Difference between business, profession and employment.

April 16, 2020

April 17, 2020

Good morning boys!

First of all, as this is a new subject for you I will give you the type of questions which can be asked. Minimum 1 marker will be there and Maximum 6 marker. Then there is no 2 marker, only 3, 4 and 5 markers are there in between 1 and 6 marker. The syllabus for PA1 Exam in the month of May is as follows:

Chapter 1- Evolution and Fundamentals of Business.
Chapter 2- Only Sole Proprietorship meaning, features, merits, demerits and Partnership features.
Exam will be of 40 marks and 10 marks for class assessment which includes class test and marks for register. Your notes should be complete on daily basis.

Learning objectives- At the end of the topic, students will be able to:
1) Explain the concepts of Business, Profession and employment.
2) Differentiate between the types of economic activities.

XI- A will do from Q.1 to 5
XI- B will do Q.4 and Q.5 only as they have already done Q.1, 2 and 3.

Q.1 What are the types of human activities? Explain them. (3)
Ans-1) Human activities can be categorised as economic and non economic activities .
2) Economic Activities are undertaken with an objective of earning money or for financial gain. For example- Ayushman wishes to earn money by doing business where as Asif wants to earn by becoming a lawyer .
3)Non economic activities are undertaken without any expectations of any kind of monetary reward or benefit. They are influenced by love, sympathy, pleasure, emotions, etc. For example-
Sana wishes to teach lesser privileged children in her free time. She is doing so out of sympathy.

Q.2 Differentiate between economic and non economic activities. (5) ( Write in tabular form)( You have to make three columns, first one for Basis, second one for Economic Activity and third one for Non Economic Activity.)
Ans- 1) Definition - Economic activities are those activities which are undertaken to earn money or financial gain for livelihood .For example- Fruit seller selling fruits. Non economic activities are those activities which are undertaken for the sake of pleasure, performed out of love , sympathy, sentiments, etc. For example - Mother cooks food for her family.
2) Motive- Sole motive of economic activity is to earn money or financial gain. Sole motive of non economic activity is satisfaction of social, psychological or emotional needs.
3) Relationship - Economic activities are related to creation of wealth whereas non economic activities do not create wealth.
4) Outcome - All economic activities result in production , procurement, distribution and consumption of goods and services. The end result of a non economic activity is the mental, emotional or psychological satisfaction of the person doing the activity.
5) Duration- Economic activities are repetitive .They are done on a regular basis to earn a living . Non econmic activities may not be undertaken regularly. They are done during free time.

Q.3 What are the types of economic activities? (1)
Ans- 1. Business
2. Profession
3. Employment.

Q.4 Explain the types of economic activities? (3)
Abs- 1)Business- It refers to an economic activity of sale of goods, which are either produced or procured and rendering of services on a continuous basis with the motive of earning profit will satisfying human needs. Eg- Manufacturing and selling toys.
2) Profession- It is an occupation which involves rendering of personal services of a specialised nature . For example- Lawyer provides services related to legal matters and is guided by the Bar council of India .
3) Employment- It refers to the occupation in which people work for others and get remunerated in return.For example- Individuals working in a bank as banker, in an office as clerk or manager, etc.

Q.5 Differentiate between business, profession and employment . (6)
( write in tabular form). (You have to make four columns. First for Basis, Second for Business, Third for Profession and Fourth for Employment. )
Ans- 1. Mode of establishment- Business starts after the decision of the owner and has to follow legal formalities to establish business. Profession starts after getting membership and certificate of practice from the respective professional body. Employment starts after receiving letter of appointment and signing of employment contract.
2. Nature of Work- Business involves production or purchase and sale of goods and services to satisfy human needs and wants. Profession involves providing of personalized expert services. Employment involves performing all work as agreed in the service contract.
3. Qualification- In Business,there is no minimum qualification required to start or carry business activities. In Profession, education, training and experience are a must to practice profession. In Employment, qualifications and training are as per the employer's requirement.
4. Reward/ Return-Profits are owner's reward in Business, In Profession, reward is Professional Fee, In Employment, reward is Salary or Wages.
5. Investment- In Business, investment depends upon the size and nature of business. In Profession, limited capital is needed to establish and In Employment, no investment is required.
6. Risk- In Business, risk is involved due to uncertainty of profits, In Profession, risk is moderate as it receives predefined or agreed fee. In Employment, there is no risk at all as it does not depend on company's performance.
7. Transfer of Interest- In Business, interest can be transferred for a consideration or after following legal formalities. In Profession, it is not possible. In Employment, it is not possible.

Please watch the video given below for better understanding of the topic.