| Acceleration Clause:
A loan contract clause stating that if
you are in default, your creditor can
demand payment of the entire balance of
your loan at once, before its scheduled
|"S" corporation: A specific
IRS designation which allows a corporation
to be taxed similarly to a partnership,
yet retain limited liability for its shareholders.
|10-K is the audited annual
report that most reporting companies file
with the Securities Exchange Commission
(SEC). It provides a comprehensive overview
of the registrant's business. The report
must be filed within 90 days after the
end of the company's fiscal year.
|10-Q is a report filed
quarterly to the Securities Exchange Commission
(SEC) by most reporting companies. It
includes unaudited financial statements
and provides a continuing view of the
company's financial position during the
year. The report must be filed for each
of the first three fiscal quarters of
the company's fiscal year and is due within
45 days of the close of the quarter.
|13TH PERIOD in the fiscal
year is the period used for fiscal year-end
adjusting entries (periods 1-12 being
the months in the fiscal year).
|2. Sustainable Growth
Rate (showing the degree to which a company
can grow using retained earnings to fund
|3% RULE see THREE PERCENT
|401 (K) PLAN is a retirement
plan in the United States that allows
qualified employees to contribute money
from their paychecks into a tax-sheltered
|4-4-5 CALENDAR, in budgeting
and accounting, is the breakdown of each
month into weeks by counting the number
of times Friday occurs within each month,
e.g., Jan = 4 weeks, Feb = 4 weeks, Mar
= 5 weeks, Apr = 4 weeks, May = 4 weeks,
Jun = 5 weeks… etc. to total 52 weeks
in a 12 month period. Every third month,
Friday will occur 5 times. All other months,
Friday will occur 4 times. In the months
where Friday occurs 5 times, it is considered
a 5 week month. Whereas, the 4 Friday
months will be considered as 4 week months.
|A&E can mean either Appropriation
& Expense or Analysis & Evaluation.
|A&P is an acronym for
Administrative and Personnel.
|ABA (Accredited Business
Accountant or Accredited Business Advisor),
in the US, is a national credential conferred
by Accreditation Council for Accountancy
and Taxation to professionals who specialize
in supporting the financial needs of individuals
and small to medium sized businesses.
ABA is the only nationally recognized
alternative to the CPA. Most accredited
individuals do not perform audits. Generally,
they are small business owners themselves.
In addition to general accounting work,
CPAs are also heavily schooled in performing
audits; however, only a small fraction
of America's businesses require an audit.
In general, a CPA has majored in accounting,
passed the CPA examination and is licensed
to perform audits. An ABA has majored
in accounting, passed the ABA comprehensive
examination and in most states is not
licensed to perform audits.
|ABATEMENT - The reduction
of a gift under will because of insufficiency
of assets to satisfy all the gifts after
the legal obligations of the estate (debts,
taxes, charges, and claims) have been
paid in full. The general rule is that
all gifts of the same class shall abate
proportionately, unless otherwise provided.
|ABC FIRE EXTINGUISHER:
Chemically based devices used to eliminate
ordinary combustible, flammable liquid,
and electrical fires.
|absolute advantage the
ability to produce a specific product
more efficiently than any other nation
|ABSTRACT OF TITLE- A
summary of all essential facts relating
to the title to a parcel of real property.
|ACCELERATED COST RECOVERY
SYSTEM - A method for determining depreciation
using statutory percentages of the cost
basis of property over a given life as
opposed to the declining balance method,
straight-line depreciation or sum--of-the-digits
method; a term frequently found in tax
A depreciation method that allows larger
deductions in the early years of an asset's
"life" and smaller deductions at the end
of the period. (See "Straight-line depreciation.")
A method of calculating depreciation where
deductions are higher in the early years
of the asset's life. Contrasted with straight-line
depreciation where deductions are equal
for each year of the life of the asset.
The property which passes to the remainder-man
through the failure of the income or preceding
|ACCELERATION - The advancement
of the interest where a trust is created
for one beneficiary for life or for a
term of years and for another in remainder,
and the trust fails as to the interest
for life or the term.
A clause (often in mortgages or other
loans) where some action will occur ahead
of schedule as a result of some other
action. For example, an acceleration clause
in a loan may mean that the full amount
is due immediately if the debtor misses
two monthly payments in a row.
|Acceptance of bill of
exchange: Recognition of a legal obligation
to pay the amount on a term bill of exchange
at a specified future date (maturity date).
|acceptance sampling is
sampling to determine whether internal
control compliance is greater than or
less than the tolerable deviation rate.
|accessory equipment standardized
equipment used in a firm’s production
or office activities
|ACCOUNT – A term commonly
used within the advertising business to
refer to the corporate entity employing
an advertising agency. MJM's account roster
includes a wide variety of businesses
and service organizations.
|Account a record of a
business transaction. When you buy something
on credit, the company you are dealing
with sets up an "account". This means
it sets up a record of what you buy and
what you pay. You will do the same thing
with any customers to whom you extend
|ACCOUNT COORDINATOR –
The advertising agency employee responsible
for much of the day-to-day business of
servicing an account. Motto Advertising
takes pride in the expertise and dedication
of our account coordinators, who assist
account executives and oversee traffic,
production and media scheduling within
|ACCOUNT EXECUTIVE (A/E)
– The agency employee responsible for
a client’s marketing and administrative
efforts. At Motto Advertising, account
executives deal directly with the client,
vendors and the media. Our AE’s are all
highly experienced and have more autonomy
than at most other agencies.
|account executive (or
stock broker) an individual—sometimes
called a stock broker or registered representative—who
buys and sells securities for clients
|account payee only words
often written on crossed cheques, which
direct the bank to pay the cheque only
to the bank account of the payee.
|Account: A record that
holds the results of financial transactions.
|accountability the obligation
of a worker to accomplish an assigned
job or task
|accountant a qualified
person who is skilled at managing and
analysing business financial records.
The equation that is the basis of the
Balance Sheet: Assets = Liabilities +
Owners' Equity. (Also, the response to
"What does 1 + 1 equal?": "What do you
want it to equal?")
If a independent certified public accountant
is requested to audit a company's books,
he will issue a opinion as to the condition
of the financial statements. There are
several degrees of opinion from clean
to adverse. A clean opinion doesn't mean
that every number is correct, only that
the financials fairly represent the position
of the company. An adverse opinion means
the financials don't represent the position
of the company. A disclaimer means the
auditor can't (for any number of reasons)
express an opinion on the statements.
|ACCOUNTING - (1) The
record of an account showing the transactions
therein. (2) The submission of such a
record to the court or to the beneficiaries
of a trust or estate by the fiduciary.
|Accounting - The recording,
classifying, summarizing and interpreting
in a significant manner and in terms of
money, transactions and events of a financial
|accounting and review
services are official pronouncements covering
compilation and review engagements. Compilation
is presenting in the form of financial
statements information that is the representation
of management (owners) without expressing
assurance. Review is inquiry and analytical
procedures to provide the accountant a
basis for expressing limited assurance
that there are no material modifications
that should be made to the statements
for them to be in conformity with U.S.
generally accepted accounting principles
or, if applicable, another comprehensive
basis of accounting.
Methods and procedures intended to safeguard
assets, authorize transactions, and ensure
the accuracy of financial records.
|accounting data includes
journals, ledgers and other records such
as spreadsheets that support financial
statements. It may be in computer readable
form or on paper.
|accounting equation the
basis for the accounting process: assets
= liabilities + owners’ equity
Simply stated, assets are equal to liabilities
plus owners' equity.
|accounting estimate An
approximation of a financial statement
element. Accounting estimates are often
included in historical financial statements
because measurement of some amounts is
uncertain pending outcome of future events
and relevant data about events that have
occurred cannot be accumulated on a timely,
|Accounting Method. Any
number of approaches for calculating the
income of an entity. Usually applied to
the general means of recognizing income
and expenses, e.g., cash or accrual. But
it can also apply to method of keeping
|ACCOUNTING PERIOD A period
of time, (month, quarter, year), for which
a financial statement is produced.
|Accounting period The
time period between successive closings
of the books of a business. An accounting
period usually is a month, three months
(a quarter), or a year (a fiscal year
or a calendar year) corresponding to the
tax year used by the business.
are alternative ways of reporting and
disclosing information in financial statements
and related footnotes.
Similar to accounting method, but applied
to more routine issues. For example, the
method of computing depreciation, handling
small capital expenditures.
|accounting program a
software package that enables users to
record and report financial information
|Accounting Rate of Return.
A method of computing the profitability
where the total cash inflow over the life
of the project is reduced by expenses.
This amount is divided by the estimated
life of the project to arrive at an annual
return. That's divided by the investment's
cost. The result is an average rate of
|accounting the process
of systematically collecting, analyzing,
and reporting financial information
|Accounting: A service
that oversees, measures, and evaluates
financial information for decision making
|Accounts Payable - Short-term
debts incurred as the result of day-to-day
|Accounts Payable - Trade
accounts of businesses representing obligations
to pay for goods and services received.
|accounts payable is money
you owe to suppliers and other business
creditors as a result of purchases of
stock and other expenses such as overheads
|Accounts Payable The
amount a company owes for goods already
received. An account in the general ledger
representing the amount owed by the business
to its creditors on open purchases of
goods and/or services.
|ACCOUNTS PAYABLE This
represents what a business owes to its
suppliers and other creditors at a given
point in time.
|accounts payable short-term
obligations that arise as a result of
making credit purchases
|Accounts Payable. A liability
arising when a vendor provides goods or
services that are not immediately paid
for and where the liability is not formalized
in writing but backed by the reputation
and credit worthiness of the debtor. When
a business using the accrual basis of
accounting purchases goods or services
the company reports an expense and an
account payable. When payment is made
the account payable is reduced.
|Accounts Payable: The
amount of money that you owe for goods
or services that you bought.
|Accounts Payable: Amounts
due from your business to your creditors.
Generally these are short term liabilities
(30-120 days), and are shown under the
Current Liabilities section in the Balance
Sheet. (What you owe to other folks.)
|Accounts Receivable -
monies due your business as the result
of day-to-day operations.
|Accounts Receivable -
Trade accounts of businesses representing
moneys due for goods sold or services
rendered evidenced by notes, statements,
invoices or other written evidence of
a present obligation.
|accounts receivable a
record of what is owed to you. All of
the credit "accounts" - the record of
what each customer owes you - taken together
are your "accounts receivable".
|accounts receivable Debts
due from customers from sales of products
and services. Normally a current asset.
|Accounts Receivable Financing.
Financing where the company's accounts
receivable are used as collateral. This
type of financing is usually short-term
|Accounts Receivable The
amount a company is owed for goods it
sold on credit. An account in the general
ledger representing the amount due the
business from its customers for goods
and/or services sold on credit.
|ACCOUNTS RECEIVABLE This
represents the amount due to a business
by its customers at a given point in time.
|accounts receivable turnover a
financial ratio calculated by dividing
net sales by accounts receivable
|Accounts Receivable Turnover.
Ratio obtained by dividing total credit
sales by accounts receivable. The result
indicates how many times the receivables
have been collected during the period
covered by the sales. It's a measure of
how well the company is collecting it's
|Accounts Receivable Turnover:
A measure used to determine a company's
average collection period for receivables.
Usually computed by dividing net sales
(or net credit sales) by average accounts
Claims to cash on account that are expected
to be paid within one year.
For accrual basis businesses, transactions
not paid in cash create an account receivable,
an unsecured promise to pay in the future.
The accounting entry is a debit to accounts
receivable and a credit to sales. On payment,
the account receivable is credited and
cash is debited.
The amount of money that people or companies
Amounts due to your business from your
customers. Generally these amounts are
short term receivables (30-120 days),
and are shown under Current Assets section
in the Balance Sheet. (What other folks
|accounts receivables amounts
that are owed to a firm by its customers
|ACCRETION - The increase
or extension of the boundaries, or the
acquisition of land by the gradual or
imperceptible action of natural forces
as by the washing up of sand or soil from
the sea or a river, or by a gradual recession
of the water from the usual watermark.
|Accrual Accounting -
A method of reporting income when earned
and expenses when incurred, as opposed
to reporting income when received and
expenses when paid.
|ACCRUAL ACCOUNTING A
method of bookkeeping in which income
and expenses are allocated to periods
to which they apply, regardless of when
actually received or paid. For example,
when an invoice is rendered, its value
is added to income immediately, even though
it has not been paid. (Also see CASH ACCOUNTING)
|Accrual Accounting. Under
this method of accounting, income is recognized
when earned, whether or not collected,
and expenses are recognized when events
have occurred that determine that a liability
exists and the amount of the liability
can be ascertained with reasonable accuracy.
For example, at December 31 you ship a
customer 100 widgets. You have to record
the income in that year, even though you
won't get paid until the following year.
If you were buying the widgets, you could
accrue the expense in the tax year you
ordered them. There are some special rules
for tax purposes and there can be a significant
divergence between recognition of income
and expenses for tax and financial accounting
|Accrual Based Accounting
- an accounting method that enters income
and expenses into the books at the time
of contract versus when payment is received
or expenses incurred.
|Accrual Basis Accounting:
The practice of bookkeeping when income
is recorded when earned and expenses are
recorded when they are incurred. (Opposite
of Cash Basis Accounting, the way you
run your personal checkbook; personal
finances are almost always cash basis.
Believe it or not, Accrual Basis accounting
turns out to be a truer way of showing
the profitability of your business.)
|Accrual method - reporting
income when it is earned, though one may
receive payment in a later year. Expenses
are deducted in the tax year they are
incurred, whether or not they are paid
in the same year.
|Accrual method (or accrual
basis). One of two main accounting methods
for determining when a transaction has
tax significance. The accrual method says
that a transaction is taxed when an obligation
to pay or a right to receive payment is
created (for example, at the time products
are delivered, services rendered, billings
sent, etc.). This method is used by all
but the smallest businesses. (See "Cash
method (or cash basis).")
|Accrual Method An accounting
method under which income is subject to
tax after all events have occurred which
fix the right to receive such income and
deductions are allowed when all the events
have occurred to fix the obligation to
pay the debt.
|accrual method of accounting
— Used for most corporate financial statements.
Revenues are counted during the time they’re
earned, and expenses are counted during
the time they’re incurred. Cash doesn’t
need to change hands to be recorded. This
is a fuller way of looking at financial
health. It’s as if you kept records not
just of checks you’d written and deposits
you made, but also of what you owed on
your credit cards and what you were owed
by others. You can feel pretty rich if
your checking account is flush, but if
you owe thousands on your credit card
and don’t take that into account, you
can spend yourself into trouble.
In accrual-based accounting, revenues
are recorded at the time they are earned
(payment may be received in another period);
and expenses are recorded when incurred
(often not in the period when they are
statement An income statement compiled
from accrual-basis accounting. Revenues
are credited in the accounting period
when earned; expenses are charged in the
accounting period when incurred. Compared
to other types of income statements, the
accrual-basis income statement usually
gives the most accurate measures of income
|Accruals Amounts owed
to or owed by a business that have not
yet been recorded in the books of the
|Accrue. To record an
item in the accounting books when using
the accrual method of accounting. For
example, you accrue income when the customer
signs a contract, even though you won't
receive any cash at that time. When you
accrue an item of income or expense can
depend on a number of factors including
the entity's procedures. IRS requirements
here frequently diverge from accounting
|Accrued Expense. An expense
that has been incurred, but not yet paid
in cash. Similar to accounts payable,
but usually associated with nontrade vendors.
For example, an electric bill.
|Accrued Interest - The
interest that has accumulated since the
last interest payment up to, but not including,
the settlement date and that is added
to the contract price of a bond transaction.
There are two methods for calculating
accrued interest: the 30-day-month (360-da
|Accrued Revenue. Income
that has been earned (by the sale of goods
or performance of services) but where
payment has not been received in cash.
Similar to accounts receivable.
The total of depreciation amounts taken
since the time a depreciable asset was
put in service. (Charges for depletion
of natural resources and amortization
of intangibles also are accumulated and
reported on the balance sheet.)
The total depreciation taken on an asset
since it was acquired.
|acid-test ratio a financial
ratio calculated by subtracting the value
of inventory from the current asset amount
and dividing the total by current liabilities
|Acid-Test Ratio. Also
called the quick ratio, it's equal to
the sum of cash, short-term investments
and net current receivables divided by
current liabilities. It's a measure of
whether or not the business could pay
all its current liabilities if they came
|ACKNOWLEDGMENT - (1)
A declaration or avowal of ones act or
of a fact to give it legal validity, especially
before a duly qualified public officer.
(2) The formal certificate made by an
officer before whom one has acknowledged
a deed or other legal instrument.
|Acquisition - The acquiring
of supplies or services by the federal
government with appropriated funds through
purchase or lease.
|Acquisitions in relation
to the GST, acquisitions include the things
you buy (goods, services and anything
else) for your business. They also include
many other transactions, such as obtaining
advice or information, taking out a lease
of business premises or hiring business
|ACTION CARDS – A mail-order
device in which a set of postcards with
order forms and return addresses for a
variety of products and companies is wrapped
in plastic and sent to demographically
and/or psychographically selected potential
|ACTIVATION: When all
or a portion of the recovery plan has
been put into motion.
|Active Corps of Executives
(ACE) a group of active managers who
counsel small-business owners on a volunteer
Involvement in a rental real estate activity
making management decisions. Requires
no specific number of hours.
|ACTIVE TRUST - A trust
regarding which the trustee has some active
duty to perform; opposed to bare, naked,
or passive trust.
|Activity. For the passive
activity rules, it's the integral economic
unit for measuring a taxpayer's level
of participation in a trade or business.
One location can have more than one business
activity. For example, you might have
an S corporation that sells computers
at retail and does typesetting working
out of the same location. The two may
be separate activities. On the other hand,
two or more related businesses can also
be combined into one activity.
|Actual Expenses - refers
to car and truck expenses. Method used
to deduct costs of operating and maintaining
a car or truck in your business, for example,
depreciation, gas, repairs, etc. Expenses
must be divided between business and personal
use if used in both.
|ACTUARY - A statistician
who computes insurance and pension rates
and premiums on the basis of experience
|Actuary a mathematician
whose work is mainly concerned with insurance
|ad hoc committee a committee
created for a specific short-term purpose
|Ad valorem: According
|ADB: Asia Development
Bank, an international lending institution
head quartered in Manila, Philippines.
|Additional Paid-In Capital.
