N
ow, there are new goods and services in many types for the world’s society. For example, financial application is used for preparing financial transaction conveniently and effectively. This incident shows that the society is developed continuously. When this development is risen numerously, a business about the development is started. The business establishes the clear relationship between buyer and seller. However, a person, who want to start a business, needs to understand the business activities for initial plan and business risk reduction. The business activities are categorized in 3 types.
1. Financing activities
The financing activities are the activities to prepare funds for preparing a business. There are two primary sources for corporations are borrowing money and using an owner’s money (e.g. issuing shares). The borrowing money, in the form of debt and other obligations, are called liabilities. Examples are long-term loan from financial institute, debenture. The owner’s money (for example, obtaining fund by selling shares of stock) is called equity.
2. Investing activities
When a business rises fund from the chosen financing activities. It always uses the fund for investing activities. In an initial part, a business needs to purchase many resources, such as building, land, equipment and computers. The resources are called assets. This shows that the assets are use for operation to make money for supporting a business circle.
3. Operating activities
When a business has assets from investing activities. A business starts an operation. When a business sells goods or prepares a service, a business will get the return form the activities. The return which is from operation is called revenue. Beside the revenue, a business also pays money for supporting a routine operation. This activity is called expenses. When revenues exceed expenses, a business has profit. In the other hand, when expenses exceed revenues, a business has loss.
