Internal Trade - Class 11 Commerce Business Studies - Extra Questions

Main characteristics of periodic market traders:

1. Weekly markets, monthly bazaars, and annual fairs are places where they sell their products.
2. Generally, they display their goods or temporary structures made outside the shops which are closed for a weekly holiday.
3. They deal in low price and low-quality goods.
4. They sell a large variety of goods which may include plastic products, utensils, ladies' bags, etc.
5. These traders also set up shops on the occasion of Diwali, Christmas etc.
   

The retailers having a fixed place of sale are known as fixed shop retailers. These retailers have shops in the market place or residential localities.

A-Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Retailers satisfy demand identified through a supply chain.

This statement is 'True' because of the following reasons :
(i) The use of borrowed capital for financing a firm is known as Trading on equity.
(ii) If the rate of interest on debt is lower then the rate of earning of the company, the shareholders will get extra dividend out of additional profit.
(iii) Higher the rate of dividend to shareholders, better the goodwill of the company.
(iv)It increases the market value of shares.
(v) Which helps to raise further loan at lower rate of interest.
(vi) If the earnings of the company are insufficient to pay even interest on the debts, there are financial crisis.
(vii) So in case of losses also interest has to be paid.
(viii) Thus no dividend has to be declared to share holders.
(ix) It affects the goodwill and creditworthiness of the company adversely.
(x) company will not be able to raise further loans.
(xi) So it may increase income of the shareholders, if things go right and may increase the risk of loss in adverse conditions. So trading on equity is double edged sword.

Wholesale Trade refers to the trade in which goods are sold in large quantities. A wholesaler is a person who engages in wholesale trading. The wholesaler purchases the goods in bulk from the producer and sells them to the retailer in small numbers. A wholesaler acts as a middleman between the manufacturer and the retailer.

Main characteristics of Wholesale Trade:

1. Wholesaler acts as a link between producer and retailer. 
2. A wholesaler works with big amounts of products. 
3. A wholesaler is usually focused on a single product line. For instance, stationery, food grains, and so on.
4. Wholesaler invests large amounts of capital in maintaining a stock of goods.
5. Generally, the margin of profit of wholesalers is low. A wholesaler is the first intermediary in the distribution chain.
   

Main characteristics of internal trade:

1. A country's purchasing and selling of commodities and services occurs within its borders.
2. Only the home currency is used to make and receive payments.
   
3. The traders are required to complete no or only a few requirements.
   
4. Various local modes of transport can be used for transfer of goods and services.
   

The most popular type of store is the small-scale retailer. These stores can be found in almost every city. They can be found in most cities in every corner of most cities. They are generally located in neighbourhoods to meet the needs of the people that live there.

These traders sell their goods on fixed days in different marketplaces. Their weekly markets are fixed. For example:- Monday market in Karol Bagh, Wednesday market in Rohini, etc.
Main features of periodic market traders:-

1. They sell their goods in the weekly markets or monthly bazaars or annual fairs.
2. Generally, they display their goods on temporary structures made outside the shops which are closed for a weekly holiday.
3. They deal in low price and low-quality goods.

Single line stores are small shops which deal with one line of products. These stores deal in a variety of goods in that line of product. For example- stores dealing in garments have ladies garments, children garments, gent's garments, garments of all size, brands etc.

The final link in the distribution chain is retail trade. The term "retail trade" refers to the sale of items in small quantities to end users. A retailer buys goods from a wholesaler and sell them to the consumer. So he acts as a link between the wholesaler and the ultimate consumer. Retailing need not necessarily be carried on in a shop or store. Retailing includes selling goods door to door. on television, on telephone, on internet etc.

Small businesses in residential areas are known as general stores. This store sells groceries, confectionery, stationery, soft drinks, and other everyday products. They  create personal relationship with the customers and keep them happy and satisfied.

Itinerants are merchants who do not have a set location where they sell their goods.They move from one location to the next looking for customers.They are also known as mobile vendors.Itinerants deal in low price, non-standard items. They deal in daily use items and require a small investment.

