Types of Business

Subject: Accountancy

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Overview

Different business activities are carried on by the people generating incomes. On the basis of the nature of these business activities, the business can be classified into an industry, commerce and trade. This note has information about various types of business.
Types of Business

Different business activities are carried on by the people generating incomes. On the basis of the nature of these business activities, the business can be classified as follows:

Industry

Industry refers to the act of producing raw materials and finished goods. It is the process of converting raw materials into finished goods. It is the activity relating to extraction, reproduction, manufacturing and construction of products. On the basis of production, an industry can be classified as follows:

1. Primary industry: The Primary industry is concerned with extracting raw materials from the soil or beneath the surface of the earth and reproducing certain species of plants and animals. The final products of primary industry are used as raw materials by secondary industry. The primary industry can be divided as follows:

  1. Extractive industry: The Extractive industry is concerned with taking out products from beneath the surface of the earth, soil, water and air. Mining, agriculture, fishing, and lumbering are some of the examples of the extractive industry.
  2. Genetic industry: The Genetic industry is concerned with reproducing or multiplication of different species of plants and animals. Bee- keeping, poultry farming, cattle- breeding, nurseries and animal husbandry are some of the examples of manufacturing industry.

2. Secondary industry: The Secondary industry is concerned with converting raw materials into finished goods and constructing different assets. The final products of secondary industry can be directly consumed by final customers. The secondary industry can be divided as follows:

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  1. Manufacturing industry: Manufacturing industry is concerned with converting raw materials into final products. The sugar industry, cement factory, soap industry, are the some of the examples of manufacturing industry.
  2. Construction industry: Construction industry is concerned with conducting a construction work at a particular site. Construction of buildings, roads, bridges, canals and dams are some of the examples of the construction industry.

Commerce

Commerce refers to the act of buying, selling and distributing of goods and services. It is the process of connecting the producer of goods with their final consumers. It is the activity related to buying, insurance, transportation, warehousing and communication. It can be divided into two classes as follows:

Trade

Trade is concerned with buying and selling of goods. It is the process of exchanging goods with money for mutual benefits of the buyer and seller. It is the act of transferring the ownership of goods from the seller to the buyer. It can be classified as follows:

1. Home trade

Home trade is the act of buying and selling goods within the boundary of the country. It can be classified as following:

  • Wholesale trade: The act of buying goods in a larger quantity and selling them in a smaller quantity to a number of retailers is called wholesale trade. It is the connecting link between producer and retailer. The person who involves in wholesale trade is called wholesaler who acts as a middleman between producer and retailer.
  • Retail trade: The act of buying goods from the wholesaler in a large quantity and selling them in a smaller quantity of final consumers for their personal use is called retail trade. It is the connecting link between the wholesaler and final consumers. The person who involves in retail trade is known as a retailer who acts as a middleman between the wholesaler and the final consumers.

2. Foreign trade

Foreign trade is the act of buying and selling goods outside the boundary of the country. It is carried on between the citizens of two or more countries. The payment of goods in foreign trade is made in foreign currencies. It can be classified as follows:

  • Import trade: The act of buying goods from a foreign country is called import trade. The person who involves in import trade is known as an importer.
  • Export trade: The act of selling goods to a foreign country is known as the export trade. The person who involves in export trade is known as an exporter.
  • Entrepot trade: The act of buying goods from foreign countries and selling them to another foreign country is called Entrepot trade.

Aids to trade

In the process of distributing goods to different markets, the seller has to face a number of problems. These problems are related to finance, insurance, transportation, warehousing, and communication. To remove such problems and facilitate for distribution of goods and services, certain organization are established. This organization do not involve in production and distribution of goods but facilitate the distribution of goods and services, certain organizations are established. These organizations does not involve in production and distribution of goods and services. These organizations assists or support in the process of buying and selling to make the distribution effective. Hence, aid to trade refers to the facilities provided by different organizations to remove the problems of distributions. Banking, insurance, transportation, communication, etc. are the examples of aid to trade which facilitate the effective distribution of goods and services.

Things to remember
  • Industry refers to the act of producing raw materials and finished goods
  • Manufacturing industry is concerned with converting raw materials into final products. 
  • Commerce refers to the act of buying, selling and distributing of goods and services.
  • Trade is concerned with buying and selling of goods. It is the process of exchanging goods with money for mutual benefits of the buyer and seller. 
  • The act of buying goods in a larger quantity and selling them in a smaller quantity to a number of retailers is called wholesale trade.
  • The act of buying goods from the wholesaler in a large quantity and selling them in a smaller quantity of final consumers for their personal use is called retail trade.
  • Foreign trade is the act of buying and selling goods outside the boundary of the country.
  • It includes every relationship which established among the people.
  • There can be more than one community in a society. Community smaller than society.
  • It is a network of social relationships which cannot see or touched.
  • common interests and common objectives are not necessary for society.
Questions and Answers

Industry refers to the act of producing raw materials and finished goods. It is the process of converting raw materials into finished goods. It is the activity relating to extraction, reproduction, manufacturing and construction of products.

