Business Terms

Terms and concept

Enterprise.   The term is often applied to a newly formed venture. Enterprise is the willingness to take risks in the hope of making a profit and accepting the possibility that losses may be encountered.

Entrepreneurship is the process or act of organizing resources and acceptance of risk and uncertainty with the ultimate aim of profit. The entrepreneur is the person who organizes production and bears the risks.

Barter refers to the direct exchange of goods and services. Thus, goods can be exchanged for goods and/or services and vice versa, without the use of money. This process does not involve any medium of exchange or instrument of exchange. People exchanged for example animals for bread and corn for fish. Services were also exchanged. This is a direct production.

Profit is the excess of returns over expenses. It may also be defined as the positive that results from selling goods and services for more than it costs to produce them. For example, if it costs $8 to produce a pencil, and the pencil is sold for $12, the profit, which is found by taking the cost price away from the selling price, is $4.  Profit is the reward to the entrepreneur for organizing and bearing risks in a successful business.

Loss is a term which indicates that the cost of production is greater than the selling price. Hence, if a pencil costs $8 to produce and then it can only be sold for $6, there is a loss of $2.

Trade refers to the exchange of goods and services directly (barter) or indirectly (using money) whether internally (within the country) or internationally (among countries).

Organization is often used synonymously with enterprise. However, more specifically, it refers to the structuring of resources and activities to accomplish objectives efficiently and effectively. Managers organize by reviewing plans and determining what activities are necessary to implement them; then, they divide the work into small units and   assign it to specific individuals,...