Question 6 of 17beginner💡 UnderstandShort Answer3 marks

How would you classify business activities?

Correct Answer

Business activities may be classified into two broad categories: industry and commerce. On the basis of these categories, business firms are classified as industrial and commercial enterprises.

Industry is concerned with the production or processing of goods and materials. It involves the conversion of raw materials into finished goods that are ready for use or consumption.

Commerce includes all those activities which are necessary for facilitating the exchange of goods and services. It ensures that the goods produced by the industry are effectively distributed to the consumers.

Exercise: EXERCISES - Short Answer Questions | Q: 5 | (Page 23)
For More Understanding

Explanation

The answer is derived directly from the section '1.3 CLASSIFICATION OF BUSINESS ACTIVITIES'. The textbook explicitly states that business activities are classified into two categories: industry and commerce. Industry is defined by production/processing, while commerce is defined by facilitating exchange. The context also mentions that based on these, firms are classified as industrial and commercial enterprises.

Solution Steps

  1. Step 1: Identify the classification categories from the text (Industry and Commerce).

  2. Step 2: Define Industry based on the context (production or processing of goods).

  3. Step 3: Define Commerce based on the context (facilitating exchange of goods and services).

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