The Nature of Business Flashcards
The nature of a business is…
the type of sector or industry to which it belongs
What is an industry?
A group of companies that are related by their primary business activities.
What is a sector?
Larger parts of the economy that can include various industries
What is specialization?
A form of dividing labour where everyone concentrates their productive efforts on a single product.
What is Bartering?
The exchange of goods and services for other goods and services without the use of money.
The challenges of bartering are…
- Rates of exchange
- Double coincidence of wants
- Indivisibility
- Store of value
Commodity money is…
a physical good that has intrinsic value
What are the 4 main characteristics of commodity money?
It’s rare, durable, divisible and easily exchangeable.
What is Representative money?
Any type of money with face value greater than its value as material substance
Define what is Fiat money.
Inconvertible paper money with extrinsic value that is accepted by persons globally.
List the characteristics of money
- Portable
- Homogenous
- Relatively scarce
- Accepted by everyone
- Divisible
- Durable
List the functions of money
- Medium of exchange
- Store of value
- Measure of value
- Means of deffered payment
What are some other forms of money?
- Bills of exchange
- Credit card, Debit card
- Electronic Transfer
- Tele-banking, E-commerce
What is a cheque?
A cheque is a document you can give to the bank with a specific sum of money for the person whose name is on it.
Define these types of cheques : open, crossed, post-dated, dishonoured
Open - only payable to the receiver named on the cheque
Crossed - has two lines across the face of it to avoid fraud
Post-Dated - cannot be cashed until the date on it arrives
Dishonoured - when the bank declines processing the cheque
