Question

Briefly explain the auxiliaries to trade.

Answer 1

Auxiliaries of trade may be classified into five categories:

1. Transportation:
Selling all the goods produced at or near the production place is not possible. Hence, goods are to be sent to different places where they are demanded.

2. Banking and Finance:
Now - a - days we cannot think of a business without a bank. A bank is an organization that accepts deposits of money from the public, withdrawals on demand or otherwise, and lends the same to those who need it. Necessary funds can be obtained by businessmen from a bank. Thus, banking helps business activities to overcome the v problem of finance.

3. Insurance:
Business involves various types of risks. Materials and goods held in stock or in transit are subject to the risk of loss or damage. Insurance provides protection in all such cases. On payment of a nominal premium, the amount of loss or damage and compensation for injury, if any, can be recovered from the insurance company.

4. Warehousing:
Goods are held in stock to make them available as and when required. A special arrangement must be made for the storage of goods to prevent loss or damage. Warehousing helps business firms to overcome the problem of storage and facilities the availability of goods when needed.

5. Advertising:
Advertising is one of the most important methods of promoting the sale of products, particularly, consumer goods like electronic goods, automobiles, soaps, detergents, etc. Advertising helps in providing information about available goods and services and inducing customers to buy particular items.