Equity contributions to a corporation
in excess of the amount of capital stock.
|Add-On Interest. Interest
that isn't paid by the debtor, but added
to the principal amount.
|ADJUDICATION - The decision
of a competent court with regard to matters
in dispute; to be distinguished from arbitration.
|Adjustable Rate Mortgage
(ARM): A contractual loan may have provision
for adjustable rates. In the case of a
home mortgage loan, the interest rate
changes over time with movements in an
|Adjusted basis. The cost
of property (or a substitute figure-see
"Basis") with adjustments made to account
for depreciation (in the case of business
property), improvements (in the case of
real estate), withdrawals or reinvestment
(in the case of securities, funds, accounts,
insurance or annuities), etc. Adjusted
basis is part of the computation for determining
gain or loss on a sale or exchange and
|Adjusted Basis. Used
for determining depreciation and gain
or loss on the disposition of an asset.
Your adjusted basis in an asset is your
beginning basis (see Basis, below), decreased
by depreciation, depletion or any Sec.
179 expense taken or increased by capital
additions. For example, you purchase a
machine for $10,000 (your basis) and take
a Sec. 179 expense deduction of $1,000
and depreciation of $2,000 in the first
year. At the end of the year your adjusted
basis is $7,000. Note. Even professionals
often say basis when they really mean
|Adjusted Gross Income.
Also known as AGI, it's your individual
income before personal exemptions or standard
or itemized deductions. It's the total
of wages, interest, dividends, capital
gains (or up to $3,000 in losses), profit
or loss from real estate or pass-through
entities (e.g., S corporation), pension
income and certain other items less contributions
to an IRA or Keogh plan, one-half of any
self- employment income, and health insurance
for self-employed individuals, and certain
|Adjusted gross income.
The amount of income considered actually
"available" to be taxed. Adjusted gross
income is gross income reduced principally
by business expenses incurred to earn
the income and other specified reductions
(such as alimony).
|Adjusted Trial Balance.
A list of all the ledger accounts with
their adjustments and the adjusted balances.
|adjusting entries are
accounting entries made at the end of
an accounting period to allocate items
between accounting periods.
|Adjusting Entry. An entry
made at the end of the period to assign
expenses to the period for which they
were incurred and revenue to the period
in which it was earned. They are also
used to correct entries that could not
be accurately made before the end of the
|Adjustment Period: The
length of time between interest rate changes
on an ARM.
|ADMINISTRATION - The
care and management of an estate by a
trustee or a guardian; to be distinguished
from the settlement of an estate by an
executor or an administrator.
|administrative law the
regulations created by government agencies
that have been established by legislative
|administrative manager a
manager who is not associated with any
specific functional area but who provides
overall administrative guidance and leadership
|Advance Against Documents
(AAD): A loan made on the security of
the actual documents covering a shipment.
|Advance payment: Trading
method in which the buyer pays for the
goods before they are dispatched. This
is used where the buyer is of unknown
credit worthiness and is unable to obtain
a letter of credit. This is also used
as a matter of convenience for small orders.
|Advances. Funds made
available to another party. In the case
of a loan, it's the disbursement of funds
under a note. In tax parlance it often
means something between a formalized loan
and equity. For example, a shareholder
puts money into a corporation with the
intention of being paid back shortly.
|adverse An audit opinion
that the financial statements as a whole
are not presented in conformity with U.S.
|ADVERSE POSSESSION -
An occupation of land inconsistent with
the right of the true owner.
|ADVERTISEMENT – A paid
public announcement appearing in the media.
|ADVERTISING – Making
known; calling public attention to a product,
service, or company by means of paid announcements
so as to affect perception or arouse consumer
desire to make a purchase or take a particular
|advertising agency an
independent firm that plans, produces,
and places advertising for its clients
|ADVERTISING MANAGER –
A client representative responsible for
overseeing marketing efforts related to
product, including budgeting, creative
activities and liaison with agency.
|advertising media the
various forms of communication through
which advertising reaches its audience
|advertising a paid,
nonpersonal message communicated to a
select audience through a mass medium
|ADVERTORIAL – An advertisement
that resembles a newspaper editorial or
a television program but promotes a single
advertiser’s product, service, or point
|Adviory Capacity: Used
to indicate that a shipper's agent or
agent or reprentative is not empowered
to make definitive changes or adjustments
without approval of the group or individual
|advisory services are
a consulting service in which the CPA
develops the findings, conclusions, and
recommendations presented for client consideration
and decision making. This differs from
attestation services where the CPA expresses
a conclusion about reliability of a written
assertion that is the responsibility of
|Affidavit a declaration
in writing on oath, made before a person
legally qualified for the purpose.
|Affiliates - Business
concerns, organizations, or individuals
that control each other or that are controlled
by a third party. Control may include
shared management or ownership; common
use of facilities, equipment, and employees;
or family interest.
|affirmative action program a
plan designed to increase the number of
minority employees at all levels within
|AFTER-BORN CHILD - A
child born after the execution of the
parent's will; to be distinguished from
|AGATE LINE – A measure
of advertising space, 1/14 of an inch
in depth by one column in width. Thus
there are 14 agate lines to the column
inch. At Michael J. Motto Advertising,
we precisely measure all of the classified
ads we run and pay only for the exact
size ad that runs. In this way we take
thousands of dollars in linage corrections
each month on behalf of our clients.
|AGE GROUP – A target
audience defined by age.
|AGENCY – A company in
the business of creating advertisements,
packaging and names for products and services,
as well as providing marketing and merchandizing
advice and general business and promotional
counsel to its clients.
|agency shop a workplace
in which employees can choose not to join
the union but must pay dues to the union
|agency a business relationship
in which one party, called the principal,
appoints a second party, called the agent,
to act on its behalf
|Agent - (1) An individual
or firm that effects securities transactions
for the accounts of others. (2) A person
licensed by a state as a life insurance
agent. (3) A securities salesperson who
represents a broker-dealer or issuer when
selling or trying to sell sec
|Agent A person authorized
by another to act on their behalf. Thus,
an agent can enter into contracts and
other such legal binding functions on
behalf of another. Usually, the corporation's
officers act as corporate agents.
|agent a middleman that
facilitates exchanges, represents a buyer
or a seller, and often is hired permanently
on a commission basis
|Agent: A person who is
authorized to act on behalf of another.
A corporation acts only through its agents,
whether they are directors, employees,
|Agents. Middlemen that
provide a risk-free procurement function
by not taking title to the merchandise
they buy or sell for their customers.
Constituting the whole. Aggregate expenses
include expenses of all divisions combined
for the entire year.
|Aggregate Par Value Aggregate
par value is the par value multiplied
by the number of authorized shares. This
amount is important in determining initial
fees and annual franchise taxes in many
|Aggregation. The combination
of several business operations into a
larger unit. Primarily used to combine
passive trade or business undertakings
into one or more activities in order to
determine whether a taxpayer is a material
|Aging of Accounts Receivable.
A way to estimate bad debts by analyzing
individual accounts receivable according
to the length of time they have been outstanding.
For example, outstanding accounts may
be split into those 30 days or less outstanding,
60 days or less outstanding, etc. The
analysis includes arriving at the balance
for all the accounts in a group.
|Aging Schedule: A schedule
showing the length of time an invoice
has been outstanding or held. Aging schedules
are normally created for Accounts Payable
and Accounts Receivable. For example,
an aging schedule for accounts receivable
can show how many days an invoice has
been outstanding. Aging schedules can
also be created for inventory.
An engagement where the client specifies
procedures and the accountant agrees to
perform those procedures. An accountant
may accept an engagement limited to applying
agreed-upon procedures to financial statement
elements, where the scope of the engagement
is not sufficient to express an opinion
on the elements, if the users assume responsibility
for sufficiency of the procedures, and
use of the report is restricted to specified
|aicpa American Institute
of Certified Public Accountants. The professional
organization of CPAs in the U.S. It is
a private organization of CPAs, not an
arm of the government. Each state issues
CPA certificates, not the AICPA. Since
each state makes its own laws, each state
could prepare and grade their own CPA
examination. However, each state uses
the uniform CPA exam prepared and graded
by the AICPA.
|Air way bill: Transport
document used in air freight. Serves as
a receipt for the goods and evidence of
carriage contract. This is not a document
of title and so is not needed by the consignee
in order to claim the goods from the carrier.
|AIRPLANE BANNER – A flag
or banner bearing an advertisement that
trails behind a low-flying airplane.
|ALERT: Notification that
a disaster situation has occurred - stand
by for possible activation of disaster
|alien corporation a
corporation chartered by a foreign government
and conducting business in the United
|All risks insurance:
Insurance covering risks set out in the
Institute of London Underwriters Cargo
Clauses A. Covers fire, theft, loss at
sea, damage during loading, transhipment
and discharge but NOT strikes, riots,
civil commotion or war piracy.
|Allocation Base. An approach
for assigning a given cost to two or more
departments of a business.
according to a plan. Depreciation, amortization,
and depletion are methods to allocate
a cost to periods benefited.
|All-or-None Bid. A bid
for a number of different items in which
the bidder will not accept a partial award,
but only an award for all the items, services,
etc. included in the bid.
|allowance for bad debt
— The amount of debt a company expects
not to collect. This is subtracted from
what the company is owed for goods it
sold on credit (accounts receivable),
so the balance sheet better reflects the
company’s true economic health.
|allowance for doubtful
accounts A contra asset account with a
credit balance used to reduce the carrying
amount of accounts receivable to net realizable
value. The allowance balance is the estimated
total of uncollectible accounts included
in accounts receivable.
|allowance for sampling
risk The difference between a sample estimate
and the projected population characteristic
at a specified sampling risk. This allowance
is also the difference between the expected
error rate and the tolerable deviation
|Alongside: The side of
a ship. Goods to be delivered "alongside"
are to be placed on the dock or taken
next to the ship within reach of the transport
ship's tackle so that can be loaded aboard
|ALTERNATE SITE: A location,
other than the normal facility, used to
process data and/or conduct critical business
functions in the event of a disaster.
SIMILAR TERMS: Alternate Processing Facility,
Alternate Office Facility, Alternate Communication
|Alternative minimum tax.
An alternative tax system that says: your
tax shall not go below this level. The
alternative minimum tax works by negating
(or minimizing) the effects of tax preferences
in the terms or conditions of any document.
In the case of Letters of credit, an amendment
to a letter of credit is issued by the
Issuing bank under the direction of the
applicant, and is advised to the Advising
bank, following the same route as the
|american national standards
institute (ansi) Without some semblance
of a standardized language, computers
could not easily communicate with each
other. ANSI (pronounced "antsy") is the
U.S.-based organization dedicated to developing
industrywide standards for technology.
ANSI works closely with other entities,
such as the International Organization
for Standardization (ISO) to facilitate
the development of global standards. One
widely used ANSI standard is ASCII (American
standard code for information interchange),
the most common format for computers and
|Amortise the gradual
process of writing off the cost of an
asset, or paying off a liability by means
of a sinking fund, over a period of time.
|Amortization - (1) The
paying off of debt in regular installments
over a period of time. (2) The ratable
deduction of certain capitalized expenditures
over a specified period of time.
|Amortization - reduction
of debt through installed payments.
|Amortization The gradual
reduction of debt by periodic payment
sufficient to pay current interest and
to eliminate the principal at maturity.
This is also the term used for gradual
reduction/writing off over a period of
time in the book value of fixed or intangible
assets, deferred charges and prepaid expenses,
bond discount and bond premium, etc.
|Amortization The reduction
in the value of an intangible asset (a
copyright, a patent, an address list,
or other similar property) taken as an
expense (written off) in each accounting
period. (Compare to loan amortization,
|Amortization. The write-off
of an amount spent for certain capital
assets, similar to depreciation. This
tax meaning is different from the common
meaning of the term that describes, for
example, payment schedules of loans.
|Amortization. This is
similar to straight-line depreciation,
allowing a business or individual to write
off an expenditure over a number of years.
Amortization generally applies to intangible
assets. For example, you purchase a business
consisting of a machine with a fair market
value of $10,000 and goodwill of $15,000.
You can't expense (write off) the cost
in the year acquired, but you can depreciate
the machine using any of several methods,
including one that provides greater deductions
in the early years. The goodwill can only
be amortized over 15 years using a straight-line
method, or $1,000 per year.
of a loan in installments of principal
and interest, rather than interest-only
|Amortization: The gradual
and periodic reduction of an amount over
time. It can apply to either the periodic
write-down of an asset (see depreciation)
or a gradual extinguishment of a debt
(payments reducing loan principal).
|Amortize. Process of
rationally and systematically allocating
cost of an asset over the expected life
of the asset.
|analytic process a process
in operations management in which raw
materials are broken into different component
A comparison of financial statement amounts
with the auditor's expectation. An example
is the comparison of actual interest expense
for the year (a financial statement amount)
with an estimate of what that interest
expense should be. The estimate can be
found by multiplying a reasonable interest
rate times the average balance of interest
bearing debt outstanding during the year
(the auditor's expectation). If actual
interest expense differs significantly
from the expectation the auditor explains
the difference in the working papers.
|analyze Identify and
classify items for further study.
|angel investors Wealthy
individuals who choose to put substantial
sums of their own money into startup companies.
They are specifically not operating under
the auspices of a venture capital fund.
While their investments tend to be less
than $1 million per venture, angel investors
account for more than $20 billion annually
in seed money, providing an important
development layer for new technology and
market ideas that might not otherwise
get out of the gate.
|Annual Meeting of Shareholders
Nearly all states require a corporation
to hold an annual meeting of shareholders
at which time directors are elected and
other corporate issues are voted on.
|Annual Percentage Rate
(APR): Cost of credit expressed as a yearly
|Annual Percentage Rate.
A credit arrangement term that applies
to the relative cost of credit stated
as an annual percentage, i.e. the annual
cost of credit.
|Annual Report: A report
prepared by a business entity at the end
of its calendar or fiscal year. It presents
a company's financial position and operating
results for use by interested parties,
including potential investors, creditors,
stockholders, and employees.
|Annuity. The dictionary
definition is a contract issued by an
insurance company that pays an annuitant
an amount periodically for a certain time
for the remainder of his life. Common
usage has expanded that definition to
the point where you must dig deeper to
understand the meaning. Variations include
a deferred annuity where you make payments
into a fund over a period of years (where
tax on the fund's income is deferred),
an immediate annuity (the original definition)
or many other plans where a series of
payments, either into or out of the fund,
|APEC: Asia Pacific Economic
Cooperation, an organization of countries
in Asia and elsewhere dedicated to increasing
|Apostille Is a method
of certifying a document for use in another
country pursuant to the 1961 Hague Convention.
With this certification by apostille,
a document is entitled to recognition
in the country of intended use, and no
certification or legalization by the embassy
or consulate of the foreign country where
the document is to be used is required.
With our international package, we include
an apostilled copy of the certificate
of incorporation for use in your desired
|appellate court a court
that hears cases appealed from lower courts
|applet A software program
(or application) within a larger program
that is designed for a specific task,
such as the Java program embedded in Web
browsers. Unlike applications, applets
cannot be executed directly from the operating
system. Well-designed applets can be executed
from many different applications. This
cross-platform compatibility, their small
file size, and the fact that they cannot
be used to gain access to a user's hard
drive make applets ideal for small Internet
applications accessible from a browser.
|Applicable Federal Rates
(AFRs). Minimum interest rates that must
be charged on various transactions that
involve payments over a number of years.
If the parties to a transaction do not
adhere to these rates, the IRS will impute
the interest. (See "Imputed interest.")
in a letter of credit transaction, who
applies to the Issuing Bank for a letter
of credit in favor of the seller (beneficiary).
Other terms for this are, the accountee
|application control Programmed
procedure in application software designed
to ensure completeness and accuracy of
The component of Disaster Recovery which
deals specifically with the restoration
of business system software and data,
after the processing platform has been
restored or replaced. SIMILAR TERMS: Business
|APPORTIONMENT - The division
or distribution of a receipt or a disbursement
of property between or among two or more
accounts, as between principal and income;
to be distinguished from allocation.
|APPRAISAL - The evaluation
|Appraisal: A report made
by a qualified person giving an opinion
or estimate of value.
|APPRAISED VALUE - The
values arrived at in an appraisal of property.
|APPRECIATION - Increase
in value of property; opposite to depreciation.
|Appreciation - The increase
in value of an asset.
|Appreciation: An increase
in the value of an item, for instance
a home, due to changes in market conditions
or other causes.
|Appropriation of Retained
Earnings. Restriction of retained earnings
that is recorded by a formal journal entry.
The restriction may be made voluntarily
by the board of directors to show the
earnings are being accumulated for a particular
purpose or the restriction may be the
result of a covenant in a loan agreement.
|approve To authorize.
A manager authorizes a transaction by
signing a voucher providing approval for
|Arbitage: The process
of buying foreign exchange, stocks, bonds,
and other commoditiies in one market and
immediately selling them in another market
at hopefully higher prices.
|arbitration — One method
of settling disputes, including union-employer
battles. The parties choose a third party
to settle their disagreement. This is
called binding arbitration when the parties
also agree to abide by the arbitrator’s
|arbitration the step
in a grievance procedure in which a neutral
third party hears the two sides of a dispute
and renders a decision
|arithmetic mean the
sum of all the values of a set of data,
divided by the number of items in the
Business dealings between independent
and rational parties who are looking out
for their own interests.
|ART DIRECTOR – The person
responsible for the graphic design and
creative positioning of an advertisement
or campaign; the person in charge of an
agency’s production department.
|articles of association
the basic document of a registered company
defining its internal organisation. It
is one of two fundamental documents on
which the registration of a company is
based. See memorandum of association.
|Articles of Incorporation
(Certificate of Incorporation or charter).