The primary industry is an industry which is concerned with extracting raw materials from the soil or beneath the surface of the earth and reproducing certain species of plants and animals.

An extractive industry is the industry whichis concerned with taking out products from beneath the surface of the earth, soil, water and air. Mining, agriculture, fishing, and lumbering are some of the examples of the extractive industry.

A genetic industry is an industry which is concerned with reproducing or multiplication of different species of plants and animals. Bee- keeping, poultry farming, cattle- breeding, nurseries and animal husbandry are some of the examples of manufacturing industry.

A secondary industry is an industry which is concerned with converting raw materials into finished goods and constructing different assets.

Manufacturing industry is an industry which is concerned with converting raw materials into final products. Sugar industry, cement factory, soap industry, are the some of the examples of manufacturing industry.

Commerce refers to the act of buying, selling and distributing of goods and services. It is the process of connecting the producer of goods with their final consumers.

Construction industry is an industry which is concerned with conducting a construction work at a particular site. Construction of buildings, roads, bridges, cannels and dams are some of the examples of construction industry.

The wholesale trade is the process of exchanging goods with money for mutual benefits of the buyer and seller. It is the act of transferring the ownership of goods from the seller to the buyer.

Trade is the process of exchanging goods with money for mutual benefits of the buyer and seller. It is the act of transferring the ownership of goods from the seller to the buyer.

The act of buying goods from the wholesaler in a large quantity and selling them in a smaller quantity of final consumers for their personal use is called retail trade.

The act of buying goods from a foreign country is called import trade.

The act of selling goods to a foreign country is known as the export trade.

The act of buying goods from foreign countries and selling them to another foreign country is called entrepot trade.

Foreign trade is the act of buying and selling goods outside the boundary of the country.

Home trade is the act of buying and selling goods within the boundary of the country.

Industry refers to the act of producing raw materials and finished goods. It is the process of converting raw materials into finished goods. It is the activity relating to extraction, reproduction, manufacturing and construction of products. On the basis of production, an industry can be classified as follows:

1. Primary industry: The Primary industry is concerned with extracting raw materials from the soil or beneath the surface of the earth and reproducing certain species of plants and animals. The final products of primary industry are used as raw materials by secondary industry. The primary industry can be divided as follows:

  1. Extractive industry: The extractive industry is concerned with taking out products from beneath the surface of the earth, soil, water and air. Mining, agriculture, fishing, and lumbering are some of the examples of the extractive industry.
  2. Genetic industry:The Genetic industry is concerned with reproducing or multiplication of different species of plants and animals. Bee- keeping, poultry farming, cattle- breeding, nurseries and animal husbandry are some of the examples of manufacturing industry.

2. Secondary industry:The Secondary industry is concerned with converting raw materials into finished goods and constructing different assets. The final products of secondary industry can be directly consumed by final customers. The secondary industry can be divided as follows:

  1. Manufacturing industry: Manufacturing industry is concerned with converting raw materials into final products. Sugar industry, cement factory, soap industry, are the some of the examples of manufacturing industry.
  2. Construction industry: Construction industry is concerned with conducting a construction work at a particular site. Construction of buildings, roads, bridges, cannels and dams are some of the examples of construction industry.

Trade is concerned with buying and selling of goods. It is the process of exchanging goods with money for mutual benefits of the buyer and seller. It is the act of transferring the ownership of goods from the seller to the buyer. It can be classified as follows:

1. Home trade

Home trade is the act of buying and selling goods within the boundary of the country. It can be classified as following:

  • Wholesale trade: The act of buying goods in a larger quantity and selling them in a smaller quantity to a number of retailers is called wholesale trade. It is the connecting link between producer and retailer. The person who involves in wholesale trade is called wholesaler who act as a middleman between producer and retailer.
  • Retail trade: The act of buying goods from the wholesaler in a large quantity and selling them in a smaller quantity of final consumers for their personal use is called retail trade. It is the connecting link between the wholesaler and final consumers. The person who involves in retail trade is known as a retailer who acts as a middleman between the wholesaler and the final consumers.

2. Foreign trade

Foreign trade is the act of buying and selling goods outside the boundary of the country. It is carried on between the citizens of two or more countries. The payment of goods in foreign trade is made in foreign currencies. It can be classified as follows:

  • Import trade: The act of buying goods from a foreign country is called import trade. The person who involves in import trade is known as an importer.
  • Export trade: The act of selling goods to a foreign country is known as the export trade. The person who involves in export trade is known as an exporter.
  • Entrepot trade: The act of buying goods from foreign countries and selling them to another foreign country is called Entrepot trade.
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