Business

• Double coincidence of wants


  Two people who each want what the other has to offer
• Surplus production


  Output in excess of what a producer requires for his or her own use
• Money


  Anything that serves as a generally acceptable means of exchange. Includes physical objects, e.g. cowrie shells and paper money, as well as cards and electronic forms of payment.
• Deferred payments


  Payments that are made in the future for a current debt
• Cowrie shells were an early form of money
• Barter


  The exchange of goods without the use of money
• Advantages of barter


  • People can access goods that they do not produce themselves
  • People can specialise in producing one or a small number of goods
  • Surplus production can be traded
  • There is no need for money
• Disadvantages of barter

  • It requires finding someone willing to barter
  • There is no common measure of the value of items (as would be the case with money)
  • It is difficult to "save" bartered goods in the same way that you would save money
  • Certain goods cannot be broken up into smaller units (in the way that money can)
  • It is difficult to transport certain goods once they have been received
• Subsistence economy


  One in which people are able to provide for their own wants and needs through farming and fishing, supplemented by some barter trading
• Characteristics of items used as money before coins and notes were introduced

  • Scarcity
  • Acceptability
  • Portability
  • Durability
  • Divisibility
• Debt and credit cards have become a more popular instrument of exchange for individual consumers than cash and cheques
• Instrument of exchange


  The means through which a payment is made, e.g. notes and coins, cheques and m-money
• Drawer


  A person making out a bill of exchange, such as a cheque ordering the payment of funds
• Drawee


  Usually the bank responsible for following the drawer's instruction to transfer funds to the payee
• Payee

  A person entitled to payment by the drawee as a result of instructions made by the drawer
• Instruments of exchange


  • Barter
  • Bills of exchange
  • Electronic transfer
  • Tele-banking and e-commerce
  • Cheques
  • Money order
  • Debit cards
  • Credit cards
  • Bank draft
  • Telegraphic money transfer
  • Bank transfers
  • M-money, mobile money and mobile wallets
• Crossed cheque


  A cheque that has two parallel vertical or diagonal lines drawn across it. Instructions can be written between the lines, such as that the cheque can only be redeemed by the person whose name appears as the payee.
• Order


  A written instruction binding one party to pay a fixed sum on an agreed settlement date.
• Settlement date


  The date on which a financial transaction is completed
• You should be able to identify some of the key details on a given instrument of payment
• Only four of the most common instruments are outlined here but make sure that you can identify key details on other instruments such as debit cards
• Layout of a cheque


  • Drawee's name
  • Payee's name
  • Drawer's name
  • Sum being paid
  • Date
• A crossed cheque has to be deposited in a bank account: it cannot be cashed
• Layout of a bill of exchange

  • Issuer
  • Payee
  • Drawee
  • Amount
  • Date
• The bill of exchange represents an order for Royal England Importers to pay this sum of money in 60 days' time, by which time they will have received the goods
• Layout of a credit card

  • Cardholder name
  • Issuing bank
  • Card number
  • Issue date
  • Expiry date
  • Card type
• Layout of a money order

  • Sender
  • Receiver
  • Amount
  • Date
• A money order is a payment for a specified sum to a specified person, which is pre-paid by the sender
• Means of payment usually involve a drawer, drawee and payee
• The payment method enables the transfer of funds to the payee
• Bank details appear on most payment methods
• You may be asked to identify key information that appears on an instrument of payment such as the drawer, drawee and payee
• You should also be able to explain how the instrument works
• A distinction is made between private sector businesses (owned by individuals or groups for their own purposes, usually with profit-driven motives) and public sector businesses (owned by the government, usually for purposes that benefit the whole community)
• Private sector businesses in Barbados

  • Private-run buses
  • Private-run minivans
  • Private-run route taxis
• Private sector


  Businesses owned by private individuals and shareholders
• Public sector


  Government departments and public corporations
• Types of enterprise in the private sector

  • Companies
  • Partnerships
  • Sole traders
• Who owns private sector enterprises

  • Private individuals
  • Shareholders
• Who manages private sector enterprises

  • Sole trader
  • Managing partners
  • Board of directors for major decisions
  • Management board for day-to-day