The articles are the primary legal document
of a corporation; they serve as a corporation's
constitution. The articles are filed with
the state government to begin corporate
existence. The articles contain basic
information on the corporation as required
by state law. Business Filings Incorporated
prepares the articles as part of its incorporation
|Articles of Incorporation
(or Partnership). An agreement that is
the contract between those individuals
starting the corporation or partners in
a partnership specifying such items as
the name, location, nature of the business,
capital investment, etc.
|Articles of Incorporation:
The charter of the corporation, this is
the public filing with a state which requests
that the corporation be allowed to exist.
Along with the corporate By-Laws, it provides
details of the organization and structure
of the business. They must be consistent
with the laws of the state of incorporation.
|Articles of Organization
LLCs must file the articles with the proper
state authorities to begin existence.
The articles of organization are very
similar to a corporation's articles of
incorporation. Business Filings Incorporated
prepares the articles as part of its incorporation
|ascertain An audit procedure
to determine or to discover with certainty.
For example, to ascertain the date on
which an investment was purchased by examining
|ASCII: A standard computer
code for the conversion of a character
to a binary number (a combination of 1's
and 0's) that is understood by almost
all computers. Because it is a uniform
code, it is used frequently in data transfer
of all kinds.
|ASEAN: The Association
of South East Asian Nations, a regional
organization of Southeast Asian countries.
|Asian Dollars: US funds
deposited in banks in Asia and the Pacific
asserts financial statements are correct
with regard to existence or occurrence
of assets, liabilities or transactions,
completeness of information in the financial
statements, rights and obligations at
a point in time, appropriate valuation
or allocation, presentation, and disclosure.
|assess To determine the
value, significance, or extent of.
The level of control risk determined by
the auditor, based on tests of controls,
is the assessed level of control risk.
|Assessments. The right
to secure additional payments from partners
or co-venturers in a project.
|Asset Anything owned
that has monetary value.
|Asset anything of worth
that is owned. The assets of a business
are money in the bank, accounts receivable,
securities held in the name of the business,
property or buildings, equipment, fixtures,
merchandise for sale or being made, supplies
and all things of value that the business
|Assets - all real or
intellectual property owned by the enterprise
that has a positive financial value.
|Assets - cash, property,
and other resources owned by a firm.
|ASSETS - The financial
resources of a company (Cash, Accounts
Receivable, Inventory, Machinery, Buildings,
|assets — Things a company
controls, which usually means it owns
these items. A car company’s assets would
include everything from computers used
by the accounting department, to cars
not yet sold, to the factory where the
autos are made. Items must have value
and must have been obtained for a measurable
cost; broken computers that can’t be repaired
don’t count, nor does a company’s reputation.
|Assets All of that which
a business owns, including cash, merchandise
inventories, real estate, equipment, supplies,
|Assets Things of value
held by or owned by a business or a person.
|assets the resources
that a firm owns
|ASSETS, CAPITAL - Those
assets which are not readily convertible
into cash. They are most often called
|ASSETS, LIQUID - Those
assets, generally current assets, which
may be quickly converted to cash.
|Assets. Probably future
economic or income producing benefits
of value that are owned or controlled
by the business. Current assets are those
that can be converted into cash within
|Assets: All property
to include equipment, materials, vehicles,
vessels, cash, investments, and other
items you or your business owns.
|Assets: Economic resources
owned or controlled by a person or company.
|Assignment. A transfer
of your rights to another party. For example,
in the case of an insurance policy it's
the partial or total transfer of the policyowner's
rights to another party. If you're selling
a piece of equipment, you may be able
to assign the warranty to the buyer. Some
contracts expressly prohibit assignment.
|Assignment: A transfer
of legal rights under an agreement. In
the case of letters of credit, a banking
arrangement between the beneficiary of
a letter of credit and a third party -
usually the supplier of the goods - who
requires an assurance of payment. Usually
takes the form of a letter or deed of
assignment. The beneficiary of the credit
is the assignor; part of the proceeds
of the credit are irrevocably assigned
to the assignee.
|Assumed Name A name under
which a corporation conducts business
that is not the legal name of the corporation
as shown in its articles of incorporation.
Assumed names (also called fictitious
name and Doing Business As) are typically
filed at the county level with the county
recorders office. A corporation can use
multiple assumed names.
|Assumed name: A name,
other than the corporation's legal name
as shown on the Articles of Incorporation,
under which a corporation will conduct
business. Most states require registration
of the fictitious name if a company desires
to conduct business under an assumed name.
The corporation's legal name is not an
|Assumption of Mortgage:
A buyer’s agreement to assume the liability
under an existing note that is secured
by a mortgage or deed of trust. Ordinarily,
assumptions require a lender’s written
consent and the original buyer may not
be released from the liability.
|Assumption. An agreement
where the purchaser agrees to make the
payments on an existing mortgage on the
property. The original borrower remains
liable unless he is specifically released.
|Assumptions - The act
of assuming/undertaking another's debts
|ASSUMPTIONS: Basic understandings
about unknown disaster situations that
the disaster recovery plan is based on.
|assurance The level of
confidence one has in a proposition.
|At-risk rules. Rules
that limit an investor's deductible losses
from an investment to the amount invested.
Complications arise when investors finance
their investment through loans that they
are not personally on the hook for (nonrecourse
financing). Without these rules, investors
could raise their deduction limit considerably
without being at-risk for the actual loss.
report An attest engagement is one in
which a practitioner is engaged to issue
a written conclusion about the reliability
of a written assertion that is the responsibility
of another party. A financial statement
audit is one type of attestation.
|attorney's letter is
signed by the client's lawyer and addressed
to the auditor. It is the auditor's primary
means to corroborate information furnished
by management about litigation, claims,
|attribute sampling The
characteristic tested is a property that
has only two possible values (an error
exists or it does not).
|ATTRIBUTION - For purposes
of the Internal Revenue Code sections
dealing with stock redemptions and stock
ownership, attribution refers to particular
situations in which one family member
(or a trust or estate) is deemed to own
stock held by another family member (or
trust or estate). The attribution of ownership
between family members or trusts or estates
may have adverse consequences in a stock
redemption and such relationships need
to be examined carefully.
|Auction - A public sale
of goods to the highest bidder.
|AUDIOVISUAL (A/V) – Pertaining
to the use of recordings, videos, slides,
and other media for presentation.
|audit adjustment, whether
or not recorded by the entity, is a proposed
correction of the financial statements
that may not have been detected except
through audit procedures.
|audit committee A committee
of the board of directors responsible
for oversight of the financial reporting
process, selection of the independent
auditor, and receipt of audit results.
|Audit detailed checking
of the financial records of a business
by an independent qualified person (auditor)
in order to verify their correctness or
to detect errors or fraud.
|audit objective In obtaining
evidence in support of financial statement
assertions, the auditor develops specific
audit objectives in the light of those
assertions. For example, an audit objective
related to the completeness assertion
an auditor might develop for inventory
balances is that inventory quantities
include all products, materials, and supplies
|Audit Opinion: The official
result of an audit. A CPA's "unqualified
opinion" means that the financial statements
he/she has audited present fairly the
financial position and operating results
of the company in conformity with GAAP
(in other words, "you pass"). A "qualified
opinion" occurs under a number of circumstances,
for instance, if the financial statements
do not follow GAAP and the client refuses
to make the needed changes (this may be
anything from "not bad" to "really bad",
depending on the reason for the qualified
opinion; a string of qualified opinions
is generally "bad"). An "adverse opinion"
happens when the financial statements
are misleading and do not fairly represent
a company's financial position (in other
words, "you fail"; If you're running a
company that just got an "adverse opinion",
get ready to find new employment.) Keep
in mind that, just because you passed
an audit, it does not mean that your company
is in good financial shape. It just means
that your books are a fair representation
of what you did.
|audit planning is developing
an overall strategy for the conduct and
scope of the audit. The nature, extent,
and timing of planning varies with the
size and complexity of the entity, experience
with the entity, and knowledge of the
|audit risk A combination
of the risk that material errors will
occur in the accounting process and the
risk the errors will not be discovered
by audit tests. Audit risk includes uncertainties
due to sampling (sampling risk) and to
other factors (nonsampling risk).
|AUDIT Verification of
financial records and accounting procedures
generally conducted by a CPA or accounting
firm or if you're really unlucky, the
|audit an examination
of a company’s financial statements and
accounting practices that produced them
|Audit: The result of
an independent accountant's review of
the financial statements and their footnotes
to ensure compliance with generally accepted
accounting principles (GAAP) and to express
an opinion on the fairness of the financial
|auditing standards board
Statements on Auditing Standards are issued
by the auditing standards board, the senior
technical body of the AICPA designated
to issue auditing pronouncements.
|AUTHENTICATED COPY -
A copy of an instrument on which is an
attestation in the manner required by
law by an official authorized to make
such certification, as by the certification
and seal of a specified public official.
|authorised capital the
total amount of capital which a company,
by its memorandum of association, is authorised
to offer for subscription. See also, paid
|authoritarian leader one
who holds all authority and responsibility,
with communication usually moving from
top to bottom
|authority the power,
within the organization, to accomplish
an assigned job or task
To give permission for. A manager authorizes
a transaction by signing a voucher providing
authorization for the disbursement.
|Authorized Shares The
total number of shares a corporation is
authorized to issue. This number is specified
in the articles of incorporation. All
of the shares authorized need not be issued
to shareholders, the corporation can have
unissued shares that can distributed at
a latter time.
|Authorized Stock - The
number of shares of stock that a corporation
is permitted to issue. This number of
shares is stipulated in the corporation's
- state-approved charter, and may be changed
by a vote of the corporation's stock-holders.
|Authorized Stock See
|Authorized stock: The
number of shares of stock that a corporation
is allowed to issue as stated in the Articles
of Incorporation. All authorized shares
need not be issued.
|Automatic Data Processing
- *** Data processing largely performed
by automatic means. *** The discipline
which deals with methods and techniques
of automatic data processing. *** Pertaining
to data processing equipment such as electrical
accounting machines and electronic data
|automatic vending the
use of machines to dispense convenience
goods automatically when customers deposit
insurance insurance that covers financial
losses resulting from injuries or damages
caused by the insured vehicle
|automobile physical damage
insurance insurance that covers damage
to the insured vehicle
response to a customer e-mail inquiry.
undertaking given by a bank in respect
of a bill of exchange drawn on a buyer.
A way of giving security to the drawer
of a term bill. The bill is stamped with
wording such as 'Pour aval' and signed
by a representative of the bank.
|Average Cost Method.
Inventory costing method based on the
average cost of inventory during the period.
Average cost is determined by dividing
the cost of goods in inventory by the
number of units of the same type in inventory
at any point in time.
|Award an agreement having
the force of law, which sets out working
conditions and wages for certain types
|Back end e-commerce:
an ordering system tied directly to your
inventory with real time adjustments for
|BACK OFFICE LOCATION:
An office or building, used by the organization
to conduct support activities, that is
not located within an organization's headquarters
or main location.
of credit: Arrangement used by intermediaries
to give payment security to their suppliers.
The beneficiary of one L/C (prime or 'master'
letter of credit) offers this as security
for the issuance of a further L/C (second
or 'slave' letter of credit) in favour
of the supplier of the goods. The bank
issuing the second L/C (usually Advising
bank to the prime L/C) is called the second
Issuing bank. This is regarded by many
banks as risky - if the prime L/C runs
into problems, it will no longer serve
as security for the second L/C.
|backup A copy of a computer
program or file stored separately from
|BACKUP AGREEMENTS: A
contract to provide a service which includes
the method of performance, the fees, the
duration, the services provided, and the
extent of security and confidentiality
|BACKUP POSITION LISTING:
A list of alternative personnel who can
fill a recovery team position when the
primary person is not available.
|BACKUP STRATEGIES (RECOVERY
STRATEGIES): Alternative operating method
(i.e., platform, location, etc.) for facilities
and system operations in the event of
|Bad Debt Expense. Generally,
the cost of uncollectible accounts receivable
which occurs when customers to whom a
business has extended credit fail to pay.
It can also refer to any debt owed you
which is uncollectible.
|Bad Debt: An uncollectible
|bad debts money owed
to you that you can't collect
|BAILMENT - The delivery
of personal property by one person to
another for some specific purpose, such
as for use, repairs, or safekeeping, but
without passing title to the property.
The person delivering the property is
known as the bailor; the person receiving
it, the bailee.
|balance of payments the
total flow of money into the country minus
the total flow of money out of the country,
over some period of time
|balance of trade — An
accounting of a country’s exports versus
|balance of trade the
total value of a nation’s exports minus
the total value of its imports, over some
period of time
|Balance of Trade: The
difference between a country's total imports
and exports; if exports exceed imports,
a favorable balance of trade exists; if
not, a trade deficit is said to exist.
|balance sheet — A reckoning
of a company’s financial health at a given
time. Lists assets, liabilities and equities.
|BALANCE SHEET - A report
listing the assets, liabilities, and owner's
equity of a business as of a specific
|Balance Sheet - A report
of a corporation's financial condition
at a specific time.
|Balance Sheet - a statement
of assets and liabilities.
|balance sheet (or statement
of financial position) a summary of the
dollar amounts of a firm’s assets, liabilities,
and owners’ equity accounts at the end
of an accounting period
|balance sheet an important
business document that shows what a business
owns and owes as of the date shown. Essentially
a "balance sheet" is a list of business
assets and their cost on one side and
a list of liabilities and owners' equity
(investment in the business) on the other
side with the amount for each. The liabilities
include all that the business owes.
|BALANCE SHEET Financial
statement showing assets and liabilities
at a specific time.
|Balance Sheet Statement
of financial position of a business at
a particular point in time; lists what
is owned and owed.
|Balance Sheet. A statement
of financial condition of the business
that provides the owner with an estimate
of the firm's worth on a given date.
|Balance Sheet. Listing
of the assets, liabilities and owner's
equity at a specific point in time.
|Balance Sheet: A total
list of all assets and liabilities in
the business. The difference between them
is owner equity.
|Balance sheet: A balance
sheet is an itemized statement which lists
the total assets and the total liabilities
of a given business to show its net worth
at a given moment in time (like a snapshot).
|balance the amount of
money remaining in an account. The total
of your money in the bank after accounting
for all transactions (deposits and withdrawals)
is called a "balance".
|Balloon Payment. The
final installment on a loan which is greater
than the prior payments and pays any remaining
amount outstanding under the loan. For
example, a loan calls for equal monthly
payments of $500, where most of the payment
is for interest. At the end of the loan
a balloon payment of $100,000 is due.
|Balloon Payment: A lump-sum
principal payment due during the term
of or at the end of a loan. It is substantially
larger than the other payments.
|Bandwidth One of the
words most often misused in tech speak,
but as with similar cases in language,
the misuse is becoming a primary definition.
The technical definition for bandwidth
is the difference between two frequencies
(expressed in Hertz, or cycles per second),
no more, no less. Broadcast TV channels,
for example, all have the same bandwidth,
by FCC rule. Bandwidth is commonly (mis)used
to mean bitrate, or speed of data transmission.
It's also used to describe a tech executive's
capacity to think about multiple things
at once. If your boss tells you she doesn't
have the bandwidth to deal with your issues
right now, that doesn't mean it's time
to install a new T-1 line.
|bank draft a written
instruction to a bank’s agent to pay a
sum of money to the person specified on
the draft. A safe and convenient way of
remitting money overseas.
|Bank guarantee: Undertaking
given by a bank on behalf of a customer
to pay the guaranteed party a sum of money
if the customer cannot or will not pay.
This should not be confused with the payment
undertaking given under a letter of credit.
|Bank Reconciliation -
making sure the bank statement, checkbook,
and books (ledger, journal, etc.) all
|bank reconciliation a
comparison between the bank’s record of
transactions and the record of the firm’s
cash book. After taking into account such
items as unpresented cheques and bank
charges etc., the two records should show
an identical balance.
|Bank Reconciliation A
formal comparison of the balance in the
checking account as shown on the bank
statement with the balance of the cash
account in the general ledger, at a given
Verification that your bank statement
and your checkbook balance.
|banker’s acceptance a
written order for the bank to pay a third
party a stated amount of money on a specific
|Banker's draft: A payment
instrument used to make international
|Bankrupt a debtor, who
has volunteered or been forced to appear
before a Bankruptcy Court and has been
judged insolvent, because s/he has insufficient
assets to meet the demands of all creditors.
|Bankruptcy - A condition
in which a business cannot meet its debt
obligations and petitions a federal district
court for either reorganization of its
debts or liquidation of its assets. In
the action the property of a debtor is
taken over by a receiver or trustee in
|bankruptcy — A word you
don’t want to hear if a company or person
owes you a lot of money. The person or
company is considered bankrupt if they’re
unable to pay their debts. The U.S. Bankruptcy
Court tries to sort out the financial
troubles and get creditors paid. Companies
filing for protection under Chapter 7
of the bankruptcy code are shut down and
their assets handed over to the creditors.
Under Chapter 11, companies try to rework
their debts and stay in business.
|bankruptcy a legal procedure
designed both to protect an individual
or business that cannot meet its financial
obligations and to protect the creditors
Failure) This involves a discharge of
the debtor's obligations through court
order. The purpose of bankruptcy is to
provide the debtor with a fresh start
and to have an equitable distribution
of the debtor's assets among the creditors.
A major federal law concerning bankruptcy
in the USA is the Bankruptcy Reform Act
of 1978. Chapter 7 deals with corporate
bankruptcy; Chapter 9 involves procedures
for municipal bankruptcy; and Chapter
13 pertains to individual bankruptcy.
Chapter 11 deals with reorganization (can
be either voluntary or involuntary).
|banner advertising Banner
ads are graphic images that appear on
your screen to entice you to visit a Website.
Banner ads appear with a link to another
site or advertised product. One method
that advertisers use to gauge their potential
customer base is counting the number of
times a banner is downloaded over a period
|barcodes The vertical
series of lines printed on most physical
goods these days, from magazines to lumber.
A machine scans the barcode to identify
the product, price, and other details.
