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1. Introduction
Goods produced by an industry should be distributed to the customers in the market.
Distribution of goods is done by the way of commercial activities, i.e. buying, selling and
other management services. Trade may be defined as a regular process of buying and
selling goods and services for cash or credit with a profit motive. It is an act of transferring
the goods along with their ownership from one person to another in consideration of
some monetary value. Trade acts as a link between the producers and the consumers in
the form of different channels.
But a consignment trade is slightly different from that of ordinary trade. It is a process
of sending goods to a person, say an agent, without transferring the ownership on them
but requiring that person to make sales thereof subject to a certain remuneration and
commission. The consignee acts entirely on behalf of the consignor. Some of the popular
definitions of trade are given below:
According to A.N. Agrawal, “Trade refers to the sale, transfer or exchange of goods and services.”

According to Oxford Dictionary of Finance and Banking, “Trade is the activity of selling
goods and service in order to make a profit.”
According to F.C. Hopper, “All activities which exchange ownership between the persons or
organization with the view of profit.”
From the above definitions, it can be concluded that trade is the act of selling and buying
of goods and services among persons or organizations, with the object of earning profit.

Key Point A regular process of buying and selling of goods and services in cash or
credit with profit motive is known as trade.

2. Types of Trade

With the growth and development of business activities, trade is also developed in
a considerable size inside and outside a country. Some sorts of goods and services are
exchanged within the same country whereas some others to foreign countries. As the
nature of trade dealing, a trade can be classified as home trade and foreign trade.

Types of Trade

Home trade Foreign trade

Wholesale Retail Import Trade Export Trade Entrepot Trade

a. Home Trade
Home trade refers to that trade which is limited
within the geographical boundaries of a country. It is also
known as internal trade. In this trade, goods and services
are exchanged between the persons or organizations of the
Home trade

40 Aakar’s Office Practice and Accountancy - 10 Trade 41