Horngren’s Cost Accounting A Managerial Emphasis, Canadian 9th edition soluti...
28ff business 2
1.
2. Business refers to commercial activities relating
to production & distribution of goods & services
for economic gain. i.e. profit.
is a group effort of PRODUCERS, DISTRIBUTORS
(like banks, insurance companies) etc.
To satisfy human wants
Not only profit is the motive but also social
interest and customer satisfaction.
3. Includes distinct features which are as follows:
Organized
activity
creativity
Profit motive
Nature
of
Social
responsibility Degree of scale
business
Societal interest Regularity in
dealings
Risks &
uncertainties
4. Organized activity :
Identify customer problems or needs.
Produce/supply goods & services.
Monitor customer satisfaction.
Profit motive:
It’s the primary objective of any business.
It’s reward for the risks undertaken by the
business firm.
Firm must utilize its net profits for growth &
expansion.
5. Regularity in dealings:
Firm should engaged in business
activity on a regular basis.
A single or rare act of buying & selling
can’t be called as business activity.
For ex: a construction firm may take
fairly a long time to construct and sell
buildings or flats, as compared to a
retailer who may buy & sell goods
everyday. Both these activities can be
termed as business.
6. Risks & uncertainties :
Business is subject to risk & uncertainties.
It may earn profit or may also occur loss due to risk
For ex:
change in fashion,
tastes of customers,
change in govt. policies,
recession,
change in technology,
damage to goods/property due to fire, natural
calamities, riots etc.
8. Social responsibilities:
Firms try to fulfill their social responsibility
towards various groups such as:
EMPLOYEES : by providing better wages,
working conditions ,welfare facilities etc.
CUSTOMERS: better quality of goods &
services at right prices.
GOVERNMENT: Paying proper taxes & duties.
SHAREHOLDERS: Enhancing their value,
payments of dividends etc.
COMPETITORS: adopting fair business
activities.
SOCIETY: sponsoring education, sports,
culture etc.
9. Creative & dynamic:
◦ Modern business is creative in nature.
◦ Firms must come up with innovative ideas to
produce & distribute consumer goods & services.
◦ No business can say that they provide 100% there
is always a scope for improvement.
Government control:
Business firms are subject to government control in
the form of rules & regulations.
For ex: laws like
1. Indian Companies Act ,1956
2. Foreign Exchange Management Act , 1999
3. The Competition Act , 2002
10. REGULAR SUPPLY OF GOODS OF SERVICES:
We can’t produce goods on our own.
It helps in promoting welfare & development of the
society.
GENERATING EMPLOYMENT OPPORTUNITIES:
It generates employment for people.
Provides direct employment related to the
production, marketing, & service sectors like
transport, communications, banking etc.
REVENUE TO GOVERNMENT:
In the form of taxes & duties payments.
Uses this revenue for development of railways,
roadways, irrigation, rural development, etc.
11. SOCIAL WELFARE:
It leads to prosperity & happiness
Business is connected to almost every area of
our social & personal life.
For ex: participating in activities like sports,
education, donations etc.
FACILITATES ECONOMIC GROWTH, CREATION
OF RICH & DEVELOPED COUNTRY :
Economy
National Economic
income growth
income
Also earn foreign exchange
12. CAPITAL FORMATION:
It facilitates capital formation in the country.
It takes place because of savings &
investments.
13. Business objectives
Organic
Economic Social Human National
objectives
objectives objectives objectives objectives
15. Economic objectives:
Its related to the profit or monetary term.
To earn profit
Creation of customer
Innovation in products
Optimum utilization of resources.
Creation wealth in form of goods & services.
17. HUMAN OBJECTIVES:
is related with the workers who provide their services
for the efficient working of the business.
To ensure following things:-
Working
Fair wages
conditions
Equal work Equal pay
18. NATIONAL OBJECTIVE:
SOCIAL JUSTICE:- means providing equal
opportunities to all, protecting interest of
neglected, prevention of any sort of
exploitation.
For ex: a business unit should do justice to
their handicapped workers, & women
employees.
PRODUCTION AS PER NATIONAL PRIORITIES:
Analyze the taste, interest, and also The
population then accordingly produce goods.
19. SELF SUFFICIENCY:
Make use of available natural resources &
manpower for economic development.
Should reduce dependence on foreign countries
by producing goods or increasing exports and
reducing imports.
SOCIAL WELFARE:
Adopting schools in backward areas,
Funds for rural development, irrigation etc.
Health camps.
In December 2010, Azim Premji, the chairman of
Wipro ltd transferred 213million shares valued at
rs.8,846cr. Held by him in Wipro Ltd. To a trust
as an endowment to fund social development
activities( health, education, etc.)
