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Principles Of Business

Name : Rahul Lildhar

Class : Form 4

Question 1
Briefly explain the history of trading instruments from subsistence economy to money
economy.
A subsistence economy is one which relies on natural resources to provide for basic needs,
through hunting, gathering, and subsistence agriculture usually with little or no surplus; if
there was any surplus it was usually exchanged on the barter system. Economies of the past
were of this kind. As technologies became more developed, production increased, resulting in
more surplus and exchange. This increase in exchange resulted in problems with the barter
system. Persons wanted to improve their standard of living and expand the economies as a
result there was a shift from the subsistence economy to money economy. Money can be
defined as anything that is used to purchase goods and services and repay debt; this
eliminated the problems with the barter system.

Question 2
Explain the use of each of the following.

Bill of Exchange

Allows the financer or the banker to retain a convincing legal claim on the
buyer as well as the seller.

A bill of exchange provides the granting of trade credit in a lawful format by

allowing payments on agreed prospective dates.

Credit Cards

Use credit cards for balance transfers and taking out cash from an ATM.

When making certain purchases for which cash or other forms of payment
are not convenient.

Electronic transfer

To withdraw cash, make deposits, or transfer funds between accounts

lets you make purchases or payments

Tele banking

Transfer funds from checking or savings to make loan payments

Enables customers to perform financial transactions over the telephone, without

the need to visit a bank branch or automated teller machine.

E-commerce

E-Commerce can help improve your business processes and information flows
by enabling you to communicate with other business.

To buy and sell goods electronically with the use of computers.

Outline 5 reasons for establishing a business

Some reasons for establishing your own business are ;

1. You are creating jobs for others - Owning your own business can be helpful
to others, especially in this economy. You have the ability to create jobs for
those in need of one.

2. Be your own boss- You make the rules of your business and run it how
you want to. You dont need permission to implement ideas, you can
just do it!
3. Work from anywhere- You dont have to be stuck in an office, cubicle, or
your home. Youre free to run your business anywhere youd like, whether its
from a nearby coffee shop, a bar, or a doctors office.

4. Creativity -Owning your own business forces you to become creative. You
always have to be on top of your game and make sure things are working they
way they should be.

5. You get to do what youre interested in - Its not fun when youre doing
something you do not genuinely enjoy. You could have fun while working if
you are doing something you are interested in.