Test: Nature And Purpose Of Business - 2 - Commerce MCQ

Starting a business involves many factors such as availability of man power, raw material, location, finance, etc. Routine workload is not considered while starting a business. It is a factor that comes after the business is started. Hence, it is not a factor considered behind starting a business.

The correct option is Option C.

Profession is a type of paid occupation which involves training, utilization of skills for a prolonged period. Business, profession and employment all are considered economic activities because they consist of exchange of goods and/or services for money.

An activity can be considered as business, if it involves production, exchanged and distribution of goods and services with some economic objectives. Non-economic activities e.g., charitable or religious, etc., are not considered business.

In Profession a person has to acquire a specialised body of knowledge and skill and has to follow a code of conduct and must have a formal training of the particular activity.
In a profession a person provides services but does not manufacture any good. 
E.g. Doctor, CA,  Teacher etc. they do not manufacture any goods.

It is true that employment is an economic activity which is carried out with the main objective of earning profits. Any work which results in the profit in its result is known as economic activity. Here by doing job he is generating profit . Therefore it an economic activity

A person does not start a business to fill his leisure time. There is always a valid and a strong reason to start a business. A person doesn’t start a business because he is free.

Strikes are not considered natural cause of business risk because nature is not involved with them but earthquake, rains, famine are all natural phenomenon.

Business risk is the possibility a company will have lower than anticipated profits or experience a loss rather than taking a profit. Business risk is influenced by numerous factors, including sales volume, per-unit price, input costs, competition, the overall economic climate and government regulations.

Economic cause of business are those risk which directly reduces the profit earned by a firm so your decrease in demand ,increase in competition and price decrease profit

Business risk means any kind of external or internal force which could affect the company’s or organizations’ profits or Loss.

The percentage of the total sales of a product in a particular market that a business stands in, is known as the market standing or the market share for that company. This shows the position of the business in the market by calculating their coverage in the market

Trade is an essential part of commerce. It refers to sale, transfer or exchange of goods. As trade refers to buying and selling of goods and services with the aim of earning profits.

Warehousing is important for this. A warehouse is a place used for the storage or accumulation of goods. It may also be defined as an establishment that assumes responsibility for the safe custody of goods. Warehousing or storage refers to the holding and preservation of goods until they are dispatched to the consumers.

Advertising. Because of advertising users are able to know about the products quality and it attract customers

Transport and communication are very important for this purpose as communication is requires to know that where the products are to be delivered and transport is important to deliver the product.

Activities which are meant for assisting trade are known as auxiliaries to trade. These do not comprise of mining as it is not a support service for trade.

Commerce is the chain of wholesalers and retailers and through this chain a link is made between the producers and consumers. They help us in providing necessary goods and services.

Commerce includes two types of activities:

• Trade- Trade involves buying and selling of goods. It helps in making goods available for customers to buy. Producers cannot sell their produce to individual buyers hence businessman works as a middleman between them. Trade is of two types: Internal Trade and External Trade.
• Auxiliaries to trade- These are activities which supports trading. Transport, banking, insurance, warehousing, and advertising are regarded as auxiliaries to trade. These are generally known as services. They remove any hurdles that are faced during any trading activities. For example banking provides finance to the tradesman. 

The two broad categories of business activities are industry and commerce.