Question

Answer in brief.

Explain responsibilities of business towards owners.

Answer 1

Owners are the persons who own the business. They are responsible for the profits or losses and they contribute the capital and bear the risks. Following are the responsibilities of business towards owners:

1. Reasonable Pofit

It is desirable that business earns reasonable profit since profit facilitates growth and expansion as well as brings financial stability.

2. Exploring Business Opportunities

Business opportunity is the scope available for business units to expand, grow and diversify. Businessmen should be alert to find and explore such opportunities as they are crucial to the success of business.

3. Optimum of Capital 

Available capital should be used carefully and efficiently. For this, business risks should be considered appropriately. It is the responsibility of management to give attention to the safety of capital.

4. Minimise Wastage

It is possible for business organisations to maximise profits by minimising the wastage of time, money, and manpower.

5. Efficient Business

Scarce resources should be utilised at optimum level. Optimum use will increase the profitability and the productivity and thereby, contribute to efficient running of the business.

6. Fair Practices on Stock Exchange

Sometimes, share prices are artificially increased or decreased by business organisations. All such unfair practices related to stock exchange (i.e., insider trading, providing wrong and secret information etc.) should be eliminated to avoid loss to common investors.

7. Expansion And Diversification

The business should be growing & developing in order to expand and diversify. Business should continually engage in Research and Development so that they can face market competition.

8. Periodic Information

Owners should get complete and accurate information about the financial position of their business. For this, business should disclose all the relevant information through reports, circulars etc.

9. Efficiency Use of Owner's Funds

Owners' funds must be utilised in the best possible manner. It should give short-term as well as long-term returns to them in time.

10. Creative Goodwill

Management should develop and maintain good public image of the business. A reputed company commands a lot of respect and trust in the market.