Question

Describe the principal activities of the company? (1mark)

Answer 1

The principal activity means the activity which contributes maximum to the total value added by the company. The core activity of the company through which company earn most of its revenue is known as the principal activity of the company. For example if the main business of the company is to produce and sell soaps then activity of production and its sale will be the principal activity for that company. Simultaneously this company may also indulge in investing and earn income from it, the activity of investing will be secondary activity for this company. There are companies who manufacture and sell a product and also produce accessories or support products for its main product. The activity of producing and selling main product will be the principal activity. For example car manufacturing company manufactures cars and also produce fancy seat covers, foot mats. The activity of manufacturing and selling car will be the principal activity.