The characteristics of business are as under:
An economic activity
Business is considered to be an economic activity because it is undertaken with the objective of earning money or
livelihood and not because of love, affection, sympathy or any other sentimental reasons.
Production or procurement of goods and services
Before goods are offered to the people for consumption, they must either be produced or procured by the business
enterprise. Thus, every business enterprise either manufactures the goods it deals in or it acquires them from producers,
to be further sold to the end user.
Sale or exchange of goods and services
Business involves transfer or exchange of goods and services for value. If goods are produced not for the purpose of sale
but say for internal consumption, it is not a business activity. Thus, the important characteristics of business is that there
should be exchange of goods between the buyer or the seller.
Dealing in goods and services on a regular basis
Business is a ongoing activity. it involves dealings in goods or services on a regular basis. One single transaction of sale
or purchase does not constitute business.
Profit earning
One of the main purpose of business is to earn profits. No business can survive for long without earning profit. That is
why businessmen make all possible efforts to maximize profits, by increasing the volume of sales or reducing costs.
Uncertainty of returns
 Uncertainty of return refers to the lack of knowledge relating to the amount of money that the business is going to earn
in a given period. Every business invests money to run its activities with the objective of earning profits. However, the
amount of profits that can potentially be earned is not consistent. Additionally, there is a possibility of losses being
incurred, in spite of the best efforts put into the business.
Elements of risk
Risk is the uncertainty associated with an exposure to loss. It is caused by some unfavourable or undesirable event. The
risks are related with certain factors like changes in consumer tastes and fashions, changes in methods of production,
strike or lockout in the work place, increased competition in the market, fire, theft accidents, natural calamities etc.

Indemnity means when a person promises to save the other party from the loss caused from the conduct of promisor or by the conduct of any other person. And in the insurance of fire , insurance company promises to pay a certain amount when the property is destroyed by the fire.

(i)Equity shares.
(ii) Retained earnings.