Nature of

Business
Hailyn Bernardo - Ibrahim
 Agenda

1 2 3 4 5
What is Attributes of External Internal The Basic
Business Business Business Business Principles
Activities Activities Activities

2 Nature of Business 2024

What is Business?

refers to the regular conduct of legal activities

primary intended to accumulate profit. The
generation of profit is considered as the primary
motive of business entity.

3
 Attributes
of Business
• External Business Activities

• Internal Business Activities

 Attributes of Business
• External Business Activities
1. Selling of goods or products;
2. Purchasing raw materials;
3. Rendering services to customers, or
4. Paying the creditors.

• Internal Business Activities

1. Conversion of raw materials to finished products;
2. Payment of salaries;
3. Preparing of budgetary requirements; or
4. Checking the authenticity of transactions.
 Attributes of Business
Intended for profit

Financial in character Regular undertaken

Attributes of
Business
Activities
Legally undertaken Connected with business
 A business activity is intended for profit
Profit or net income – is the excess of revenue realized against expenses and losses incurred during
a period of time.

Net loss – is the excess of expenses and losses against realized revenue.

Income – increases in economic benefits during the accounting period in the form of inflows or
enhancement of assets or decreases of liabilities.

Revenue – refers to inflow of resources arising in the course of the ordinary activities of a business
entity. The distinguishing feature of the term “revenue’ is that the income should come from
activities that are considered ordinary in the business operation.

Ordinary activities – is directly related to the nature of the business. (buy and sell for example) -
income derived from the sale of grocery products is called revenue.
 A business activity is intended for profit
Gains – represents other items that meet the definition of income and may or may not arise in the
course of the ordinary activities of an entity. Gains are usually rise from the disposal of noncurremt
assets like lands, building, machinery or equipment’s.

Expenses – are decreases in economic benefits during the accounting period. Expenses come in the
form of outflows or depletion of assets or incurrences of liabilities that result in decrease in equity
other than those relating to distribution to equity participants.

Losses - represent other items that meet the definition of expenses and may or may not arise in the
course of ordinary activities of a business concern. - includes those resulting from disaster such as
fire and flood as well as those arising from disposal of noncurrent assets.
 Business opportunities are
like buses. There’s always
another one coming.
Richard Branson

9 Presentation title 20XX

Thank you
A business, engaged in the sale of household appliances, sold one unit
of refrigerator for P68, 000 during the period. The cost of the product is
P42, 000 and the operating expenses on sale amounted to P2, 000.
Compute for profit/loss.