There are the shops to sell goods which are not produced according to the required specification. These shops do not sell used or second-hand goods. They're brand-new things with flaws. The cost of the goods is determined by its fault. In some goods, the defects are not easily visible.

Street traders do not have a permanent location where they conduct business. They move from one location to the next, whereas street shop owners have a fixed location where they sell.

These stores are located at street crossings, main roadways, and colony corners. Street stalls are another name for them. There are only a few spaces available in these shops. They sell a variety of low-cost articles such as hosiery, toys, and periodicals.

Chambers of commerce and industry are voluntary and non-profit making organizations for all types of businessmen operating in a particular territory for the protection of interest of businessmen in general and that territory in particular. In simple words, we can say, a chamber of commerce is a representative body of businessmen. It represents the business community of a particular region irrespective of a particular industry or trade.

These stores deal on secondhand or used items such as books, cutlery and furniture because these are used goods, the prices are often affordable. These shops offer primarily to the needy, who cannot afford to purchase new items.

Manufacturing Account is prepared by the manufacturing enterprises to know the cost of manufactured goods. The balance of Manufacturing Account is factory cost of production which is transferred to Trading Account. Trading Account contains details regarding cost of goods sold and sales of goods to find out gross profit or gross loss.

Trade Association is the association of business firms in the same industry while Chamber of Commerce includes business firms operating in different fields of business activity.

A- Risk Sharing is an entirely different concept. It involves sharing (dividing) common risk among two or more persons. I think the "partnership" form of business organization is the most common (and oldest) practice of risk sharing.

The salient features of GST are as under:-

1. The GST is applicable throughout the country, including Jammu & Kashmir.
2. GST is applicable on the supply of goods or services as against the present concept of tax on the manufacturer or sale of goods or on the provision of services.
3. It is based on the destination-based consumption tax principle, as opposed to the traditional origin-based taxes principle.
4. Import of goods and services is treated as interstate supplies and would be subject to IGST in addition to the applicable custom duties.
5. There are various modes of tax payment available to the tax payers including Internet banking, Debit/Credit Card, NEFT, RTGS etc.

(A) Direct Channel or zero Level Channels:

When the manufacturer instead of selling the goods to the intermediary sells it directly to the consumer then this is known as Zero Level Channel. Retail outlets, mail order selling, internet selling and selling

(B) Indirect Channels :

When a manufacturer gets the help of one or more middlemen to move goods from the production place to the place of consumption, the distribution channel is called indirect channel. Following are the main types of it:

1. One Level Channel:

In this method an intermediary is used. Here a manufacturer sells the goods directly to the retailer instead of selling it to agents or wholesalers. This method is used for expensive watches and other like products. This method is also useful for selling FMCG (Fast Moving Consumer Goods). This channel is clarified in the following diagram

2.Two Level Channel :

In this method a manufacturer sells the material to a wholesaler, the wholesaler to the retailer and then the retailer to the consumer. Here, the wholesaler after purchasing the material in large quantity from the manufacturer sells it in small quantity to the retailer.

 3. Three Level Channel:

Under this one more level is added to Two Level Channel in the form of agent. An agent facilitates to reduce the distance between the manufacturer and the wholesaler. Some big companies who cannot directly contact the wholesaler, they take the help of agents. Such companies appoint their agents in every region and sell the material to them.

Internal trade is that which takes place within the domestic boundaries of a country. It is classified into two categories-
1. Wholesale trade: It refers to buying and selling goods in large quantities. A wholesaler buys goods in large quantities from the producers and sells them to other dealers. He serves as a connecting link between the producer and retailer 
2. Retail trade:- Refers to buying goods and services in relatively small quantities and selling them to ultimate consumers.

The main characteristics of hawkers and pedlars are:

1. They move from street to street, in buses, trains, etc. in search of customers.
2. They sell a wide range of products, including fruits, vegetables, toys, and bangles.
   
3. They deal with non-branded and local items.
4. They deliver the goods right to the customer's door.
5. They do not have set prices. Prices are set based on negotiations between customers and hawkers or pedlars.
   

Concept identified: Internal trade.

Concept identified: Internal trade.