Glossary

1.1 Nature of business activity

Business- a decision making org. involved in the process of using inputs to produce goods and /or to provide services.

Needs – basic necessities that a person must have in order to survive.

Wants- desires that people have.

Market- a place or process whereby customers and businesses meet to trade.

Customer- people or organization that buy the product

Consumer- pple that used the product.

Consumer goods- products that are sold to general public (non-durable goods/durable goods)

Capital goods/producer goods- products purchased by other business

Services- intangible products provided by business.

Value added- difference between the value of inputs(cost of production) and value of outputs(goods and services that are sold to customers.

Opportunity costs- the best alternative that is forgone when making a decision.

Profit- positive difference between firm's total revenue and its total costs per period of time.

Surplus- revenue exceeding costs

Land- all natural resources found on the planet that are available for production.

Labour- physical and mental effort of people used in the production of good or services.

Capital- all non-natural (manufactured ) resources that are used in the creation/production of other product.

Enterprise – management, organization and planning f the other three factor of production.

Specialization - a business that concentrate on the production of a particular good or service or a small range of product.

Division of labour – diff. aspects of job and assigning different people to each particular part of the work.

Primary sector- extraction, harvesting, conversion of land

2nd sector- using raw materials and other resources for the manufacturing and construction of finished products.

3rd sector- provide services to their private and corporate customers.

1.2 Types of Organization

Articles of Association – doc that set out the internal org. and rules of limited company. Details may include powers of each director and voting rules.-compulsory doc needed to set up a comp.

Certificate of Incorporation - doc issued to a limited company to show that it has been legally formed and is therefore a separate legal entity from its owners. Possession of this cert then allow comp to start trading.

Charities – NPO that are established to support good causes from society's point of view.

Deed of Partnership – legal contract signed by the owners of a partnership. This doc will include the fundamental issues of the business, eg. the name and responsibilities of each partner.

Incorporation – there is legal difference between the owners of a company and the business itself. This ensures that the owners are safeguarded against any losses made by the company as the owners are protected by limited liability.

Limited liability – a restriction on the amount of money that can be lost from the owners of a business if it goes into bankruptcy. The owner will lose no more than the amount of capital that put into the business.

Memorandum of Association- a legal doc required to create an incorporated company. The Memorandum will include the basic information of the org. eg. the name & address ,obj,amount of capital shares.

Non-govermental org- NGO refers to any private sector org that does not primarily aim to make a profit. Instead, they operate for the benefits of others.

Partnerships- are a form of private sector business owned by 2-20 people known as partners.they share the responsibilities and burdens of running and owning the business.

Private limited company- a business org owned by shareholders with limited liability but whose shares cannot be bought by or sold to general public. (ltd.)

Public limited company- is an incorporated business org that allows the general public to buy and sell shares in the company via a stock exchange. (plc)

Stock exchange- is the market place for trading stocks and shares of plc.

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