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Nature of the Business:
Nature of the business may be described as follows.
Nature of the business may be described as follows.
- Profit making institution: The business activities are run to earn money or make profit. The chief objective behind the business is profit maximization or wealth or value maximization
- Risk: Risk is associated with business operation. Every business action is risky. Without risk business is impossible. So risk is one of the inherent business features.
- Creation of Utility: Business creates utility. All business activities are run with an objective of value addition or utility creation.
- Materials in a Business: Abusinessman uses money, methods, men, machine and materials in the business operation. The dealings are done in exchanging products and services for money and money for materials or other resources or inputs.
- Enterprising: business takes initiative to materialize a program and to convert raw material into finished products or one product into another.
- Organization: Business is an organization. Business organizes men and machines to implement production plan.
- Use of Capital or Financial Resources: Business utilizes capital which is the lifeblood of business. Money makes money; is a proverb that happens in business.
- Monetary Value: Business activities have monetary value. Every activity is measurable in terms of money and non-monetary activities are usually kept outside business purview.
- Regular Transaction: Business survives by regular transactions. The proof of existence of business is transactions. If transactions are stopped, business is liquidated. In accounting terminology this is termed as ‘going concern’ situation.
- Service Organization: Business can not survive by only profit making. The business will better survive by better service to customer. So there is general serving attitude among the businessman.