The scanner transmits the information
to a cash register, computer, or other
device for action, such as printing out
a grocery receipt at the supermarket checkout.
Barcodes are also used for many other
purposes-from linking medical records
to a hospital patient's ID bracelet to
tracking packages from overnight shippers.
|Bargain Purchase Option:
A lease provision allowing the lessee,
at its option, to purchase the equipment
for a price predetermined at lease inception,
that is substantially lower than the expected
fair market value at the date the option
can be exercised.
|bargaining unit the
specific group of employees represented
by a union
|Barriers to Entry - conditions
that create difficulty for competitors
to enter the market. For example, copyrights,
trademarks, patents, dedicated distribution
channels and high initial investment requirements.
|barter a system of exchange
in which goods or services are traded
directly for other goods and/or services—without
|barter a system of exchange
in which goods or services are traded
directly for other goods and/or services—without
|Barter:Trade in which
merchandise is exchanged directly for
other merchandise without the use of money.
Barter is the oldest form of trade and
is currently widely in use in trade with
countries using currency that is not readily
convertible on world exchange markets.
|Base. Also known as a
Stop. In real estate leases tenants are
often responsible for operating expenses
of the building over a certain dollar
amount, the base or stop. The base may
be expressed in dollars per square foot,
total dollars, or as a base year (in which
case the base is the expense in the base
|Basis Point. A way of
quoting the yield on a bond, note, or
other debt instrument. One basis point
is equal to 0.01%. Thus, a 50 basis point
yield increase in a bond would be equal
|basis. The modified accrual
basis should be used for governmental
funds. To be recognized as a revenue or
expenditure, the actual receipt or disbursal
of cash must occur soon enough after a
transaction or event has occurred to have
an impact on current spendable resources.
In other words, revenues must be both
measurable and available to pay for the
current period's liabilities. Revenues
are considered available when collectible
either during the current period or after
the end of the current period but in time
to pay year-end liabilities. Expenditures
are recognized when a transaction or event
is expected to draw upon current spendable
resources rather than future resources.
|Basis. The starting point
for computing gain or loss on a sale or
exchange of property or for depreciation.
(See "Adjusted basis.") For property that
is purchased, basis is its cost. The basis
of inherited property is its value at
the date of death (or alternative valuation
date). The basis of property received
as a gift or a nontaxable transaction
is based on the adjusted basis of the
transferor (with some adjustments). Special
rules govern property transferred between
corporations and their shareholders, partners
and their partnership, etc.
|Basis. Used in determining
depreciation or gain or loss on the sale
of property. In the simplest situation,
your basis in property you purchase is
the cost. For example, you pay $1,000
for a machine--that's your basis. How
you acquire the property determines your
basis. For example, if you inherited the
machine, your basis would be the fair
market value at the decedent's death.
In a simple trade-in, your basis is equal
to your adjusted basis (see above) in
the equipment traded in plus any cash
paid. If you contributed the property
to a corporation, the corporation's basis
would be the basis of the property in
your hands. Your basis in the stock in
an S corporation is your cost plus profits
taxed to you less losses passed through
and distributions. There are a number
of other ways of arriving at basis.
|batch A set of computer
data or jobs to be processed in a single
|Batch Processing. Entering
transactions in a group rather than as
|bear market a market
in which average stock prices are declining
|Bearer Bond. While new
issues are rare because of a change in
the tax law, the principal and interest
on the bond is payable to whoever has
possession. On the other hand, the ownership
of a bond in registered form is recorded
with a bank, the issuer, etc.
|BEARER BONDS - Bonds
which are not registered as to the name
of the owner but are the property of the
holder and title to which passes by delivery.
The Tax Code now denies tax-free treatment
for interest paid on most bonds that are
|behavior modification a
systematic program of reinforcement to
encourage desirable behavior
|BENEFICIARY - (1) The
person for whose benefit a trust is created.
(2) The person to whom the amount of an
insurance policy or annuity is payable.
|beneficiary person or
organization named in a life insurance
policy as recipient of the proceeds of
that policy on the death of the insured
|Beneficiary. A person
entitled to the benefits of a trust, will,
insurance policy, pension plan, etc. For
example, if you name your daughter as
the sole beneficiary of a life insurance
policy, only she is entitle to the proceeds.
|Beneficiary: a party
who receives a legal benefit. In a letter
of credit situation, the party to whom
payment will be made. Normally, but not
always, the seller or exporter.
|benford's law is a mathematical
law that applies to any population of
numbers derived from other numbers (such
as the dollar amount of a sale, found
by multiplying the quantity sold times
the unit price). It holds that 30% of
the time the first non-zero digit of this
derived number will be one, and it will
be a nine only 4.6% of the time. Benford's
law is used by auditors to identify fictitious
populations of numbers.
|Best And Final Offer
- For negotiated procurements, a contractor's
final offer following the conclusion of
|BETTERMENTS - Improvements
to real property that add to its value
otherwise than by mere repairs.
|Bid Bond. An agreement
in which a third party agrees to be liable
in the event the bidder fails to sign
the contract as bid (if his bid is accepted).
A bid deposit is similar, but the bidder
must deposit cash or a certified check.
|Big Emerging Markets:
A group of fast growing economies identified
by the Department of Commerce as having
the most potential for US exporters.
They are: The Chinese Economic Area (China,
Hong Kong and Taiwan), India, Indonesia,
South Korea, Argentina, Brazil, Mexico,
Poland, Turkey and South Africa.
|Big-Ticket: A market
segment of leasing, sales, etc for items
costing over $2 million. In leasing,
this sector is generally dominated by
leveraged leases, represented by lease
financing over $2 million.
|Bill of exchange: The
most commonly-used financial instrument
in international trade. An unconditional
payment demand for a specific sum of money,
payable either at sight or at a specified
future date. This is drawn up by the seller
and presented to the buyer. This is sometimes
called “the draft.”
|bill of lading A document
issued by a carrier to a shipper, listing
and acknowledging receipt of goods for
transport and specifying terms of delivery.
|bill of lading issued
by the transport carrier to the exporter
to prove merchandise has been shipped
|bill of sale a document
under seal, which formally transfers ownership
of property specified in the document
from the borrower to the lender, until
such time as the debt has been paid in
|BILLBOARD – A large outdoor
printed sign. Costs for a specific billboard
are determined by the amount of traffic
that passes its location, plus the board’s
size and visibility.
|BILLINGS – The agency’s
annual gross dollar volume generated from
one or several accounts.
|binding arbitration —
Better really mean it when you use this
method of solving a dispute. Warring parties—like
a union and employer—agree to argue their
cases before a neutral party and accept
the outsider’s decision.
|binding contract an
agreement that requires an intermediary
to purchase products from a particular
supplier, not from the supplier’s competitors
|biometrics The current
craze in sci-fi and action-adventure movies,
biometric gadgets essentially replace
the keyboard as a gateway to all things
computerized. Biometric devices identify,
or authenticate, computer users by their
unique biological characteristics, such
as fingerprints, retinas and irises, and
voice patterns. With biometrics you could,
for example, enter an office building
after hours by placing your thumbprint
on a doorpad that recognizes only the
employee prints stored in its system.
Future uses might include e-commerce transaction
signatures identified by biometric means.
The technology promises great advances
in security, but privacy advocates view
biometrics with some concern, fearing
that the data collected on individuals
may not always be used for benign purposes.
|Blank endorsement: The
method whereby a bill of lading is made
into a freely negotiable document of title.
Any bearer of a blank endorsed bill of
lading has title to the goods and may
claim them from the carrier. Insurance
documents can also be blank endorsed,
so that any party can make a claim if
|Blanket Mortgage. A single
mortgage that covers more than one property.
|Blanket Order. A purchasing
arrangement where the purchaser contracts
with a vendor to provide his requirements
for an item or service on an as-required
|Blanket Position Bond.
A fidelity bond where each employee is
covered up to the bond penalty. The maximum
liability is equal to the bond penalty
times the number of employees.
|Blind Pool. A partnership
or syndication where the investments to
be purchased are not specified at the
time the investments are sold.
|blind trust A financial
arrangement in which a person avoids possible
conflict of interest by transferring financial
affairs to a fiduciary who has sole asset
management discretion. The person establishing
the trust also gives up the right to information
regarding the assets.
|BLISTER PACK – A display
package in which clear plastic seals the
product, which rests against a "backer"
sheet, usually made of card stock.
|bloatware Software programs
that require vast amounts of disk space
and RAM (random access memory), effectively
eating up valuable computer memory, or
shutting down other systems, or completely
fouling up the hard drive. Novice users
often don't realize they have completely
overstuffed their hard drive with memory-hungry
software that does little more than make
rodents sing when they turn on the computer.
|BLOCKAGE - (1) Placing
an account subject to United States Treasury
control because of enemy or suspected
enemy interest. (2) A discount from the
estab-lished market price for which a
large block of stock of a single corporation
would have to be sold if the entire holding
were placed on the market at a given date
(a term used in connection with federal
|BLOCKED ACCOUNT - Any
account in a bank, the handling of which
is closely circumscribed by government
regulations. The term in this country
is used to designate any account whose
administration is subject to United States
Treasury license because of enemy or suspected
|blue-chip stock a stock
that is a safe investment that generally
attracts conservative investors
|blue-sky laws state
laws that regulate securities trading
|Board Of Directors -
(1) Individuals elected by stockholders
to establish corporate management policies.
A board of directors decides, among other
issues, if and when dividends will be
paid to stockholders. (2) The body that
governs the NYSE; it is composed of 20
|board of directors —
A group of people chosen by stockholders
to watch over a company and its executives,
and to set overall corporate policy. Their
job is to try to keep the company healthy
and ensure stockholders get a good return
on their money.
|board of directors the
top governing body of a corporation, the
members of which are elected by the stockholders
|Board of Directors: Individuals
elected by the stockholders to govern
|Board of directors: The
group with control of the general supervision
of the corporation. They are elected by
the shareholders and they, in turn, appoint
the officers of the corporation.
|bona fide in good faith,
honestly, without fraud, collusion or
participation in wrong doing.
|bond — A written promise
to repay a loan plus interest, usually
more than one year after the bond is issued.
Investors buy bonds from a company or
government entity, essentially loaning
the company or government that money.
|Bond Discount. The excess
of the value of a bond at maturity (the
par value) over the issue price of a bond
or the purchase price. The difference
between the value at maturity and the
issue price is often called original issue
discount. For example, the par value of
a bond is $1,000; the bond is issued at
$990. The bond has $10 of original issue
discount. Another bond has a par value
of $1,000; you purchase it in the open
market at $900. The bond has $100 of discount.
|bond indenture a legal
document that details all the conditions
relating to a bond issue
|Bond payment by a tenant
to a landlord before the tenant takes
over the premises and from which the landlord
may be able to deduct arrears of rent
or the cost of rectifying damage.
|Bond Premium. The excess
of the bond's price over the maturity
(par) value. For example, you purchase
a bond for $1050; the maturity value is
$1,000. The bond has a premium of $50.
|Bond Sinking Fund. Amounts
accumulated and segregated for the purpose
of redeeming or retiring bonds. Can also
apply to preferred stock.
|Bond: A contract between
a borrower and a lender. The borrower
promises to pay a specified rate of interest
for each period the bond is outstanding
and repay the principal at the maturity
|Bonded Warehouse - a
warehouse authorized for storage of good
on which payment of duty is deferred until
the goods are removed from the warehouse.
|BOOK – A talent agency’s
listing, with pictures of actors and models.
|Book Value of an Asset.
The asset's cost less accumulated depreciation.
|Book Value of Stock.
The book value of the assets of a company
less the liabilities. Can be translated
into book value per share by dividing
by the number of shares outstanding.
|Book Value: The net
amount (original value plus or minus any
adjustments such as depreciation) shown
in the accounts for an asset, liability,
or owners' equity item.
|BOOKING – A scheduling
of the talent and staff that will work
on a shoot or photo session.
|Bookkeeping the process
of recording business transactions in
the accounting records
|Bookkeeping: The act
of systematically recording the financial
transactions affecting a business.
|bookmark A Web browser's
bookmarking functions serve the same purpose
as the slip of cardboard marking the page
where you last stopped reading your detective
novel. When you open a Web page in a browser,
you can tell your computer to remember
the location by bookmarking it. Whenever
you must get the latest standings in the
Australian Rules Football League, you
simply click on the previously saved bookmark
to find out whether Newcastle beat Perth.
Some users find bookmarks unwieldy, however,
and many companies are developing alternatives
to replace them. In the case of Internet
Explorer, Microsoft's browser, bookmarks
are referred to as "favorites". But the
more common generic term is "bookmark".
|Boot. A tax term that
means cash or unlike property received
in an exchange. For example, you trade
investment real estate worth $500,000
for another property worth only $300,000.
In addition to the deed on the new property
you receive $200,000 in cash (or notes).
The $200,000 is boot.
|bots Bots, from robots,
are smart software programs that continuously
run in the background on a computer, performing
specific repetitive tasks. A bot can,
for example, search the Internet, post
messages to newsgroups, comparison-shop,
hold open a channel on the Internet, relay
chat, generate reports at specified times,
clip news articles, and so on. Bots are
typically endowed with artificial intelligence,
enabling them to make decisions based
on past experiences. They are often called
intelligent agents because they can be
sent out on missions (although some bots
run in place and are not, strictly speaking,
agents). Hotbots, search bots, shopping
bots, and spiders are among the many species
|boycott in restraint
of trade an agreement between businesses
not to sell to or buy from a particular
|boycott a refusal to
do business with a particular firm
|BRAINSTORMING – A meeting
to generate creative ideas. At Michael
J. Motto Advertising, daily, weekly and
bi-monthly brainstorming sessions are
held by various work groups within the
firm. Our monthly I-Power brainstorming
meeting is attended by the entire agency
|brand (or selective demand)
advertising advertising that is used
to sell a particular brand of product
|brand equity the marketing
and financial value associated with a
brand’s strength in a market
|brand loyalty extent
to which a customer is favorable toward
buying a specific brand
|brand mark the part
of a brand that is a symbol or distinctive
|brand name the part
of a brand that can be spoken
|brand a name, term,
symbol, design, or any combination of
these that identifies a seller’s products
and distinguishes them from competitors’
|branding Branding is
the entire process of creating a distinct
identity for a product, service, or concept
and establishing it in the public mind.
Branding can also be applied to corporate
identity. The American Productivity and
Quality Center and the American Marketing
Association have defined the primary purpose
of branding as to "establish a meaningful,
differentiated presence that will increase
the ability to attract and retain loyal
customers and improve marketplace ability."
Cobranding refers to partnerships between
companies-such as retailers and manufacturers,
or online and offline companies-to boost
sales and build brand awareness.
|breach of contract the
failure of one party to fulfill the terms
of a contract when there is no legal reason
for that failure
|Break Even: The status
of a business when you have made enough
money to cover all costs, but not making
any profit. The total sales in dollars
equal the total costs.
|BREAK-EVEN ANALYSIS -
A method of determining the point at which
the business will neither make a profit
nor suffer a loss. This occurs when the
dollars of revenues exactly equal the
dollars of expenses.
|Break-Even Point - The
break-even point in any business is that
point at which the volume of sales or
revenues exactly equals total expenses
-- the point at which there is neither
a profit nor loss -- under varying levels
of activity. The break-even point tells
|Break-Even Point - the
point at which revenues are equal to expenses.
|BREAK-EVEN POINT The
point at which sales equal total costs.
|break-even point the
point at which volume of sales is enough
to cover all costs.
|Break-Even Point. The
dollar amount or unit amount of sales
where total revenue equals total expenses.
|Break-even point: The
volume point of sales at which revenues
and costs are equal; a combination of
sales and costs that will yield a no profit/no
|breakeven quantity the
number of units that must be sold for
the total revenue (from all units sold)
to equal the total cost (of all units
|Breakpoint. See Overage
|Brick and Mortar store:
business location or store front in the
|bridging loan a loan
to provide short-term finance, usually
to buy property or land, where the loan
is to be cleared by longer-term borrowing,
or the sale of assets.
|Broad Form Storekeepers
Policy. An insurance policy for a retail
store with four or fewer employees that
provides both fidelity and crime coverage.
connections to the Internet. In theory,
broadband makes possible a whole new set
of Internet applications, such as streaming
video, due to speeds up to 20 times as
fast as conventional modems.
|BROCHURE – A folded leaflet
with an advertising or promotional message.
|broker a middleman that
specializes in a particular commodity,
represents either a buyer or a seller,
and is likely to be hired on a temporary
|Broker. An agent middleman
or wholesaler who arranges title-free
sales for his clients.
|Broker: A company or
person who arranges, for a fee, purchase
or sales or transactions between lessees
and lessors of an asset.
|browser The browser is
the decoding lens-think of it as 3-D glasses-that
allows you to look at a Website and see
words and images, instead of software
code, usually HTML (hypertext markup language).
Recent versions of browsers also support
more advanced technologies such as streaming
video and audio. Microsoft's Internet
Explorer and Netscape's Communicator are
the two biggest names in today's browser
|Budget an estimate of
expanses and revenue required.
|budget a financial statement
that projects income and/or expenditures
over a specified future period
|Budget: A formal statement
of management's expectations of sales,
expenses, volume, and other financial
transactions of an organization. A budget
is a tool for planning and control. In
the beginning it can act as a plan and
in the end it can act as control to measure
performance against so that future plans
can be improved. (Also, a piece of paper
that is quoted when one department wants
another department's money, and is ignored
when a department needs more money than
is in the budget. See also: inter-department
|bug An error or flaw
in a computer program's code that makes
it falter or fail. The "debugging" process
begins as soon as a program is written,
but it does not guarantee that the software
will be perfect when released. Preliminary
versions of programs, known as betas,
often contain bugs that are eventually
weeded out in later versions. Users can
either avoid the beta releases or get
a patch from the program's developer to
bypass any bug-riddled code.
|Builder's Bonds. Mortgage-backed
securities issued by builders on mortgages
accumulated from the sales of houses.
|bull market a market
in which average stock prices are increasing
|Bullet Loan. Generally,
a loan where no principal repayments are
made during the loan. Only interest is
paid, leaving the total amount borrowed
as a balloon payment at maturity.
|BUMPER STICKER – An advertising
strip attached to an automobile bumper.
|bundle pricing the packaging
together of two or more products, usually
of a complementary nature, to be sold
for a single price
|BURDEN OF PROOF - The
duty of proving a position taken in a
court of law. Failure in the performance
of that duty calls for judgment against
the person on whom the duty rests. Thus
the burden of proof that the paper writing
is not the valid will of the testator
is upon the person who contests the will.
|bureaucratic structure a
management system based on a formal framework
of authority that is carefully outlined
and precisely followed
|burn rate The pace at
which a new company spends its venture
capital while waiting to turn a profit.
