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 a 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
