Classification of Commercial Organisations — Flashcards

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Commercial organisations are organisations which undertake commercial activities. Their main motive is to earn profit. They may be owned by one or more individuals and can be industrial, trading, tran…

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Commercial organisations on the basis of ownership are classified into three types: private sector enterprises, public sector enterprises, and joint sector enterprises.

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The main motive of private sector undertakings is to earn profits. Profit is the main reason for their business activity, and they are fully owned and controlled by private businessmen.

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Private sector enterprises are undertakings that are owned, controlled, and financed by private businessmen. There is no government participation in them. Examples include Infosys Ltd., ITC Limited, T…

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No state participation means the Central Government or State Government does not take part in the ownership or control of the private sector enterprise. Even partial government involvement makes it di…

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Capital in a private sector undertaking is arranged by its owners. A sole trader contributes the capital in a sole proprietorship. In partnership, the partners invest capital. A joint stock company ra…

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Independent management means a private sector undertaking is managed by its owners. In sole proprietorship and partnership, the owners directly manage the business. In a joint stock company, the manag…

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A sole proprietorship is a form of private ownership in which one person owns the business. It is a simple form of private sector enterprise and is managed by that single owner.