Pob (Cxc) Business Flashcards
4 ways in which economic activity developed
To satisfy three basic needs:foods,clothes,shelter
Direct production: providing needs without the help of others
Subsistent economy:production just enough for survival
Surplus:producing more than required
What is barter system
The exchange of goods and services without the use of money
Define trade
The buying and selling of goods and services
Define demands
The willingness of consumers to purchase goods and services at a particular prize
Define Supply
The willingness to produce at a particular price
ADVANTAGES OF BARTER
allowed for the disposal of surplus
Increased productivity which resulted in more wealth creation
DISADVANTAGES OF BARTER
Double coincidence
What is money
Any commodity that can be used as a medium of exchange and a unit of account
Give some examples of early money
Spearheads
Shells
Teeth
Beads
Animals
What is bill of exchange
An unconditional order in writing issued by a person or a business instructing the person in who’s name it is drawn to pay a fixed amount of money to the drawer or a third party
What is a credit card
A financial instrument of payment issued by commercial banks it also gives the holder access to goods and services on credit
Define commerce
Using the internet to conduct business
Define bank drafts
A cheque drawn by a bank on its own funds
What is a business
A business is a organization or entity that is providing good and services or both with the aim of making a profit
Reasons for establishing a business?
To obtain power,influence and status
To work for one self and to be one owns boss
To gain personal freedom
To lay foundation for a family situation
To respond to changes in personal situations
To put a creative idea into operation
Functions of the business
To provide goods or services
To create employment
To provide income for the govt
What is a stakeholder in the business
Everyone who has an interest in the business
Role of mangers
To plan,organize,control and protect the interest of owners and investors
Roles of employees
Carry out various activities assigned to them
Role of board of directors
Represents the interest of all stakeholders in ensuring the business is successful
Roles of the owner
Expect managers to demonstrate professionalism as they expect a return on their investment
List some external stakeholders
Customers
Creditors
Government
The community
Internal stake holders
Managers
Employees board of directors
Owners
Roles of the customer
The support the activity of the business thereby giving life to the business
Role of the creditor
Provide resources the business need to produce goods and services
Roles of the government
Regulates businesses and the environment in which they operate
The role of the community
The business should be a good cooperate citizen in the community in which it operates
What is private sector
Refers to that part of the economy owned and controlled by private individuals and firms
What is public sectors
Refers to that part of the economic and administrative life of a country through which certain goods and services are delivered by the government
Types of businesses in the private sector
Sale propirtorship/trader ship
Advantages of sale proprietorship
Easy to establish and manage,decision making easy, profits are not shared
Disadvantages of sale proprietorship
Unlimited liability which you incur all the loss of the business
Lack of competitiveness
Problems in raising capital
What is partnership?
A business jointly operated by Individual
How many persons can form a partnership business?
Two to twenty persons
Characteristics of partnership
Provide financial capital needed
Sharing of profit and loss and liability
Types of trade agreements
Bilateral and multilateral
Explain bilateral
Trade between two countries
Explain multilateral trade
Trade among a number of countries
Benefits of engaging a trade
The ability of a country to produce good at a lower marginal and opportunity cost that’s another country
Name 3 businesses that doesn’t exists to make a profit
Govt owned schools
Churches
Service owned clubs
What is a entrepreneur
An individual who takes a risk by investing resources in building a business with the aim to make a profit
What is tele banking
Carrying out of banking via a telecommunication network
Where do private sectors get money from to start a business
Investors
Commercial bank loans
Personal money
Where does the government get money from to provide goods n services
Grants
Treasury bills
Taxation
Barrowing
Bonds
Wbat is sole proprietorship
A business that is owned and operated by one person,often small business and very little startup capital needed
What is partnership deed
A major legal document that is filled out and submitted to the registrator of companies
Major types of partnership
General partnership
General unlimited partnership
General limited partnership
General partnership
May have 2 sleeping partners which only contributes capital but does not get involved in the daily running of the business
General unlimited partnership
All the partners have responsibility for the daily running of the business
General limited partnership
Governed by the partnership act
It’s not a legal entity separated from its owners
Atleast one partner has unlimited liability
Inactive partners stand to bear a great loss
Coorperatives
Organizations formed by groups with similar objectives and interests
Retail cooperatives
Members learn up to provide
Ensure goods are in adequate supply at all times
Financial cooperatives
Brings together persons with common interests
Financing a cooperative
Purchasing of shares
One member one vote
Companies
Governed by the companies act (legal documents which outlines how a company should be operated under the laws of the company)
Enterprise
Generally a large business organization
A multinational or transnational corporation
Major types of companies
One man/one person company
Legal entity
Owned and operated by one person/one share holder
Limited liability company
Investors are only liable up to the amount they invested
Characteristics of limited liability company
Financed by government agencies
Companies must include the word limited(LTD)
Accounts must be audited
Must keep proper accounting records to be checked by the authorities
Private unlimited liability company
Owners or share holders assume unlimited liability mostly found in legal and accounting firms
Public limited company
An cooperated body:it is constituted as a legal entity and its therefore separate and apart from the persons who own it
Characteristics of public limited
Funded financial institutions
By the use of bonds and debentures to raise funds
