2.1 Types of Businesses

Question 1

What are the main business activities of profit-making businesses?

Answer 1

Trading and service

Question 2

Explain the difference between trading and service businesses.

Answer 2

Trading business: buys from suppliers and sells goods to customers.

Service business: provides services to customers

Question 3

Give examples of trading businesses.

Answer 3

bookshops, supermarkets, ice cream cafe.

Question 4

Give examples of service businesses.

Answer 4

Businesses providing design services / web design services to customers, cleaning, medical and banking services.

Question 5

Distinguish between the financial statements of businesses in trading and services.

Answer 5

1. Trading business: There are two portions of a statement of financial performance, i.e. trading portion cum profit and loss portion.
2. Service business: There is no trading portion in its statement of finacial position.