(a) Compare Business with profession and employment. (any 5)

OR

(b) Write the difference between Factoring and Forfaiting.

Question

(a) Compare Business with profession and employment. (any 5)

OR

(b) Write the difference between Factoring and Forfaiting.

Accepted Answer

>

> [!TLDR]
> (a) Business, profession and employment are economic activities that differ in establishment, nature of work, qualification, capital, reward, risk and transferability. (b) Factoring finances short-term receivables (with or without recourse); forfaiting finances medium/long-term export receivables and is always without recourse.
>
> In the Tamil Nadu HSC Commerce syllabus, this Part-IV OR question covers the classification of economic activities and sources of finance. Both alternatives are answered.
>
> **(a) Comparison of Business, Profession and Employment (any five):**
>
> | Basis | Business | Profession | Employment |
> |---|---|---|---|
> | Mode of establishment | Decision of the entrepreneur | Membership of a professional body | Appointment/service agreement |
> | Nature of work | Production/exchange of goods and services | Rendering specialised expert services | Performing work as per employer's direction |
> | Qualification | No minimum qualification prescribed | Expert knowledge and prescribed qualification/training | Qualification as per the job requirement |
> | Capital | Capital required as per size | Some capital for setting up practice | No capital required |
> | Reward | Profit (uncertain) | Professional fee | Salary or wages (fixed) |
> | Risk | High risk of loss | Some risk | Little or no risk |
> | Transfer of interest | Possible | Generally not transferable | Not transferable |
>
> **(b) Difference between Factoring and Forfaiting:**
>
> | Basis | Factoring | Forfaiting |
> |---|---|---|
> | Meaning | Sale of short-term trade receivables (book debts) to a factor for immediate cash | Discounting of medium/long-term export receivables (bills) by a forfaiter |
> | Period | Short-term receivables | Medium- to long-term receivables |
> | Recourse | May be with or without recourse | Always without recourse | …

Q.(a) Compare Business with profession and employment. (any 5)

Concept understanding — Business Activity and Its Classification into Industry and Commerce

Basis	Business	Profession	Employment
Mode of establishment	Decision of the entrepreneur	Membership of a professional body	Appointment/service agreement
Nature of work	Production/exchange of goods and services	Rendering specialised expert services	Performing work as per employer's direction
Qualification	No minimum qualification prescribed	Expert knowledge and prescribed qualification/training	Qualification as per the job requirement
Capital	Capital required as per size	Some capital for setting up practice	No capital required
Reward	Profit (uncertain)	Professional fee	Salary or wages (fixed)
Risk	High risk of loss	Some risk	Little or no risk
Transfer of interest	Possible	Generally not transferable	Not transferable

Basis	Factoring	Forfaiting
Meaning	Sale of short-term trade receivables (book debts) to a factor for immediate cash	Discounting of medium/long-term export receivables (bills) by a forfaiter
Period	Short-term receivables	Medium- to long-term receivables
Recourse	May be with or without recourse	Always without recourse

Q.(a) Compare Business with profession and employment. (any 5)

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