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Principles Of Business > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What is barter

A

Bartering is an exchange of goods and services without the use of money

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2
Q

What are some advantages of barter

A
  1. People can access goods and they do not produce themselves
  2. Surplus production can be traded
  3. There is no need for money
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3
Q

Disadvantages of barter

A
  1. It requires finding someone willing to barter so there is a double coincidence
  2. There is no common measure of the value of items
  3. Unlike money it is difficult to transport certain goods once they have been received
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4
Q

What is money

A

Money is anything that is widely accepted used in exchange for goods

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5
Q

Examples of money?

A

Notes, coins, etc

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6
Q

Some characteristics of money are?

A
  1. Durable: must be hard wearing and long lasting
  2. Divisible: it is possible to divide it into smaller units
  3. Scare: it’s value is maintained when it’s harder to require
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7
Q

What are some functions of money

A
  1. A medium of exchange: money makes exchange of goods easier
  2. A measure of value: Money can be used to state prices for goods
    3.A store of value: Money can be saved whereas goods often cannot
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8
Q

What is a bill of exchange

A

A written order by one party in an exchange (the drawer) to another (the drawee) to pay a given sum of money on the date set out out in the order

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9
Q

Electronic transfer

A

Way of transferring funds from one bank to another automatically without using the bank staff

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10
Q

What is a Cheaque

A

A instrument of payment that a person use to pay someone a sum of money for their bank account

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11
Q

What are the sequence of a cheque

A

The date
The name of the recipient
The account number of the drawer
The signature of the person issuing the Cheque

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12
Q

What is a bank draft

A

Banks drafts are a more reliable cheque that provides the recipient the funds guaranteed that they are available

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13
Q

What is a money order

A

A directive to pay a pre specified amount of money from pre paid funds

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14
Q

What is an economy

A

A system of organization of institutions that either facilitate or play a ride in the production and distribution of goods and services of society

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15
Q

What is trade

A

This means buying and selling business ‘em engage in trade to make a profit

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16
Q

What is a organization

A

A group of persons using resources or things that are arranged in a certain way to carry out specific activities

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17
Q

What is a producer

A

This is a person or businesses that makes or creates goods or services

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18
Q

What are consumers

A

This a person that buys goods and services

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19
Q

What is an exchange

A

This is the giving of one thing and receiving of another

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20
Q

What are services

A

Work that is done for another

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21
Q

What is a market

A

A situation where buyers and seller meet and communicate in order to exchange goods

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22
Q

What is profit

A

This is the sun of money that remains after the cost of production

23
Q

What is a loss

A

A loss is the opposite of profit when the cost of production are greater than the return or revenue

24
Q

What is e-commerce

A

Business activities such as marketing of goods and de or business transactions over the internet

25
Q

Benefits of e-commerce

A

Business can market an see their products anywhere in the world

Business have lower overhead cost as there is less need for a physical store

26
Q

What are some drawbacks of e-commerce

A

It usually encodes no human contact disallowing you to provide personalized service

Customer are unable to experience the good or inspect the product

It will be difficult to keep up todays as technology keeps changing

27
Q

What is the public sector

A

Are business own by the government used for the benefit of the whole community

28
Q

What is the private sector

A

Businesses owned by a group of individuals for their personal profit

29
Q

What are sole traders

A

A person who owns controls and manages and is totally responsible for their business

30
Q

How do you form a sole trader business

A

No legal requirement however trade name must be registered

31
Q

Who manages sole trader businesses

A

The owner manages

32
Q

What is a partnership

A

An association of 2-20 partners Oo Persia business for the common goal of making a profit

33
Q

How are partnerships formed

A

No formal requirement but it is best if a person partnership deed is drawn

34
Q

Who manages a partnership

A

Managed by ordinary partners

35
Q

What are cooperative businesses

A

A business that is formed by individuals with a common bond

36
Q

How is a cooperation formed

A

Each member purchases shares to form the capital base of the business

37
Q

Who manages a cooperation

A

Members through a board of management

38
Q

Advantages of sole trader

A

1.easy to form
2. The owner has great flexibility
3.there is no need to disclose a profit

39
Q

Disadvantages of sole trade

A

1.source of finance is limited
2.lack of specialized staff
3.The owner has unlimited liability

40
Q

Advantages of partnership

A
  1. More capital is obtained
  2. Some partners enjoy limited liability
  3. The workload can be shared
41
Q

Disadvantages of partnerships

A
  1. Ordinary partners have limited liability
  2. Capital is still limited
  3. Conflict may occur among partners
42
Q

Advantages of cooperations

A
  1. Members pool their resources
  2. Members are the owners
  3. Decision making is shared
43
Q

Disadvantages of cooperation

A

1.The membership may not have the experience necessary to build the organization
2. Decision making is slow

44
Q

Formation of private and public sector

A

They must be registered and they need memorandum of association, articles of association and private needs prospectus

45
Q

Who manages the public and private sector

A

A board of directors will oversee major decisions

46
Q

Advantages of private and public sectors

A
  1. Shareholders have limited liability
  2. large sums of capital can be raised by a company
  3. enabling it to grow larger
47
Q

Disadvantages of private and public sector

A
  1. Shares are not easily transferred
  2. Decision making can be slow
48
Q

What is a franchise

A

A franchise business is made up of a franchisor or franchisee.
The franchisor is an established business with a well known name and product

49
Q

How does franchises form

A

Set up through a franchise agreement between the franchisor and franchisee

50
Q

Who manages a franchise

A

The franchisee runs the business with the support of the franchisor

51
Q

Advantages of franchises

A
  1. The franchisee works hard t make a success if the business
  2. Starts with a recognizable name
  3. There is increased income for the franchisor
52
Q

Disadvantages of franchises

A

The agreement usually involved restrictions on a franchisee runs their business

53
Q

What is limited liability

A

the condition by which shareholders are legally responsible for the debts of a company

Principles Of Business (4 decks)

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