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Chapter V. Types of Business According To Activities

The document discusses the three main types of businesses according to their activities: service businesses, merchandising businesses, and manufacturing businesses. A service business offers professional skills, advice, and consultations such as barber shops and banks. A merchandising business buys products wholesale and sells them retail, making a profit on the difference in price, like bookstores and hardware stores. A manufacturing business buys raw materials and transforms them into new products through combining materials, labor, and expenses, for example shoe manufacturers and car plants. Some businesses can fall under more than one type and are considered hybrid businesses, such as a bakery that manufactures bread, sells baked goods, and provides food service.

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1K views1 page

Chapter V. Types of Business According To Activities

The document discusses the three main types of businesses according to their activities: service businesses, merchandising businesses, and manufacturing businesses. A service business offers professional skills, advice, and consultations such as barber shops and banks. A merchandising business buys products wholesale and sells them retail, making a profit on the difference in price, like bookstores and hardware stores. A manufacturing business buys raw materials and transforms them into new products through combining materials, labor, and expenses, for example shoe manufacturers and car plants. Some businesses can fall under more than one type and are considered hybrid businesses, such as a bakery that manufactures bread, sells baked goods, and provides food service.

Uploaded by

marissa casareno almuete
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Fundamentals of Accountancy, Business, and Management 1

Chapter V: Types of Business According to


Activities
Specific Learning Objectives
At the end of this lesson, you should be able to:
• review the types of business according to activities
• describe a service entity and give examples
• describe a merchandising entity and give examples
• describe a manufacturing entity and give examples

Three (3) types of business according to activities:


• Service Business
This type of business offers professional skills, advice and consultations.
Examples: barber shops and beauty parlors, repair shops, banks, accounting
and law firms

• Merchandising Business
This type of business buys at wholesale and later sells the products at retail.
They make a profit by selling the merchandise or products at prices that are
higher than their purchase costs. This type of business is also known as "buy
and sell".
Examples are: book stores, sari-sari stores, hardware stores

• Manufacturing Business
This type of business buys raw materials and uses them in making a new
product, therefore combining raw materials, labour and expenses into a
product for sale later on.
Examples are: shoe manufacturing businesses, car manufacturing plants

Additional information:
There are businesses that may be classified under more than one type of
business. A bakery, for example, combines raw materials in making loaves
of bread(manufacturing), sells hot pan de sal (merchandising), and caters
customers’ orders in small coffee table servings of ensaymada and hot coffee
(service). This type of business is called a “hybrid business”.

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