In this hyperspeed landscape of venture-backed
brainstorms, burn rate is especially applicable
to Internet and technology startups, where
profitability may be a distant goal even
though the idea is worthy of funding.
Once, companies were expected to be profitable
before going public, but Wall Street has
become attuned to burn rates. Today's
initial public offerings (IPOs) are fueled
by projections, and analysts like to bet
on companies that promise to show profit
long before they burn out.
|BUS CARD – An advertising
poster attached to the side or back of
|Business Activity Statement
a single form used to report business
tax entitlements and obligations, including
the amount of GST payable and your input
|Business balance sheet
A financial statement providing a "snapshot
view" of the financial condition of the
subject business on specified date. The
three principal divisions of a balance
sheet are: assets, liabilities, and net
worth (equity). (Also called a financial
statement, a net worth statement, or a
statement of financial condition.)
|Business Birth - Formation
of a new establishment or enterprise.
|business buying behavior the
purchasing of products by producers, governmental
units, and institutions
|BUSINESS CONTINUITY PLANNING
(BCP): An all encompassing, "umbrella"
term covering both disaster recovery planning
and business resumption planning. Also
see disaster recovery planning and business
laws: For each individual state, these
provide the legal framework for the operation
of corporations. The Articles of Incorporation
and the By-Laws of a corporation must
adhere to the specifics of state law.
|business cycle the recurrence
of periods of growth and recession in
a nation’s economic activity
|Business Death - Voluntary
or involuntary closure of a firm or establishment.
- For enumeration purposes, the absence
from any current record of a business
that was present in a prior time period.
|Business Entity An organization
that possesses a separate existence for
tax purposes. Some types of business entities
include corporations and foreign corporations,
business trusts, limited liability companies,
and limited partnerships.
|business ethics the
application of moral standards to business
|Business Failure - The
closure of a business causing a loss to
at least one creditor.
|Business Failure: According
to law, business failure can be either
"technical insolvency" or "bankruptcy."
In technical insolvency a business is
unable to meet current obligations even
if the total assets exceed total liabilities.
In bankruptcy, liabilities exceed the
market value of the assets and a negative
net worth exists. (See accountant's equation).
|BUSINESS IMPACT ANALYSIS:
The process of analyzing all business
functions and the effect that a specific
disaster may have upon them.
|Business Income Coverage:
The insurance company agrees to pay your
loss of business income that results in
a suspension of your business operations
because of damage to your building or
personal property caused by a covered
cause of loss insured in your property
policy. Business Income includes net profit
or loss that would have been earned if
the suspension of operations had not occurred
and normal operating expenses including
payroll that would have continued during
the suspension. Coverage begins with the
date of the loss to your property and
ends when the damage or destroyed property
could have been restored with reasonable
speed and like quality.
|Business Income from
Dependent Properties: Coverage is provided
for you loss of business income because
of damage to the building or personal
property at another business that you
are dependent on for your operations.
The four types of dependent properties
are businesses that furnish materials
or services to you, businesses that purchase
material or services from you, businesses
that manufacture products for your customers,
and a leader location, for example, an
anchor store that attracts customers to
Center (Bic) - One-stop locations for
information, education, and training designed
to help entrepreneurs start, operate,
and grow their businesses. The centers
provide free on-site counseling, training
courses, and workshops and have resources
for addressing a broad va
COSTS: The costs or lost revenue associated
with an interruption in normal business
insurance insurance protection for a
business whose operations are interrupted
because of a fire, storm, or other natural
Insurance. A policy that pays a stipulated
amount when the business cannot operate
because of some insured peril. For example,
a policy will pay a certain percentage
of the business's earnings lost because
of a fire.
Any event, whether anticipated (i.e.,
public service strike) or unanticipated
(i.e., blackout) which disrupts the normal
course of business operations at a corporate
|Business Judgment Rule
The rule states that directors of corporations
will not be held personally liable for
unwise business decisions providing that
the directors made an informed decision
and that decision was not tainted by self-interest.
Everything (all debts) owed by the business.
|business model a group
of shared characteristics and behavior
in a business situation
|business name the name
of a business officially listed in the
state or territory Register of Business
|Business net worth or
business equity The owners' interest in
a business. Equity is calculated as the
value of all business assets minus all
business liabilities. (Often called owners
equity or owners net worth.)
|Business Plan - A comprehensive
planning document which clearly describes
the business developmental objective of
an existing or proposed business applying
for assistance in SBA's 8(a) or lending
Programs. The plan outlines what and how
and from where the resources needed
|BUSINESS PLAN - A written
review of the business to identify strengths
and weaknesses, locate needs, and begin
planning how to best accomplish the business'
|business plan a carefully
constructed guide for the person starting
|business product a product
bought for resale, for making other products,
or for use in a firm’s operations
|BUSINESS RECOVERY COORDINATOR:
See Disaster Recovery Coordinator.
|BUSINESS RECOVERY PROCESS:
The common critical path that all companies
follow during a recovery effort. There
are major nodes along the path which are
followed regardless of the organization.
The process has seven stages: 1) Immediate
response, 2) Environmental restoration,
3) Functional restoration, 4) Data synchronization,
5) Restore business functions, 6) Interim
site, and 7) Return home.
|BUSINESS RECOVERY TEAM:
A group of individuals responsible for
maintaining and coordinating the recovery
process. SIMILAR TERMS: Recovery Team
|BUSINESS REPLY CARD (B.R.C.)
– A preprinted postcard enabling direct
mail recipients to respond easily. Direct
mail offers that include BRCs have a much
higher response rate.
|BUSINESS RESUMPTION PLANNING
(BRP): The operations piece of business
continuity planning. Also see: Disaster
|business service providers
(bsps) A new breed of software developers
that rent business applications. Rather
than purchasing software, a company can
access applications via the Internet.
A BSP's offerings are hosted by a computer
service provider, and are often tailored
to a specific industry, such as banking,
food service, or airlines. Tibersoft,
for example, has created a service that
connects food service vendors, distributors,
and restaurants. First-generation BSPs
include companies such as Automatic Data
Processing (ADP), the leader in payroll
|business service an
intangible product that an organization
uses in its operations
|Business Services - services
offered to commercial enterprises, such
as: equipment maintenance, supplying of
part time personnel, engineering, design
and management consulting, etc.
|Business Start - For
enumeration purposes, a business with
a name or similar designation that did
not exist in a prior time period.
|Business Taxes - four
general kinds of business taxes are income,
self-employment, employment, and excise.
|BUSINESS UNIT RECOVERY:
The component of Disaster Recovery which
deals specifically with the relocation
of key organization personnel in the event
of a disaster, and the provision of essential
records, equipment supplies, work space,
communication facilities, computer processing
capability, etc. SIMILAR TERMS: Work Group
|business the organized
effort of individuals to produce and sell,
for a profit, the goods and services that
satisfy society’s needs
|Business: An organization
created with the objective of making a
profit from the sale of goods or services.
An insurance policy designed for small
offices or stores, covering the building
and contents for full replacement cost
as well as liability insurance.
(b2b) Communications and transactions
conducted between businesses, as opposed
to between businesses and consumers. Expressed
in alphanumeric form, it refers to such
transactions conducted over the Internet.
(B2B) model firms that conduct business
with other businesses
(B-TO-B) – Communications or commerce
between companies (as distinguished from
dealings between a company and a consumer);
frequently conducted through trade journals.
(b2c) Communications and transactions
conducted between businesses and consumers,
as opposed to between businesses. When
expressed as B2C, it refers to such communications
and commerce via the Internet. See business-to-business.
(B2C) model firms that focus on conducting
business with individual buyers
(b2d) Communications and transactions
conducted between a business and the members
of the distribution channel (resellers,
distributors, agents, retailers) that
it uses to sell its products to consumers.
|Buy-Down. A loan in which
someone other than the borrower puts up
money to reduce the interest rate or borrower's
monthly payments. Frequently done by builders
in poor markets. It makes the house more
affordable. The buy-down usually expires
within a few years.
|buying allowance a temporary
price reduction to resellers for purchasing
specified quantities of a product
|buying behavior the
decisions and actions of people involved
in buying and using products
|buying long buying stock
with the expectation that it will increase
in value and can then be sold at a profit
|buying on margin — For
those who don’t have lots of money, but
believe that’s what it takes to make a
killing on the stock market. Stock buyers
purchase stocks with borrowed money, gambling
the share price will rise enough to pay
off the loan and then some.
|Buying Power Index (B.P.I.)
A composite indicator of consumer demand
in specific cities, counties, and metro
areas. Published annually by Sales and
Marketing Management magazine, the B.P.I.
reflects disposable personal income, retail
sales, and population in the area.
|BUZZWORD – A word or
phrase that takes on added significance
through repetition or special usage. "Customer
Retention Program" has become a buzzword
|Bylaws Bylaws are the
rules and regulations adopted by a corporation
for its internal governance. It usually
contains provisions relating to shareholders,
directors, officers and general corporate
business. At the corporation's initial
meeting the bylaws are adopted. Bylaws
are a private document not filed with
any state authority. Bylaws are more flexible
than the articles of incorporation because
they are easier to amend.
|Bylaws. The rules governing
the operation of an organization. In the
case of a corporation, the bylaws are
drawn up at the time, or shortly after
incorporation. (Most stationery stores
have standard forms which can be modified.)
|By-Laws: The internal
rules which govern the management of the
corporation. They contain the procedures
for holding meetings, appointments, elections
and other management matters. If these
conflict with the Articles of Incorporation,
the provision in the Articles will be
|Byproduct. Output of
a production process with relatively little
sales value when compared to the main
|C Corporation A C corporation
is simply a standard business corporation.
It is called a C corporation because it
is taxed under subsection C of the IRS
|cable modems These are
modems that receive data (usually Internet
data) over the same type of cable that
cable TV uses (fiber or coaxial). This
cable provides much more bandwidth than
that provided by regular phone lines,
and thus more data-intensive operations,
like video, are easily delivered. In theory,
cable modems have maximum data rates six
times those of a dedicated T-1 line, but
since cable connections are shared, heavy
use in a single neighborhood can slow
|cache A cache, generally
speaking, is a store of data placed on
a computer network close to the user who
needs it. PC operating systems might use
space on a hard drive to cache software
that spills over its capacity. Web browsers
use caches to remember recently surfed
Web pages and images, speeding their display
when a user returns to them. Network caching
is where Web data is replicated on servers
closest to the users who download it most
frequently. Portals like Yahoo use caching
services like Akamai to make their pages
download more quickly. Caching is also
key to technologies like streaming audio,
which would overwhelm networks if streams
weren't cached close to the listener.
|Cafeteria plan. A plan
maintained by an employer that allows
employees to select from a menu of taxable
and nontaxable benefits.
|calendar software Software
to tell you what day it is, ring an alarm
(or flash a screen reminder), or line
up and schedule events that are to take
place at a certain time. An unprepossessing
calendar utility is a freebie in Microsoft
Windows operating system; more powerful
ones are integral to personal information
managers (PIMs). See personal information
|Calendar Tax Year - 12
consecutive months beginning January 1
and ending December 31.
|Calendar Year: An entity's
reporting year, covering 12 months and
ending on December 31. (See: Fiscal year)
|call — An option to buy
a certain amount of stock at a specific
price during a specific time.
|CALL OPTION - Option
to buy shares of a certain stock within
a given period of time at a specific price
fixed in the contract.
|Call Option. 1. The right
to buy 100 shares of a stock (or stock
index, etc.) at set price. Usually, the
option holder has the right, but not the
obligation to purchase the property. The
option expires at a set time. For example,
the current price of Madison Inc. is $50.
For $5 per share you can purchase a option
that allows you to buy Madison stock at
$52 at anytime within the next 60 days.
Traded options expire at preset times.
2. The right to prepay a mortgage.
|call premium the dollar
amount over par value that the corporation
has to pay an investor when it redeems
either preferred stock or a corporate
|Call Premium. In the
case of straight or convertible bonds
or preferred stock it's the amount in
excess of the par value of the security
the issuer may have to pay for the privilege
of redeeming the security before maturity.
For example, if the par value is $1,000,
the issuer may have to pay $1,100 to redeem
the bond. The call premium can vary with
the timing of the call feature. For example,
the call premium may be $100 on a bond
that's callable 5 years from issuance.
The premium may be only $50 if the bond
is callable 10 years after issuance. The
term call premium can also refer to the
purchase price of a call option.
|CALL PRICE - The price
at which a corporation or other obligor
is permitted to redeem securities containing
call provisions. To compensate for this
privilege, a price above par is usually
|Call Protection. The
length of time during which a bond, preferred
stock, etc. cannot be redeemed by the
|Callable Bond. A bond
that can be redeemed by the issuer before
the stated maturity date. Usually, the
bond cannot be redeemed before a certain
time, say 5 years. And often bonds are
only callable at certain times. If a call
date is missed, the bond may not be callable
until the next call date. The call privilege
is to enable the issuer to refund the
bonds at a lower interest rate should
that occur during the term. The yield
and value of a bond can be affected by
any call privilege. Sometimes known as
a call feature.
|CALLED BOND - A bond
which the debtor has declared to be due
and payable on a certain date, prior to
maturity, in accordance with the provisions
of the bond indenture. In case only part
of an issue is to be redeemed, the bonds
to be retired are usually drawn by lot.
|CALLED PREFERRED STOCK
- Preferred stock, containing call provisions,
which is redeemed by a corporation.
|CAMPAIGN – The total
planned, coordinated sales effort on behalf
of a specific client or product, often
multimedia in nature and run over a period
of time. Motto Advertising has created
numerous award-winning campaigns for its
|cancel supporting documents
To mark supporting documents as having
been used to support a transaction so
the same documents can't be used as support
for a second transaction. An example is
stamping vouchers "paid" and marking them
with the check number.
|Canceled Loan - The annulment
or recission of an approved loan prior
|CANON - A rule or law.
Under civil law the rules by which the
title to real property is traced are known
as canons of inheritance; under common
law such rules are known as canons of
|CANON LAW - The law of
the church, ecclesiastical law.
|CANON OF ETHICS - Written
and unwritten standards of conduct expected
by certain groups, especially professional
groups, in pursuit of their specialized
|capacity the amount
of products or services that an organization
can produce in a given time
|Capital - *** Assets
less liabilities, representing the ownership
interest in a business; *** a stock of
accumulated goods, especially at a specified
time and in contrast to income received
during a specified time period; *** accumulated
goods devoted to the produc
|capital — Money needed
to start or grow a business. This pool
can come from securities offerings and
|Capital - the financial
investment required to initiate and/or
operate an enterprise.
|Capital Account: An
account where an owner's or partners'
interest in the business is recorded.
It is increased by owner investment and
net income and decreased by withdrawals
and net losses.
|Capital Asset - All tangible
property, including securities, real estate
and other property, held for the long
|CAPITAL ASSET An asset
that is purchased for long-term use such
as machinery and equipment.
|capital budget — Shows
plans for buying long-term assets—machinery
and other things you expect to last several
years—and estimates the costs of those
|capital budget a financial
statement that estimates a firm’s expenditures
for major assets and its long-term financing
|Capital Budgeting. A
formal plan for making investments in
plant, equipment, other fixed assets,
advertising projects, etc. Items included
in the capital budget have lives in excess
of one year and often require long-range
The purchase of or outlay for an asset
with a life of more than a year, or one
that increases the capacity or efficiency
of an asset or extends it's useful life.
Generally, such expenditures cannot be
deducted currently for tax purposes (or
expensed for financial accounting purposes.
Instead, they must be depreciated or amortized
over their useful life.
- Business spending on additional plant
equipment and inventory.
Amounts spent to acquire or improve assets
with useful lives of more than one year.
These expenditures may not be deducted,
but are added to the basis of the property
(See "Adjusted basis.") and, for business
property, may be converted into deductions
through depreciation or amortization.
|Capital Expense: A capital
expenditure is one that will benefit one
year or more. It can increase the quantity
or quality of services to be gained from
the asset. It is charged to an asset account.
|Capital Gain - The profit
realized when a capital asset is sold
for a higher price than the purchase price.
See also capital loss.
|Capital Gain (or loss).
A category of gain or loss under the tax
law resulting from the sale or other disposition
of specified property such as stock or
bond investments, real estate, etc. It
does not include property used in a trade
or business. However, special rules apply
in such situations that can result in
similar treatment for business property.
|capital gain a financial
gain made from selling fixed assets such
as land, buildings, or a business at a
price above the original purchase price.
|Capital gain or loss.
Gain or loss from the sale or exchange
of investment property, personal property
(such as a home) or other "capital asset,"
which is often entitled to preferential
|Capital Gain or Loss:
The difference between the market and
book value at purchase or other acquisition
realized at the sale or disposition of
a capital asset. (Washington's gain is
|capital gain the difference
between a security’s purchase price and
|Capital Gains or Losses
Gains or losses realized from the sale
or exchange of capital assets. The amount
is determined by calculating the difference
between an asset's purchase and sale price.
|Capital Lease: Although
the lessee does not legally own rental
property, the property is theoretically
acquired and recorded as an asset with
the related liability.
|Capital Lease: Type of
lease classified and accounted for by
a lessee as a purchase and by the lessor
as a sale or financing, if it meets any
one of the following criteria: (a) the
lessor transfers ownership to the lessee
at the end of the lease term; (b) the
lease contains an option to purchase the
asset at a bargain price; (c) the lease
term is equal to 75 percent or more of
the estimated economic life of the property
(exceptions for used property leased toward
the end of its useful life); or (d) the
present value of minimum lease rental
payments is equal to 90 percent or more
of the fair market value of the leased
asset less related investment tax credits
retained by the lessor. (Also see finance
|Capital Loss - The loss
incurred when a capital asset is sold
for a lower price than the purchase price.
