Commerce definitions

(grade 10)

> Business

Business Doing any economical activity to earn a profit by

satisfying consumer needs & wants by providing
goods & services
Needs Essential things that must be fulfilled by human beings
Wants The different ways of satisfying human needs
Factors of production Resources required by business to produce goods and
services
Land All the natural resources used in the production
process
Labour Mental and physical contribution towards the
production process
Capital Man made things used in the manufacturing process
Entrepreneurship The role of organizing the factors of productions such
as land, labor and capital
Direct production Producing goods and services for own consumption
Indirect production Producing goods and services to sell in the market
Barter system Exchanging excess products with another’s products
Commodity/goods Tangible and physically existing things
Service Any activity rendered to consumers in order to fulfill
their needs and wants by business
Stakeholders Interested parties of a business
Owners The people providing resources to the business
Managers The people taking decisions to direct the resources of
a business in order to achieve the objectives of its
owners
Employees Individuals performing the operations of a business
Business The environment in which the factors affecting the
environment business is activated
Internal environment Different parties and forces acting within a business
and affecting it
External environment Different parties and forces acting outside a business
and affecting it
Economical Economical factors which affect business
environment organizations
Global environment/ Mutual relationship among the countries in terms of
Globalization social, economical and cultural dimensions
Technological New technologies which are being used by business
environment organizations
Legal environment Rules and regulations which affect business
organizations
Political environment Decisions taken by politicians which affect business
organizations
Interest rate The interest rate given for bank deposits and charge
for bank loans
Inflation Continuous increase in the general price level of
goods and services
Income distribution How the national income of a country has been
divided among its people
International The relationships existing between countries
relations
Foreign exchange The rate at which the currency of one country is
rate exchanged with the currency of another country
Savings The proportion of the income that individuals keep
without spending on consumption
Private sector Businesses owned by an individual or a group
businesses
Public sector Businesses funded and owned by the government
businesses
Small and medium Businesses with small number of capital invested, a
scale businesses small number of employees and only having a small
market share relative to large scale businesses
Large scale Businesses with a large number of capital, a large
businesses number of employees and a large market share with
the ability to influence the respective industry
Sole proprietorships Businesses owned by an individual
Legal personality Being able to use the business name for legal
activities
Partnership The mutual relationship among members to conduct
businesses business activities
Partnership A partnership commences with an agreement among
agreement its partners
Partnership deed The written agreement which is signed by all the
members of a partnership
Incorporated A firm which is registered under the 2007 section 7 of
companies the incorporated company act
Association Nonprofit organizations established for the wellbeing
of the members
Cooperative societies Democratically controlled independent organizations
established for the wellbeing of the members and by
registering under the cooperative Societies Act no. 5
of 1972
State departments Institutions which are fully owned by the government
State corporations Institutions which are fully owned or which the
majority is owned by the government
> Accounting

Accounting Providing financial information to stakeholders for

their decision making
Transaction An exchange of resources between a business and other
parties
Monetary Transactions in which their value can be measured in
transactions terms of money
Events Incidents which occur in business
Assets Resources occurred due to past transactions
Liabilities Payables which had arose due to past transactions
Equity Value of assets belonging to the owner
Expenses A reduction of equity except for drawings
Income An increase of equity except for owners investments
Drawings Withdrawing money from a business by the owner for
his personal use
Dual impact of a Changes in the values of assets, liabilities, equity,
transaction income and expenses due to business transactions
which causes the change of 2 items in the accounting
equation
Double entry system The accounting system which records the same
amount in debit and credit sides of accounts
Account The commonly accepted structure that is used to
record the changes in assets, equity, liabilities, income
or expenses for a certain time period
Principles of double That generally accepted principles in accounting which
entry decide what is debited and what is credited
Ledger A collection of all accounts
Prime entry books Books which are used to record transactions before it is
posted into the ledger accounts
Source documents The documents prepared by including all the details of
a transaction and authorized by the person in charge
Cashbook The prime entry book in which the receipts and
payments of cash are recorded
Receipts The documents issued to a certain party when the
business receives cash from them with the cashier’s
signature
written evidence of cash received by the business
Payment voucher The document prepared by the business with the
relevant details as an evidence that cash payments are
made which are authorized by a responsible officer
Discounts A deduction of value from the value of a transaction
Trade discounts Selling goods deducting a certain amount from the
listed price
Petty Cashbook The prime entry book used to record small expenses of
the business
Petty cash imprest This specific amount of cash given to the petty cashier
by the main cashier to make petty cash payments
Bank/current An account which facilitates to do transactions VIA by
accounts cheques
Bank overdraft The facility provided by the bank which allows the
current account holder to issue checks for more than
the existing balance in their current accounts
Bank statement/ The statement sent by the bank to the current A/C
statement of holder
accounts
Purchases Journal The prime entry book in which good purchased on
credit bases are recorded
Sales journal The prime entry book in which credit sales of trading
stocks are recorded
Specialized journals Journals which are used to record only 1 type of
transaction
General journal The prime entry book in which transactions which
cannot be recorded in any other primary books are
recorded
Narration The description written for every transaction recorded
in the general journal
Tele banking services Mobile banking services provided by the banks
Trial balance The list which is prepared at the end of the period by
including all the debit and credit balances of ledger
accounts
Suspense accounts Accounts in which the differences between the totals of
debit and credit balances in the trial balance are
recorded temporarily
(Grade 11)

