Business Basics – Key Terms You Need To Know
A business can be described as a corporation, partnership or group of people that engage in commercial, corporate, or service activities for profit. A business also can be defined as the collective efforts of people to create and sell goods and/or services to others for monetary value. The activities involved in conducting a business include the preparation of plans and methods for carrying out the business activities; the negotiation and acquisition of financial instruments to carry out the business activities; and the utilization of resources to carry out the business activities. The activities involved in the various stages of a business may be divided into three categories: capital assets, liabilities, and intangibles. A company’s capital assets are the tangible assets of the business. These include the real property owned by the business, its accounts, supplies, machinery, immovable assets, and equities such as goodwill and name.
Liabilities include obligations and contracts, and financial liabilities such as debts and worker’s compensation claims. Intangible assets, on the other hand, include the rights and privileges to create income and operate the business. There are various types of intangibles and these include profits, the quality or capacity of production of a product, recognition of advances made in technology, workers’ compensation, taxes, and social responsibility. All of these key terms are used to discuss the economic value added to a business through its operations.
The operation of the business involves three phases namely operation, growth, and development. This is known as the operation phase. Growth involves increasing the capital to fund new operations and acquiring new products or services. Development involves paying off debts, buying land, buildings, equipment and labor to improve productivity and reduce costs. The purpose of the operation, growth, and development is to make the owner feel that he or she is the owner of the business and it is his or her responsibility to maximize profits. The operation of a corporation is carried out by a board of directors designated as the officers of the company.