Table of Contents
Basic Business Concepts #
Businesses are activities or organizations that provide goods or services to satisfy people’s needs and wants. Every business aims to earn money by providing something valuable to its customers. To do this, they engage in different activities, like producing goods or offering services.
- Business Activity: These are the actions businesses take to achieve their goals. For example, a bakery bakes bread and sells it to customers, while a hair salon provides haircuts and other beauty services.
- Types of Business Activities:
- Manufacturing: Involves making products. For example, a car factory assembles cars from parts.
- Retail: Involves buying goods and selling them to customers. A local shop or a supermarket sells groceries, clothing, or electronics.
- Service: Involves providing services to customers. Examples include a hairdresser cutting hair or a teacher giving lessons.
Key Business Terms #
Understanding key business terms helps you follow how businesses operate and how they handle their finances. These terms describe the actions and exchanges that happen in a business.
- Sales vs. Purchases:
- Sales: When a business sells its goods or services to customers, like a bookstore selling books to people.
- Purchases: When a business buys goods or services from another supplier, like a bookstore buying books from a publisher.
- Business Transactions: Any action involving the exchange of goods, services, or money. For example, buying a snack from a shop is a transaction because money is exchanged for a product.
- Types of Business Transactions:
- Cash Transaction: Payment is made immediately at the time of purchase. Example: Paying cash for a sandwich at a café.
- Credit Transaction: Payment is delayed until a later date. Example: Buying a mobile phone now but agreeing to pay in monthly installments.
- Barter Transaction: Exchange of goods or services without using money. Example: Trading a comic book with a friend for a different comic book.