See also capital gain.
|capital requirement a
list of expenses that must be met to establish
a business. Even before a business is
started, the owner should start keeping
|Capital Stock See Authorized
|Capital Stock: The ownership
shares of a corporation authorized by
its articles of incorporation, including
preferred and common stock.
|Capital stock: See Authorized
|Capital the total owned
and borrowed funds in a business.
|capital all the financial
resources, buildings, machinery, tools,
and equipment that are used in an organization’s
|Capital. Account that
represents real ownership and is the difference
between the value of the assets and the
liabilities. Includes owner's original
investment, subsequent investments and
profit derived from the business less
losses incurred and withdrawals from the
|Capital. Sometimes used
as a synonym for the owner's equity in
|Capital: Another word
|Capital: Property or
money used and owned by a business and
used to acquire future income or benefits.
|Capital: Initially, the
actual money or property that shareholders
transfer to the corporation to allow it
to operate. Once in operation, it also
consists of accumulated profits. The net
worth of the corporation.
|capital-intensive technology a
process in which machines and equipment
do most of the work
|capitalism an economic
system in which individuals own and operate
the majority of businesses that provide
goods and services
|Capitalization - The
sum of a corporation's long-term debt,
stock and surpluses. Syn. invested capital.
The rate of interest used to discount
the future income from a property to arrive
at a present value.
|Capitalization: How you
are going to raise money for your business.
- Personal property of the agency which
has an average dollar value of $300.00
or more and a life expectancy of one year
or more. Capitalized property shall be
depreciated annually over the expected
useful life to the agency.
as an asset. A capitalized lease is in
substance a purchase to the lessee. An
asset is recorded equal to the present
value of the lease payments, which is
also recorded as a liability. Payments,
partly interest and partly principal,
are made on the lease liability. The lease
asset is depreciated by the lessee as
though it were legally owned by the lessee.
|captioned photograph a
picture accompanied by a brief explanation
|captive pricing the
pricing of a basic product in a product
line at a low price, but pricing related
items at a higher level
|Carnet: A Customs document
permitting the holder to carry or send
merchandise temporarily into certain foreign
countries for display, demonstration,
or other purposes without paying import
duties or posting bonds.
|carrier a firm that
offers transporation services
|Carrier: The party responsible
for transport of goods (shipping line,
airline, road haulage company etc.)
|Carrybacks and carryforwards.
Deductions that may be transferred to
a year other than the current year because
they exceeded certain limits. These deductions
are typically carried back to earlier
years first and, if they exceed the limits
for those years, are then carried forward
to later years until the deduction is
used up. Charitable contributions and
net operating losses are examples of deductions
that may be carried back or forward.
|Carrying Costs. Expenses
incurred from storage of inventory. Includes
interest, insurance, taxes, deterioration,
spoilage, obsolescence, handling and warehousing.
|carve-outs The most common
example of a carve-out used to be when
an HMO would pay a separate insurer to
provide and manage coverage in a related
area, such as mental-health care. While
mental-health care is a good old-economy
example, carve-outs in the new economy
mean leveraged buyouts or venture-capital
investments (or both-see the Accel-KKR
Internet Fund) that liberate a dotcom
division from its bricks-and-mortar (nonvirtual)
parent. A classic example of a carve-out
is the creation of Barnesandnoble.com
as a separate company from Barnes & Noble.
While a tracking stock does not constitute
a carve-out, it could set the stage for
|Case of need: In a collection,
party in the buyer's country who is designated
by the seller to advise and/or give instructions
in the event of problems or disputes.
The collection order will specify whether
the case of need is authorised to instruct
|CASH ACCOUNTING The simplest
form of accounting in which income is
considered earned when received and expenses
are not taken into account until paid.
|Cash Against Documents
(CAD): Payment for goods in which a commission
house or other intermediary transfers
title documents to the buyer upon payment
|Cash Based Accounting
- an accounting method that enters income
and expenses into the books at the time
when payment is received or expenses incurred.
|Cash Basis: A bookkeeping
method that recognizes revenue and expenses
at the time of cash receipt or payment.
(Opposite of Accrual Basis.) (This is
the same as your personal checkbook.)
|cash book a record of
cash payments and receipts, showing these
under various categories.
|cash budget a financial
statement that projects cash receipts
and expenditures over a specified period
|Cash Budget. An internal
statement used by management to keep track
of inflows and outflows of cash transactions
over a period time.
|Cash cover: In a letter
of credit transaction, money deposited
by the applicant with the Issuing bank.
|Cash Discount - An incentive
offered by the seller to encourage the
buyer to pay within a stipulated time.
For example, if the terms are 2/10/N 30,
the buyer may deduct 2 percent from the
amount of the invoice (if paid within
10 days) otherwise, the full amount is
|cash discount a deduction
that is given for prompt payment of a
|Cash Discount. Price
reduction or discount on bills paid early.
Terms of "2/10, Net 30," for example,
means that a 2% discount is granted if
the bill is paid within 10 days. Otherwise,
the entire amount is due within 30 days.
|Cash Flow - An accounting
presentation showing how much of the cash
generated by the business remains after
both expenses (including interest) and
principal repayment on financing are paid.
A projected cash flow statement indicates
whether the business will have cash
|cash flow — Money coming
into a company and being paid out by the
company. Ideally you’d want to take in
at least as much as you pay out. On a
personal level, you’re having a cash-flow
problem if you can’t make your mortgage
payments. You’re not necessarily poor;
your house might be worth a lot if sold,
but you’re still having cash-flow problems.
|CASH FLOW - The sources
of funds and the uses of funds for a business
during a specified time frame.
|Cash Flow - the transfer
of monies into and out of an enterprise.
|Cash Flow Projection:
An estimate into the future of how cash
will move through the business during
a period of time.
|Cash Flow Projections
based on analysis of past operating experience,
payment of obligations, and collection
of receivables. This experience is applied
to budgeted sales and costs for a future
periodi in order to allow for repayment
of loan obligations and to assure adequate
working capital from earned income. Cash
flow forecasts provide a fundamental financial-management
tool for planning cash needs and ensuring
|cash flow the flow of
internal funds generated within the business
as a result of receipts from debtors,
payments to creditors, drawings and cash
|cash flow the movement
of money into and out of an organization
|Cash Flow: The movement
of money into and out of a business as
it sells products and services and pays
|Cash Flow: Generally
refers to the difference between cash
receipts and disbursements over a specific
period of time
|Cash flows All dollar
amounts received by or paid by the business.
All monetary flows into or out of the
|Cash flows from financing
Cash flows related to the use of credit
by the business as it prepares for, engages
in, or terminates business activities.
NOTE: These "cash flows" include both
debt extensions and debt repayments during
the subject accounting period.
|Cash flows from investing
Cash flows from transactions involving
purchases and sales of productive assets
and the debt and equity instruments of
|Cash flows from operations
Cash flows from day-to-day, income-producing
activities of the firm.
|Cash in Advance (CIA):
Payment for goods in which the price is
paid in full before the shipment is made.
This type of payment is usually only made
for very small shipments or when goods
are made in order.
|Cash includes all money
in the bank, in the cash drawer and in
petty cash. Banknotes, coins, bills and
negotiable securities (like cheques) is
cash. But so is the money you can draw
on demand - your bank accounts or savings
accounts also represent "cash".
|Cash Method - reporting
income one receives during the year, usually
deducting expenses in the year you pay
|Cash method (or cash
basis). One of two main accounting methods
for determining when a transaction has
tax significance. The cash method says
that a transaction is taxed when payment
is made. This method is used by most individuals.
(See "Accrual method (or accrual basis).")
|Cash Method An accounting
method under which income is subject to
tax when actually received and deductions
are allowed when actually paid.
|CASH POSITION - The percentage
of cash to the total net assets indicates
the cash position of the firm.
|cash receipts the money
received by a business from customers
|cash surrender value the
amount payable to the holder of a whole
life insurance policy if the policy is
An accounting system in which revenues
are recorded when received or collected,
and expenses are recorded when paid.
|Cash-basis income statement
An income statement compiled from cash-basis
accounting. Revenues are credited when
received or collected; expenses are recorded
when paid. A cash-basis income statement
does not match current costs with current
revenues. It can give erroneous measures
of profit or loss when inventory levels
increase or decrease during the accounting
Usually reserved for real estate income
properties, it's the annual cash flow
from the property divided by your cash
investment. Sometimes called return on
equity or equity dividend rate. It's a
quick and dirty way to evaluate an investment.
|CATALOG – An illustrated
booklet listing products or services available.
|catalog marketing marketing
in which an organization provides a catalog
from which customers make selections and
place orders by mail or telephone
|catalog showroom a retail
outlet that displays well-known brands
and sells them at discount prices through
catalogs within the store
|category killer a very
large specialty store that concentrates
on a single product line and competes
on the basis of low prices and product
|CAUSA MORTIS - See Gift
|CAUTION. The rules for
real property are more complicated.
|caveat A warning or caution.
|CAVEAT EMPTOR "Let the
|caveat emptor let the
buyer beware. The condition of sale is
that the purchase is at the buyer’s risk.
|caveat emptor a Latin
phrase meaning "let the buyer beware"
|CAVEATOR - An interested
party who gives notice to some officer
not to do a certain act until the party
is heard in opposition-as the caveator
of a will offered for probate.
|CBI is a Web-based knowledge
management system that gathers and organizes
structured (numeric) and unstructured
(text) information from a wide variety
of sources, including data warehouses,
e-mail, and the Web, so that users can
easily locate, present, share, annotate,
and update such data. CBI systems capture
information that may otherwise be lost
when employees leave a company, extend
information to a wider audience, bring
together related information to recapture
the context in which past decisions were
made, and speed up the decision-making
process. In essence, they make it possible
to share and institutionalize not only
information but also knowledge. SAS Institute
is a leading provider of CBI.
|CD Drive (or CD-ROM drive
or CD-RW drive): A Compact Disc drive,
used to read data CDs (also called CD-ROMs).
A CD can store up to 650 Megabytes (millions
of characters). These days, new programs
and data are often distributed on CD-ROM,
so a CD-Drive is almost mandatory. A CD-RW
drive is able to write to special CD media
(either CD-Recordable or CD-ReWritable).
CD-Recordable media can be written only
once, but can be read as often as you
wish. CD-ReWritable media can be written
multiple times (a minimum of 1000 times).
Both types of media are available from
office supply stores as well as computer
|cease and desist order
— Federal Trade Commission ruling that
orders a stop to an unfair business practice.
|centralized organization an
organization that systematically works
to concentrate authority at the upper
levels of the organization
|Certiciate of manufacture:
A statement which is usually notarized
in which the producer of goods certifies
that the goods have been produced and
are now available to the buyer.
Security is the new frontier of the digital
world, and there are numerous safeguards
to build secure systems for e-commerce
and data transfer. A certificate authority
is a third-party organization that creates
digital certificates for a public key
infrastructure (PKI), which lays the groundwork
for requiring users to have an issued
key or password to access information.
The certificate authority guarantees a
user's identity and issues public and
private keys for message encryption and
decryption (coding and decoding). In essence,
the certificate authority guarantees that
a user making a request is the person
she claims to be, and conversely, that
the provider of the information is the
recipient the user believes she is accessing.
|Certificate of Acceptance:
Term used in leasing. A document whereby
the lessee acknowledges that the equipment
to be leased has been delivered, is acceptable,
and has been manufactured or constructed
according to specifications.
|Certificate of analysis/certificate
of inspection: Documents that may be asked
for by the importer and/or the authorities
of the importing country, as evidence
of quality or conformity to specifications.
|Certificate of Authority
Is a document issued by the proper state
authority to a foreign corporation granting
the corporation the right to do business
in that state.
|Certificate Of Competency
- A certificate issued by the Small Business
Administration (SBA) stating that the
holder is "responsible" (in terms of capability,
competency, capacity, credit, integrity,
perseverance, and tenacity) for the purpose
of receiving and performing a specific
|Certificate of Compliance.
A vendor's certification that the supplies
or services delivered meet certain specified
|certificate of deposit
(CD) a document stating that the bank
will pay the depositor a guaranteed interest
rate for money left on deposit for a specified
period of time
|Certificate of Incorporation:
See Articles of Incorporation. Note, however,
some states will issue a Certificate of
Incorporation after the filing of the
Articles of Incorporation.
|Certificate of origin:
Documents that may be asked for by the
authorities of the importing country,
as evidence of the country of manufacture
of the goods and hence qualification for
preferential tariffs etc.
|certificates of deposit
(CDs) — Generally considered conservative
investments. You purchase the CDs from
financial institutions–essentially loaning
your money–and they promise to pay you
back on a fixed date, usually with interest.
You can invest for several months, but
longer investments generally earn higher
|Certified 8(A) Firm -
A firm owned and operated by socially
and economically disadvantaged individuals
and eligible to receive federal contracts
under the Small Business Administration's
8(a) Business Development Program.
|CERTIFIED BUSINESS CONTINUITY
PLANNER (CBCP) or DISASTER RECOVERY PLANNER
(CDRP): CBCP's are certified by the Disaster
Recovery Institute, a not-for-profit corporation,
which promotes the credibility and professionalism
in the DR industry.
|CERTIFIED LENDERS Banks
that participate in the SBA's guaranteed
|certified public accountant
(CPA) an individual who has met state
requirements for accounting education
and experience and has passed a rigorous
two-day accounting examination
|Certified Public Accountant:
A designation given to an accountant
who has passed a uniform CPA examination
and has met other certifying requirements.
CPA certificates are issued and monitored
by state boards of accountancy or similar
|CESTUI QUE TRUST - (pl.,
cestuls que trustent) - A person for whose
benefit a trust is created; a beneficiary.
|CFR - Cost and Freight
: A pricing term that indicates that the
cost of the goods and freight charges
are included in the quoted price.
|chain of command the
line of authority that extends from the
highest to the lowest levels of an organization
|chain retailer a firm
that operates more than one retail outlet
protocol (chap) A secure procedure for
validating a network connection request.
After the link is established, the server
sends a challenge message to the connection
requestor, who responds with encrypted
authentication information-the username
and password-based on a key in the challenge
message. If the server is able to decipher
the message using the original key, the
authentication is acknowledged. Otherwise,
the server terminates the contact. See
the less secure password authentication
|Change in net worth Change
in business net worth during an accounting
period due to business earnings during
the period. Usually calculated from a
cost-basis balance sheet (see definition
under "Balance sheet terminology") holding
unit value of inventories constant. (Sometimes
called comprehensive income.)
|channel conflict Occurs
when a producer or manufacturer bypasses
its normal distribution channel (resellers,
distributors, agents, retailers) to sell
directly to consumers, often on the Internet.
|channel of distribution
(or marketing channel) a sequence of
marketing organizations that directs a
product from the producer to the ultimate
|channel(1) A path between
two computers or communications devices.
A channel can refer to the physical pathway
(such as a coaxial cable) or, in wireless
media, to the specific carrier frequency.
(2) A channel is also a high-speed metal
or fiber-optic pathway between a mainframe
or other high-end computer and the control
units of peripheral devices. In a 10-channel
computer, for example, 10 separate streams
of data can be transmitted to and from
the central processing unit simultaneously.
(3) Channel is also the pathway through
which a vendor communicates with and sells
products to customers. This can include
a sales force, distributors, resellers,
agents, retailers, direct mail, telemarketing,
e-mail, or the Web. See channel conflict.
|Character - A letter,
digit, or other symbol, that is a part
of the organization, control, or representation
of data used in computer systems.
|Charged Off Loan - An
uncollectible loan for which the principal
and accrued interest were removed from
the receivable accounts.
|Charge-Off - An accounting
transaction removing an uncollectible
balance from the active receivable accounts.
|Chart of Accounts: A
listing (usually in account number order)
of all accounts used by a company.
|Charter party bill of
lading: Bill of lading issued by the charterer
or hirer of a vessel. Unpopular with banks,
because situations can arise when the
owner of the vessel has a claim on the
|Charter: Also known
as Articles of Incorporation. A document
issued by a state that gives legal status
to a corporation and details its specific
rights, including the authority to issue
a certain maximum number of shares of
|chat A form of interactive
communication that enables users to have
real-time conversations with other people
who are also online. In traditional chats,
text messages are instantaneously relayed
to other people in the same chat room.
Recent developments include voice chat
(communication via audio instead of text
transmission) and customer support chat
where users can log on to talk to a customer
|check digit A redundant
digit added to a code to check accuracy
of other characters in the code.
|check register A listing
of checks issued, normally in numeric
sequence and in order by date issued.
|check a written order
for a bank or other financial institution
to pay a stated dollar amount to the business
or person indicated on the face of the
|CHECKLIST TEST: A method
used to test a completed disaster recovery
plan. This test is used to determine if
the information such as phone numbers,
manuals, equipment, etc. in the plan is
accurate and current.
|CHINESE WALL - A policy
barrier between the trust department and
the rest of the bank designed to stop
the flow of information for the purpose
of preventing use by the trust department
of any material inside information, which
may come into the possession of other
bank departments, in making investment
|CHOSE - Anything that
is personal property.
|CHOSE IN POSSESSION -
Any article of tangible personal property
in actual, rightful possession, such as
a watch, an automobile, or a piece of
furniture; to be distinguished from a
chose in action.
|CIF - Cost, Insurance,
freight : a pricing term indicating that
the cost of the goods, insurance, and
freight are included in the quoted price.
|Civil Authority Insurance:
Business Income insurance pays for the
loss of income if access to you business
is prohibited by civil authorities because
of damage to other property as a result
of a covered cause of loss insured in
your policy. Coverage is provided for
up to two consecutive weeks from the date
of the civil authority action.
|Claims-Made Basis. Under
this type of insurance policy the insurer
is responsible only for claims filed during
the period the policy is in force. See
Claims-Occurrence Basis below.
