Explain any two business activities which are auxiliaries to trade.


By Harshvardhan, Subject Matter Expert at Edumarz.

Solution: Activities that are meant for assisting trade are known as Auxiliaries to Trade. These types of activities are also referred to as Services because their nature is to facilitate Industrial and Trading Activities.

Two business activities which are Auxiliaries to Trade can be summarised below:

  1. Transport and Communication– Transport facilitates the movement of raw materials to the place of production and the movement of finished goods from the place of production(factories) to the place of consumption. Example- Road Transport, Rail Transport, Air Transport, etc. Communication facilitates the exchange of information between producers, traders, and consumers. Example- Postal facility and Mobile Telephony.

2. Banking and Finance– Banking helps the business activities in overcoming the problem of finance. The Problem of Finance is the lack of funds available with the business for acquiring assets. Commercial banks generally lend money to the Businessmen by providing Overdraft and cash credit facilities, Loans and Advances. Banks also undertake collection of cheques, Remittance of funds to different places and discounting of bills of exchange on behalf of Traders. In foreign trade, Commercial banks help the exporters in Collecting money from Importers. Commercial banks also help promoters of Companies to raise Capital from the Public.

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