Characteristics of Business Activities

1. Economic Motive

• Primary Goal: Earn income or profit.
• Focus: Financial gains through goods and services, unlike social or personal activities.

2. Production or Procurement of Goods and Services

• Activities:
  • Manufacturing: Creating products.
  • Trading: Acquiring products for resale.
  • Services: Includes activities like banking, insurance, and consultancy.

3. Sale or Exchange of Goods and Services

• Nature: Business involves the transfer or exchange of goods and services for value, either directly or indirectly.
• Definition: Goods produced not for sale do not constitute a business activity.

4. Regularity in Dealings

• Requirement: Regular sale of goods/services is essential.
• Exclusion: One-time transactions or personal consumption are not considered business activities.

5. Profit Earning

• Central Aim: Profits measure business success and sustainability.

6. Risk and Uncertainty

• Operating Conditions: All businesses face market fluctuations, competition, and economic downturns.
• Profit: Seen as a reward for bearing these risks.

7. Element of Risk

• Definition: Uncertainty associated with potential loss.
• Causes:
  • Changes in consumer taste or fashion.
  • Changes in production methods.
  • Strikes or lockouts.
  • Increased market competition.
  • Incidents like fire or theft.