With this type of insurance policy the
insurer is responsible for claims from
events that occurred during the time the
policy was in force. It makes no difference
when the claim is filed.
or grouping. Assets and liabilities are
normally classified as current or noncurrent.
|CLASSIFIED AD – A brief
listing appearing in a periodical of items
for sale and/or services offered, usually
arranged by category. Motto Advertising
has extensive experience in writing and
inserting effective classified ads in
newspapers, magazines, on television and
|Clayton Act — One of
the United States’ antitrust laws. This
one forbids price discrimination.
|Clean bill of lading:
a receipt for goods issued by a carrier
that indicates that the goods were received
in apparently good order and without damage.
|Clean collection: Collection
in which only the financial document (bill
of exchange) is sent through the banks.
of an old-fashioned (bricks-and-mortar)
store and a Website where you can order
merchandise online and possibly tie the
Web to a physical store. For example,
Gateway lets potential buyers try out
its computers at their local Gateway Country
Store, but customers still must make their
purchases online. Some conventional retailers
with Websites allow consumers to return
items to physical stores.
|clickthrough The percentage
of people who, after viewing a banner
ad on a Website, click on it and go to
the ad's target site. Say that a Website's
home page contains a banner ad for a free
flight to Fiji. If the home page is opened
100 times and five people click on the
ad to learn more, the clickthrough is
5 percent. (That's very high-most ads
have a clickthrough of 1 percent or less.)
|CLIENT – An organization
that employs an advertising agency to
create advertisements. Motto Advertising
helps its clients become rich beyond the
dreams of avarice.
relationship is best defined as one computer
program (the client) requesting information
from another computer program (the server),
and the server responding by fulfilling
the request. In the client/server model,
when you request a bank balance electronically,
your request is forwarded by the client
program and, at the bank end, received
and processed by the server program. Originally,
the term applied to network computing
in the days when PCs were hooked up to
one large mainframe computer, but the
Internet has overturned the conventional
client/server model, which requires specialized
software at both ends. Now your Web browser
is the client program, and the Web server
that houses the Web pages is the recipient
of that request. Today, with the advent
of powerful individual workstations, most
computers can act as both client and server
in different situations, particularly
when networked together. This scenario
is often described as "n-tier computing,"
where "n" refers to the multiple levels
of clients and servers that now exist.
|close corporation a
corporation whose stock is owned by relatively
few people and is not sold to the general
|Close corporation: Corporation
with less than 50 shareholders and which
has elected to be treated as a close corporation.
Not all states have close corporation
statutes. (For information regarding close
corporations, please consult a competent
|Close Corporations A
close corporation is a corporation that
possesses the following traits: a small
number of shareholders; no ready market
for the corporation's stock; and substantial
participation by the majority shareholders
in the management of the corporation.
Some states have close corporation statutes.
|Closed Loan - Any loan
for which funds have been disbursed, and
all required documentation has been executed,
received and reviewed. For statistical
purposes, first or total disbursement
is counted as a closed loan.
|closed shop a workplace
in which workers must join the union before
they are hired, outlawed by the Taft-Hartley
|closed-end fund — A mutual
fund that sells a limited number of shares.
|Closely Held Corporation.
A corporation with five or fewer shareholders
who own more than 50% in value of the
stock at any one time during the year.
Note, this is the IRS definition. In common
usage the definition can be broader.
Not a specific state-sanctioned type of
corporation, but rather a designation
of any corporation in which the stock
is held by a small group of people or
entities and is not publicly traded.
|Closing - Actions and
procedures required to effect the documentation
and disbursement of loan funds after the
application has been approved, and the
execution of all required documentation
and its filing and recordation where required.
|Closing a Settlement
Statement: When referring to a real estate
mortgage loan, the financial disclosure
statement that accounts for funds received
to date and expected at the closing, including
deposits for taxes, hazard insurance and
|CLOUD ON TITLE - A defect
in the owner-s title to property arising
from a written instrument or judgment
or from an order of court purporting to
create in someone else an interest in
or lien upon the property and therefore
impairing the marketability of the owner-s
|cloud The unpredictable
part of any network that data travels
through on its way to its final destination.
In a packet-switched network, the physical
path on which the data packet travels
can vary from one packet to the next.
In a circuit-switched network, the specific
circuit can vary from one connection to
|cluster structure an
organization that consists primarily of
teams with no or very few underlying departments
|code of ethics a guide
to acceptable and ethical behavior as
defined by an organization
|CODICIL - An amendment
or supplement to a will executed with
all the formalities of the will itself.
|Coinsurance Amount Limit.
A requirement under burglary insurance
that a minimum amount of insurance be
maintained, based on the type and amount
|coinsurance clause a
part of a fire insurance policy that requires
the policyholder to purchase coverage
at least equal to a specified percentage
of the replacement cost of the property
to obtain full reimbursement for losses
|Coinsurance Clause. In
the case of a partial loss where the property
is not insured for the indicated percentage
of its cash value at the time of the loss,
the recovery from the company is based
on a percentage.
|COLD SITE: An alternate
facility that is void of any resources
or equipment except air-conditioning and
raised flooring. Equipment and resources
must be installed in such a facility to
duplicate the critical business functions
of an organization. Cold-sites have many
variations depending on their communication
facilities, UPS systems, or mobility (Relocatable-Shell).
SIMILAR TERMS: Shell-site; Backup site;
Recovery site; Alternative site.
The process by which a software component
sifts through the profiles or usage patterns
of users who visit a Website, and makes
recommendations based on purchasing habits
or other preferences. For example, if
you go to a Website looking for a book
on minor league baseball, when you click
on the profile of that book, collaborative
filtering can recommend a list of similar
books based on data that reflects the
purchases of other buyers of that book.
Collaborative filtering is a tool intended
to increase e-commerce sales through successful
recommendations of product and upselling.
system a work environment that allows
problem-solving participation by all team
|COLLATERAL - An asset
pledged to a lender to support the repayment
of a debt.
|Collateral - assets that
can be pledged to guarantee a loan.
|Collateral - Something
of value -- securities, evidence of deposit
or other property -- pledged to support
the repayment of an obligation.
|COLLATERAL An asset that
can be sold for cash and which has been
pledged to a creditor to secure a future
obligation. (For example, if you finance
a car it is the collateral for the loan).
|Collateral Document -
A legal document covering the item(s)
pledged as collateral on a loan, i.e.,
note, mortgages, assignment, etc.
|Collateral security provided
by a borrower to cover the possibility
that the loan will not be repaid.
|collateral real estate
or personal property pledged as security
for a loan
that secures debt payment that the borrower
pledges to the creditor. Collateral recovers
all or part of a debt, if repayment of
the loan is not forthcoming.
|Collateral: Assets that
can be sold to repay a loan in the event
of failure of the business.
pledge mortgages, bonds, accounts receivable
or other marketable properties as security
for a loan.
|collateralize To pledge
property as security (collateral) for
|Collecting bank: Bank
in the buyer's country that participates
in a collection. The collecting bank may
or may not also be the presenting bank,
who presents documents
|collection by the buyer.
These may be incurred unintentionally
if the goods arrive before the buyer has
received the document of title.
|Collection order: In
a collection, the document in which the
seller instructs the banks as to how the
collection is to be conducted.
|Collection: Trading method
in which the banking system acts on behalf
of the seller, presenting documents to
the buyer and only releasing them upon
payment (or upon acceptance of a term
— The process by which labor leaders and
management iron out agreements on pay
and working conditions.
|collective bargaining the
process of negotiating a labor contract
|collusion A secret agreement
between two or more parties for fraud
|COLOR SEPARATION – A
traditional photographic process that
uses four film negatives to ultimately
create a full-color printed product. Recent
computer innovations have obviated the
need for separated film negatives in certain
|Combined transport bill
of lading: Transport document, widely
used for containerized shipments, covering
more than one transport mode - for example,
rail and sea. Has the same general characteristics
as a marine Bill of Lading.
|comfort letter A letter
written by the auditor to an underwriter
of securities, which expresses an opinion
about whether the audited financial statements
and schedules in the registration statement
comply as to form with applicable accounting
requirements of the Act and related rules
and regulations adopted by the SEC. The
procedures to be performed are specified
by the underwriter.
|COMMAND AND/OR CONTROL
CENTER: A centrally located facility having
adequate phone lines to begin recovery
operations. Typically it is a temporary
facility used by the management team to
begin coordinating the recovery process
and used until the alternate sites are
|command economy an economic
system in which the government decides
what will be produced, how it will be
produced, who gets what is produced, and
the prices of what is produced
|COMMERCIAL – An audio
or video advertising announcement, usually
presented on television, radio or in a
movie theater. Visit our creative portfolio
to see some of the celebrated commercials
MJM has produced.
|commercial bank a profit-making
organization that accepts deposits, makes
loans, and provides related services to
|Commercial Blanket Bond.
A bond that covers employee theft by one
or more employees up to a fixed amount.
General term for documents describing
various aspects of a transaction, e.g.
commercial invoice, transport document,
insurance document, certificate of origin,
certificate of inspection etc.
|Commercial invoice: Document
drawn up by the seller that gives a summary
of the commercial transaction (goods supplied,
price, means of shipment and so on).
|commercial paper — Short
term unsecured debt, with maturity up
to 270 days. Banks, corporations and others
raise money by issuing commercial paper
|commercial paper a short-term
promissory note issued by a large corporation
|Commercial Property Form.
An all-risk type insurance policy covering
business personal property against physical
loss for retailers, wholesalers and certain
other types of businesses.
|commission broker — A
person who does the trades for a stock
broker’s clients, receiving a commission
for the work. The stock broker places
orders with them.
|commission merchant a
middleman that carries merchandise and
negotiates sales for manufacturers
|commission a payment
that is a percentage of sales revenue
|Commitment fee: This
term has several meanings. It is the
fee charged by a forfeiter for reserving
funds to a transaction that was forfeited.
It is the fee charged by a negotiating
bank for waiving recourse to the beneficiary
in the event of non-payment by the Issuing
|Common Carrier - An organization
that transports persons or goods for a
|Common Control. In tax
parlance, the situation where a group
of five or fewer persons own more than
50% of an undertaking and therefore have
the ability (whether or not it is exercised)
to direct operations.
|common law the body
of law created by court decisions rendered
by judges; also known as case law or judicial
|Common Stock - A security
that represents ownership in a corporation.
Holders of common stock exercise control
by electing a board of directors and voting
on corporate policy. See also equity;
|common stock — Regular
old stock. Owners of this bottom rung
of stocks have a piece of the company
and get to vote for the board of directors
and on corporate policy. But they have
to queue up behind owners of preferred
stock both to receive dividends and, usually,
to receive assets if a company is liquidated.
|Common Stock The primary
stock of a corporation. This stock gives
shareholders the right to participate
in management of the corporation and give
the shareholder a proportionate share
of the dividends.
|common stock stock owned
by individuals or firms who may vote on
corporate matters, but whose claims on
profit and assets are subordinate to the
claims of others
|common stock stock owned
by individuals or firms who may vote on
corporate matters, but whose claims on
profit and assets are subordinate to the
claims of others
|Common Stock: A class
of stock issued by a corporation. It is
the most frequently issued type of stock.
It carries with it a voting right, however
is secondary in priority to preferred
stock in dividend and liquidation rights.
|Common stock: The standard
stock of a corporation which includes
the right to vote the shares and the right
to proportionate dividends. See also Preferred
An unplanned interruption in electronic
communication between a terminal and a
computer processor, or between processors,
as a result of a failure of any of the
hardware, software, or telecommunications
components comprising the link. (Also
refer to Network Outage.)
|communications program software
that allows computers to communicate with
The component of Disaster Recovery which
deals with the restoration or rerouting
of an organization's telecommunication
network, or its components, in the event
of loss. SIMILAR TERMS: (Telecommunication
Recovery, Data Communications Recovery)
|community of interests a
situation in which one firm buys the stock
of a competing firm to reduce competition
between the two
|Community property. A
system governing spousal ownership of
property and income that is the law in
certain western and southern states and
Wisconsin. The differences between community
property and "common law" can change how
federal tax law applies to spouses. For
example: married taxpayers filing separately
in a common law state do not have to report
income earned by the other spouse. They
do have to report income earned in a community
|community shopping center a
planned shopping center that includes
one or two department stores and some
specialty stores, along with convenience
|Company a business owned
by a group of people called shareholders,
which has its own legal identity separate
from its owners.
|comparability Users evaluate
accounting information by comparison.
Similar companies account for similar
transactions in similar ways. Another
goal is comparison of one company's information
from one period to the next (consistency).
Operating trends should not be disguised
by changing accounting methods.
One of the ways of appraising real estate
(or other property) is to find recent
selling prices of properties that are
comparable to the one being appraised.
If the properties are not identical, an
appraiser can make adjustments.
|comparable worth a concept
that seeks equal compensation for jobs
requiring about the same level of education,
training, and skills
|comparative advantage within
a nation, the ability to produce a specific
product more efficiently than any other
statements of a prior period shown with
those of the current period to aid in
comparisons between periods.
An audit procedure. The auditor observes
similarities and differences among similar
items such as an account from one year
to the next.
|comparison discounting sets
the price of a product at a specific level
and simultaneously compares it with a
An offsetting balance. A requirement by
some banks that a borrower maintain a
minimum balance in a checking or savings
account as a condition of granting a loan.
The offsetting balance increases the effective
interest rate to the bank since the net
amount loaned is reduced but the interest
paid is unchanged.
|compensation system the
policies and strategies that determine
|compensation the payment
that employees receive in return for their
|competence of an internal
audit staff is a function of qualifications,
including education, certification, and
supervision. Competent audit evidence
is valid and reliable
|competition a rivalry
among businesses for sales to potential
One of the main byproducts of the technology
age is data-valuable, quantifiable material
on every facet of running a global corporation.
Competitive intelligence is the corporate
version of old-fashioned espionage, except
the sleuths wear T-shirts and goatees
instead of trench coats and dark glasses,
and they tend to sit at computer terminals
instead of slinking through the fog-covered
streets of London and Paris. Knowledge
ranges from marketing research to pricing
to spreadsheet analysis of what other
companies have done in the places you
intend to go. Putting this knowledge to
work is the utility of acquiring competitive
A compilation is presenting in the form
of financial statements information that
is the representation of management without
expressing assurance. Compilation of a
financial projection is assembling prospective
statements based on assumptions of a responsible
party, reading the statements, considering
appropriateness of presentation, and issuing
a compilation report. No assurance is
provided on the statements or underlying
assumptions. The accountant need not be
about completeness deal with whether all
transactions and accounts that should
be presented in the financial statements
are included. For example, management
asserts that all purchases of goods and
services are recorded and included in
the financial statements. Similarly, management
asserts that notes payable in the balance
sheet include all such obligations of
|Completion Bond. A guarantee
provided by a bonding company to a lender
or other party that the contractor will
turn over the property to the owner free
of any claims.
applicable rules or laws.
Documents presented under a letter of
credit that comply with all its terms
and conditions. The banks are only obliged
to pay the beneficiary if documents are
|component part an item
that becomes part of a physical product
and is either a finished item ready for
assembly or a product that needs little
processing before assembly
|COMPOUND INTEREST Interest
earned on previously accumulated interest
plus the original principal. Most spread
sheets can calculate this easily for you
but for the curious, the formula is C
= P(1 + r/n)n, where C=compound amount,
P=original principal, r=annual interest
rate, n=total number of periods over which
interest is compounded.
|Compounding Period: The
period of time for which interest is computed.
|comprehensive basis of
accounting A complete set of rules other
than U.S. GAAP applied to all items in
a set of financial statements. Examples
include a basis of accounting required
by a regulatory agency, a basis of accounting
the entity uses for its income tax return
and the cash receipts and disbursements
|Compromise - The settlement
of a claim resulting from a defaulted
loan for less than the full amount due.
Compromise settlement is a procedure available
for use only in instances where the government
cannot collect the full amount due within
a reasonable time, by enfo
|computer controls Internal
controls performed by computer (software
controls) as opposed to manual controls.
Also means general and application controls
over the computer processing of data.
|COMPUTER RECOVERY TEAM:
A group of individuals responsible for
assessing damage to the original system,
processing data in the interim, and setting
up the new system.
|computer service providers
(csps)One of the new breed of outsource
vendors for the dotcom world. CSPs are
a kind of utility that house computer
equipment-servers-to provide computer
power for application service providers
(ASPs), business service providers (BSPs),
and e-commerce businesses. Customers run
their software on the CSPs servers. One
example is Exodus Communications.
|computer virus A malevolent
program that becomes embedded in a computer
system or application. Viruses range from
harmless pranks that merely display an
annoying message to programs that can
destroy files or disable your computer
altogether. Viruses are most commonly
transmitted through e-mail; recently,
"strains" have appeared that use personal
e-mail address books to propagate themselves
from machine to machine.
|computer viruses software
codes that are designed to disrupt normal
(cad) Also computer-assisted design, CAD
is a system combining hardware and software
that enables engineers, architects, and
other professionals to design just about
anything from a building to a bracket,
from an integrated circuit to an ice pick,
and from a sofa to a space station. CAD
systems make it possible to view a design
from any angle and to zoom in and out
for close-ups and long views. If the user
changes one value, the system automatically
changes all the others that depend on
(CAD) the use of computers to aid in
the development of products
(cae) A computer hardware and software
system that analyzes engineering designs
by simulating how they will work under
different conditions. Most computer-aided
design (CAD) systems incorporate CAE,
but there are stand-alone CAE systems
that can analyze designs produced by a
variety of CAD systems.
