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same country and the payment of money is also made in the local currency. As the size of
dealing, this trade is further divided as wholesale trade and retail trade.

Key Point The process of buying and selling of goods and services within the
geographical boundary of a country is known as home trade.

a. Types of Home Trade
i. Wholesale Trade
Wholesale trade refers to that trade in which goods are purchased in bulk quantity
from dealers or directly from the producers and sell them to retailers. They do not sell the
goods to the final consumers.

Producer Dealer Wholesaler Retailer

Key Point Wholesale trade is the act of buying goods in large quantity directly from
the producer and selling them to the retailer in smaller quantity.

ii. Retail Trade
Retail trade refers to that trade in which goods are purchased in small quantities
from the wholesalers or dealers and sold to the final consumers. Generally, the retail price
of the goods is higher than its wholesale price.

Producer Dealer Wholesaler Retailer Customer

Both of the wholesale trade and the retail trade are the intermediaries between the
producers and final consumers in the process of distribution of goods.

Key Point Retail trade is the act of buying goods from wholesaler in smaller quantity
and selling them to the final consumers in required quantity.

b. Procedures of Home Trade
As mentioned earlier, home trade refers to the trade, which is carried on within the
boundaries of a country, it is carried out between the traders of the same country. Trade
dealing through personal contact i.e. face to face dealing may not be possible in every
situation, specially when the traders are in distant places. In such a case, they generally
establish and maintain the documentary relation between them. The customers come
to know about the manufacturers and suppliers through advertisement and publicity.
Different documents/ procedures are commonly used by them to establish trade
relationship between them. Some of the common procedures are briefly described below:

i. Inquiry Letter
The customers generally come to know about a number of manufacturers through
their advertisement and publicity. Then, after identifying them, they make the necessary
inquiries about their goods. Thus, an inquiry letter refers to the letter which is written by

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