> Business
Commerce A combination of trade and supporting services
Trade Buying and selling goods and services
Local/domestic trade Doing trading activities within the country
Retail trade Selling for the final consumption
Retailer The person who carries out retail trades
Wholesale trade Selling for resale purposes
Wholesaler A seller who engages in wholesale trading activities
International trade Doing trade activities with other countries
Import trade Buying goods and services from other countries
Export trade Selling local goods and services to other countries
Supporting services Services which are provided to do the business
activities smoothly
Banking services Services which are provided by the Financial
Institutions to do the business activities smoothly
Commercial banks Institutions providing various banking services while
maintaining current accounts and other accounts
Savings accounts Accounts which can be opened by any individual at any
commercial bank to withdraw and deposit cash at any
given time
Fixed deposits Deposits that are maintained for a certain time period
at a certain interest rate
Current accounts Accounts which facilitate to do transactions by cheques
Cheques The legal document which can be used instead of
money
Drawer The person who writes and signs a cheque
Drawee Bank of the drawer
Payee The person whose name is written on the cheque
Counterfoil The part that remains in the checkbook when a check is
issued
General crossing Drawing two parallel lines on the face of a cheque with
or without including a condition inside
Special crossing Crossing mentioning a name of a commercial bank
written on the face of a check inside two parallel lines
or without parallel lines
Endorsing a cheque Writing the full name and other details in the backside
of a cheque by the payee himself
Credit cards Type of cards issued by commercial banks on credit
basis
Debit cards Cards which can be obtained for any individual with a
savings account
ATM cards Cards which facilitates transactions by ATMs
Pool of risks Accumulating the risks of all into a single insurance
fund
Insurance A pool of risks were the losses of one party are shared
collectively
First party/insured The party who obtains the insurance coverage
Second party/insurer The party who provides the insurance coverage
Third party All the other parties and properties that are affected by
an insurance contract
Insurable interest The legal right to obtain an insurance coverage for a
life/property
Utmost good faith The insurer and the insured needing to disclose all the
relevant and accurate information
Indemnity Only the damaged value being claimable as
compensation
Life insurance Insurance which covers the risks associated with the
life of an individual
Property insurance Insurance which covers the damages that might occur
to properties
Communication Exchange of messages/information between parties
through any medium
Internal Communication between different parties within an
communication organization
External Communication of a business with external parties
communication
Transportation Moving goods and passengers from one location to
another
The way Different ways used for transportation
Medium Different types of vehicles and crafts used in
transportation
Power The energy used to run transportation medium
Terminal The place where the medium of transportation is
handled
Management The process of planning, organizing, leading and
controlling the resources owned by business in order to
achieve objectives of a business efficiently and
effectively
Planning The process of determining the objectives of a business
& determining the activities to achieve them
Organizing The process of distributing required resources, job
roles and tasks in order to implement the planned
activities
Leading The process of directing human resources
appropriately when implementing the planned process
Controlling The process of finding out whether the business
activities are implemented as planned and if not,
identify errors and taking necessary measures to
correct them
Marketing The process of creating and offering valuable products
to satisfy consumer needs and wants
Market Any form in which a buyer and seller meet
Target market share of the market consisting of consumers that a
business can satisfy in a more attractive and profitable
way
Marketing mix A set of variables used to achieve the marketing
objectives of a business within a target market
Product Anything used to satisfy consumer needs and wants
Price The value expected to be charged from consumers for
a good or service
Place The activities related to the distribution of products to
consumers
Promotion Different strategies used by business to increase sales