing: Usually, goods are not sold or consumed immediately after production. They are held in stock to be available as and when required. Special arrangement must be made for storage of goods to prevent loss or damage.
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