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What are the characteristics of business activities?

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(i) An economic activity: Business is

considered to be an economic activity

because it is undertaken with the object

of earning money or livelihood and not

because of love, affection, sympathy or

any other sentimental reason.

(ii) Production or procurement of

goods and services: Before goods are

offered to people for consumption they

must be either produced or procured

by business enterprises. Thus, every

business enterprise either manu-

factures the goods it deals in or it

acquires them from producers, to be

further sold to consumers or users.

Goods may consist of consumable

items of daily use such as sugar, ghee,

pen, notebook, etc. or capital goods like

machinery, furniture, etc. Services may

include facilities offered to consumers

in the form of transportation, banking,

electricity, etc.

(iii) Sale or exchange of goods and

services for the satisfaction of

human needs: Directly or indirectly,

business involves transfer or exchange

of goods and services for value. If goods

are produced not for the purpose of

sale but say for internal consumption,

it cannot be called a business activity.

Cooking food at home for the family is

not business, but cooking food and

selling it to others in a restaurant is

business. Thus, one essential

characteristic of business is that there

should be sale or exchange of goods

or services between the seller and

the buyer.

(iv) Dealings in goods and services

on a regular basis: Business involves

dealings in goods or services on a

regular basis. One single transaction

of sale or purchase, therefore, does not

constitute business. Thus, for example,

if a person sells his/her domestic radio

set even at a profit, it will not be

considered a business activity. But if

he/she sells radio sets regularly either

through a shop or from his/her residence, it will be regarded as business activities.