(cam) A computer hardware and software
system used to automate the manufacturing
process by directing the manufacture and
inventory of parts. CAM systems include
real-time control, robotics, and material
(CAM) the use of computers to plan and
control manufacturing processes
(CIM) a computer system that not only
helps design products but also controls
the machinery needed to produce the finished
withholding adverse facts that are known
when you're obligated to reveal them.
|CONCEPT – The general
idea behind a slogan, pitch, or campaign.
|conceptual skill the
ability to think in abstract terms
|Concessions. In real
estate, free rent, allowances for alterations,
etc., or similar payments or allowances
from a landlord to induce a tenant to
sign a lease.
|condensed financial statements
are presented in considerably less detail
than complete financial statements.
|Conditional. In insurance
parlance, a contract requiring the insured
to meet specified conditions to obtain
payment for any losses.
Communication with outside parties to
authenticate internal evidence.
|Confirmed letter of credit:
Letter of credit in which a bank (usually)
in the seller's country adds its own payment
undertaking to that of the Issuing bank.
Protects against country risk and bank
risk as well as customer credit risk.
|Confirming bank: Bank
that adds its payment undertaking to a
letter of credit. Also see confirmed letter
|Consent Resolution: Any
resolution signed by all of the directors
or shareholders of a corporation authorizing
an action, without the necessity of a
Indirect losses from an event.
|CONSERVATOR - (1) Generally,
an individual or a trust institution appointed
by a court to care for property. (2) Specifically,
an individual or a trust institution appointed
by a court to care for and manage the
property of an incompetent person, in
the same way as a guardian cares for and
manages the property of a minor.
|consideration the value
or benefit that one party to a contract
furnishes to the other party
|Consignee: Party to whom
goods are to be delivered.
of possession but not title to goods.
Title stays with the consignor, while
the consignee has possession.
|Consignment: In a consignment,
the consignor (owner of the goods) transfers
goods to the consignee. The consignor
retains legal title and includes the goods
in his inventory. The consignee is acting
as an agent in an attempt to sell the
goods. Although the consignee is temporarily
holding the goods, the inventory is not
an asset on his books. If a sale occurs,
the consignee deducts from the selling
price his commission and related expenses,
remitting the balance to the consignor.
of merchandise from an exporter to an
agent under agreement that the agent sell
the merchandise for the account of the
exporter. The consignor retains title
to the goods until the consigneee has
sold them. The consignee sells the goods,
collects the commission due and remits
the net proceeds to the consignor.
|consistency To achieve
comparability of information over time,
the same accounting methods must be followed.
If accounting methods are changed from
period to period, the effects must be
|Consolidation Loan: The
process of paying off several smaller
obligations with the proceeds of a new
loan, usually with lower interest monthly
payments than the combined total of the
obligations being paid off.
|Consortium - A coalition
of organizations, such as banks and corporations,
set up to fund ventures requiring large
An agreement made by a group of organizations
to share processing facilities and/or
office facilities, if one member of the
group suffers a disaster. SIMILAR TERMS:
|Construction Loan. A
loan intended only to finance the construction
of a property. Usually must be converted
to a term loan after construction is complete.
The ability to retain control over goods
dispatched to the buyer. Usually maintained
through transport documents. Where there
is credit risk,constructive control is
important to the seller. Constructive
control may also be important to a bank
who has financed a transaction.
|Constructive Total Loss.
A partial loss where the cost of repairing
the damage is greater than the value of
the property after restoration.
|Consular invoice: Commercial
invoice prepared in the seller's country
by the consulate of the buyer's country.
Helps the government of the buyer's country
|consulted Sought advice
|consulting services performed
by CPAs include consultations, advisory
services, implementation services, product
services, transaction services, and staff
and support services.
|CONSUMER – A private
individual at whom advertisements are
aimed; a buyer.
|consumer buying behavior the
purchasing of products for personal or
household use, not for business purposes
|CONSUMER MARKET – A defined
group of consumers.
|Consumer Price Index
(Cpi) - A measure of price changes in
consumer goods and services used to identify
periods of inflation or deflation.
|consumer price index
(CPI) — Measures price changes of common
goods and services, including such things
as housing and food. What you quote when
you’re trying to convince your boss you
need a raise to keep up with inflation.
|consumer price index
(CPI) a measure of the aggregate rise
or fall in prices of commonly used goods
and services, published by the Commonwealth
Government as a basis, among other things,
for deciding what overall increases should
be made to wages and salaries.
|consumer product a product
purchased to satisfy personal and family
|consumer products goods
and services purchased by individuals
for personal consumption
|consumer profiling The
process of assembling a comprehensive
database regarding consumer shopping habits,
motivations, and product/service preferences.
Information is captured from online and
offline transactions, including supermarket
loyalty cards scanned at checkout, cookies,
credit cards, and other means. Profiling
is the underpinning of targeted marketing.
|consumer protection agency
The federal agency charged with protecting
consumers from unfair, deceptive, or fraudulent
practices. It enforces consumer-protection
laws enacted by Congress and trade regulations
issued by the Federal Trade Commission.
The bureaus divisions encompass advertising,
financial, and marketing practices, as
well as enforcement, planning, and information.
Consumer privacy falls within its jurisdiction.
|consumer sales promotion
method a sales promotion method designed
to attract consumers to particular retail
stores and motivate them to purchase certain
new or established products
|consumerism all activities
undertaken to protect the rights of consumers
who purchase goods or services for their
own personal use
(c2b) A small segment of e-commerce that
takes advantage of the Internet's power
to reverse the normal channel, so that
consumers dictate what they're willing
to pay and vendors decide whether or not
to accept. Priceline.com is an example.
|contact manager A software
program that makes it possible to automatically
track and manage present and prospective
customers. Contact managers are most widely
used in B2B marketing and range from electronic
Rolodexes to advanced customer-asset management
systems. Most comprise a contact database,
historical information about past interaction,
and the ability to schedule and track
future contacts. These systems can be
used as personal contact managers, centralized
field-sales automation systems, or integrated
marketing systems encompassing field,
telephone, direct mail, and other forms
of contact. Some include customer service,
help desk, and other nonmarketing activities.
The most widely used contact managers
are ACT 2000 (Symantec), Organizer 5.0
(Lotus), and FileMaker Pro 4.1 and 5.0
|content provider An organization
that provides and updates information
on the Internet. (Content simply means
any type of information, from stock quotes
to news to gossip to worldwide weather
forecasts.) An individual who creates
content for the Web-say, a columnist on
your favorite Website-can also be considered
a content provider.
|contingency is an existing
condition involving uncertainty as to
possible gain (gain contingency) or loss
(loss contingency) that will be resolved
by future events. Estimates, such as the
useful life of an asset, are not contingencies.
Eventual expiration of the asset's utility
is not uncertain.
|contingency plan a plan
that outlines alternative courses of action
that may be taken if the organization’s
other plans are disrupted or become ineffective
|CONTINGENCY PLAN: See
Disaster Recovery Plan.
See also Disaster Recovery Planning.
|Contingent Business Interruption
Insurance. An insurance policy that provides
benefits if your earnings are reduced
because of damages to another business
on which yours is dependent.
Clause. A clause in a purchase and sale
agreement the specifies that the buyer
must be able to secure financing on reasonable
terms or he can back out of the purchase.
Income from a note that is at least partially
based on the income from the property.
This is common in financing commercial
real estate. For example, Fred loans Madison
$1 million at 8%. The terms also require
the payment of 3% of the cash flow from
the property in any year that the cash
flow exceeds $750,000.
Liabilities that will be incurred only
when assets are sold. Contingent liabilities
include: selling costs for assets; income
tax on capital gains realized through
the sale of assets; and write-off of the
unrecovered value of intangibles or natural
- A potential obligation that may be incurred
dependent upon the occurrence of a future
event. Two examples are: (1) the liability
of an endorser or guarantor of a note
if the primary borrower fails to pay as
agreed and (2) the liability that would
a liability which will only arise upon
the happening of a certain event, for
example, the guarantor of a loan being
asked to honour the guarantee if the borrower
Payments where the amount and/or timing
is dependent on other events, usually
the income from the property.
significance Matters of continuing accounting
significance are those normally included
in the permanent audit working paper file,
such as the analysis of balance sheet
accounts, and those relating to contingencies.
Such information from a prior year is
used by the auditor in the current year's
audit and is updated each year.
|continuing auditor is
the auditor of the current year who also
audited the financial statements of the
client for the previous year.
|Contra Account. An asset
account that normally has a credit balance.
The contra account is used to offset a
related account. The approach is used
so that the regular asset account is shown
at the original or undiminished value.
For example, accounts receivable has a
contra account usually called allowance
for doubtful accounts. Fixed assets have
a contra account called accumulated depreciation.
|Contract - A mutually
binding legal relationship obligating
the seller to furnish supplies or services
(including construction) and the buyer
to pay for them.
|Contract a legally binding
agreement between two or more parties.
|CONTRACT An agreement
between two (or more) parties in which
each promises to perform in some way.
Contracts can be complex and should always
be reviewed by an attorney. A contract
may not be binding if not correctly drafted
and executed .
|Contract Interest Rate.
The stated, or nominal, interest rate
in a contract.
|contract a legally enforceable
agreement between two or more competent
parties who promise to do, or not to do,
a particular thing
|Contracting - Purchasing,
renting, leasing, or otherwise obtaining
supplies or services from nonfederal sources.
Contracting includes the description of
supplies and services required, the selection
and solicitation of sources, the preparation
and award of contracts, a
|Contracting Officer -
A person with the authority to enter into,
administer, and/or terminate contracts
and make related determinations and findings.
|Contractor Team Arrangement
- An arrangement in which (a) two or more
companies form a partnership or joint
venture to act as potential prime contractor;
or (b) an agreement by a potential prime
contractor with one or more other companies
to have them act as its subcontractors
The percentage of the selling price that
can be used to pay fixed costs. If a product
is sold for $1.00 and it costs 70 cents
to make the product, 30 cents is the contribution
that can be used to pay fixed costs and
30 % or .3 is the contribution margin.
70 cents pays for the variable costs.
|Contribution: The difference
between the selling price of a product
and the cost to make that product. The
amount of money that remains to pay fixed
costs. After you break even, contribution
is the amount of money from each sale
of your product or service that now is
counted as profit.
A defense argument that the plaintiff
did not exercise sufficient care and that
this contributed to his injury.
|control A policy or procedure
that is part of internal control.
|control environment is
the attitude, awareness, and actions of
the board, management, owners, and others
about the importance of control. This
includes integrity and ethical rules,
commitment to competence, board or audit
committee participation, organizational
structure, assignment of authority and
responsibility, and human resource policies
|control policies and
procedures Control activities are the
policies and procedures that help ensure
management directives are carried out.
Those pertinent to an audit include performance
reviews, information processing, physical
controls and segregation of duties.
|control risk The risk
that material error in a balance or transaction
class will not be prevented or detected
on a timely basis by internal controls.
those expenses that can be controlled
or restrained by the businessperson.
|controller An officer
who supervises financial affairs of an
entity. In internal control the controller
is often the person with recordkeeping
(general ledger) responsibilities, as
contrasted with asset custody, management
decision making, and internal audit functions.
|controlling the process
of evaluating and regulating ongoing activities
to ensure that goals are achieved
|Convenience Goods - goods
often used by the consumer, but the consumer
is unwilling to spend "shopping time"
to acquire them. This covers a broad spectrum
of products including candy, cigarettes,
drugs, newspapers, magazines and most
|Convenience of Termination
Clause. A contract clause that permits
the party to terminate, at its own discretion.
|convenience product a
relatively inexpensive, frequently purchased
item for which buyers want to exert only
|convenience store a
small retail store that sells a limited
variety of products but remains open well
beyond the normal business hours
|Conventional Loan. A
mortgage loan that is not backed by insurance
from a government agency or other source.
|convergence of technologies the
overlapping capabilities and the merging
of products and services into one fully
integrated interactive system
A currency that can be bought and sold
for other currencies at will.
stock preferred stock that the owner
may exchange for a specified number of
shares of common stock
|Convertible Term. Term
life insurance which is convertible into
whole life without showing insurability.
|cookie Former Netscape
programmer Lou Montulli is credited with
inventing the Web cookie, a small file
that a Web server automatically sends
to the PC of someone browsing a Website.
Cookies contain information that identifies
each user: log-in or registration information,
passwords, shopping cart information,
specified preferences, and so on. When
the user revisits the Website, his or
her computer automatically distributes
the cookie, which establishes the users
identity, thus eliminating the need to
re-enter the information. Cookies allow
Amazon.com, for example, to tailor its
appearance to suit the users established
to track a users browsing and buying
habits. This has given rise to concern
about privacy and compelled some consumers
to purge cookies from their hard drives.
|cookie a small piece
of software sent by a web site that tracks
an individual’s Internet use
|CO-OP – The practice
of a national brand subsidizing local
advertising costs incurred by a company
that sells its product. Typically, the
national brand has stringent rules about
the advertisement in which the product
appears. SUN, Pepsi, and Cadillac are
just a few of the thousands of brands
that make co-op dollars available.
|cooperative advertising an
arrangement whereby a manufacturer agrees
to pay a certain amount of the retailer’s
media cost for advertising the manufacturer’s
A hot site owned by a group of organizations
available to a group member should a disaster
strike. ALSO SEE Hot-Site.
|cooperative an association
of individuals or firms whose purpose
it is to perform some business function
for its members
|COPY – The written part
of an advertisement. Effective copy is
critically important, even in visually-oriented
|Copyright a type of property
right which protects the expression of
ideas such as literary or dramatic works,
television productions, drawings etc.,
from being used for commercial gain without
permission of the copyright owner. Registration
is not a prerequisite for protection.
|copyright control of
|copyright control of
|Copyright: The exclusive
right to reproduce, publish and sell printed
materials, musical work, and art.
|COPYWRITER – A person
responsible for writing advertising copy
and generating creative concepts, often
in collaboration with an art director
or creative director.
|corporate bond a corporation’s
written pledge that it will repay a specified
amount of money, with interest
|corporate charter a
contract between the corporation and the
state, in which the state recognizes the
formation of the artifical person that
is the corporation
|corporate culture the
inner rites, rituals, heroes, and values
of a firm
|CORPORATE IDENTITY –
A company’s name, logo, typeface, colors,
slogan, etc., are elements that help comprise
its corporate identity. Motto Advertising
has produced effective corporate identity
packages for many new and long-established
|Corporate Image Advertising
- a "corporate image" ad is designed to
primarily promote the enterprise and secondarily
promote the products or services of the
|corporate officers the
chairman of the board, president, executive
vice presidents, corporate secretary and
treasurer, or any other top executive
appointed by the board of directors
|Corporate Record Book
Maintaining the proper records is very
important to assure limited liability
to corporate shareholders. The corporation
should have a record book which contains
a copy of the articles of incorporation,
bylaws, initial and subsequent minutes
of directors and shareholders meetings
and a stock register.
|corporation — A business
owned by shareholders.
|CORPORATION - A form
of business organization that may have
many owners. Each owner is liable only
to the extent of the investment. It is
an artificial entity established by the
|Corporation - A group
of persons granted a state charter legally
recognizing them as a separate entity
having its own rights, privileges, and
liabilities distinct from those of its
members. The process of incorporating
should be completed with the state's secretary
|Corporation A legal entity
created under the laws of a state to carry
on some business or other authorized activity.
The principal distinction between a business
corporation and other forms of business
organization (i.e., proprietorship or
partnership) is the fact that the liability
of the owners is limited to the capital
of the subject corporation.
|corporation an artifical
person created by law, with most of the
legal rights of a real person, including
the rights to start and operate a business,
to buy or sell property, to borrow money,
to sue or be sued, and to enter into binding
|Corporation: A type
of business organization chartered by
a state and given many of the legal rights
as a separate entity. Ownership is represented
by transferable shares of stock.
|Correspondent bank: Overseas
bank with whom a bank account has relationships
(nostro-vostro accounts) and arrangements
for authentication of communications.
(corroboration) (corroborative) To strengthen
with other evidence, to make more certain.
|Cosigner. Any person
that signs along with the maker of a loan
or credit obligation, thus becoming responsible
if the maker defaults.
|co-signers people whom
together share responsibility on behalf
of a business by jointly signing documents
|Cost and freight (CFR):
Incoterm. Seller pays transport costs
to named destination, but not insurance.
|Cost Method. An appraisal
method that values a property based on
the cost to reproduce it today. That amount
is usually adjusted for depreciation.
|Cost of Good Sold: COGS;
The amount determined by subtracting the
value of the ending merchandise inventory
from the sum of the beginning merchandise
inventory and the net purchases for the
|Cost of Goods - the direct
costs involved in producing a product
or service which usually includes labor
|cost of goods sold —
How much it cost the seller to make or
buy the goods sold. Same as “cost of sales.”
|cost of goods sold the
total cost to the business of the goods
sold during an accounting period. In its
simplest form this is the sum of the opening
stock plus all purchases less the closing
|cost of goods sold the
dollar amount equal to beginning inventory
plus net purchases less ending inventory
|Cost of Goods Sold. Determined
for the period by counting the merchandise
left at the end of the period (physical
inventory) and subtracting its cost from
the total cost of merchandise available
|Cost of Sales - the cost
of goods plus the expenses involved in
selling and delivering the product or
|COST PER THOUSAND (C.P.M.)
– The cost of advertising per thousand
potential customers reached by a given
publication, broadcast, or outdoor advertisement.
This figure is often used in media planning.
|Cost, insurance and freight
(CIF): Incoterm. Seller pays transport
costs and insurance to named destination.
|Cost-basis balance sheet
A balance sheet in which asset values
are entered at cost or cost less depreciation,
amortization, or depletion (as appropriate
to the type of asset). (Also called a
book-value balance sheet.)
(COLA) — A type of raise workers can get
to reflect the higher cost of consumer
goods. Also a sort of corporate hardship
pay for employees sent to live and work
in expensive places.
|Costs - Money obligated
for goods and services received during
a given period of time, regardless of
when ordered or whether paid for.
|count Enumerate some
characteristic such as the number of items
|Counter credit: Another
name for back-to-back letter of credit.
|Counter trade: The sale
of goods or services that are paid for
in whole or part by the transfer of goods
or services from a foreign country.
|countertrade an international
Duties levied on an imported good that
has been unfairly subsidized by a foreign
government. Imposing duties on the good
is meant to raise the product's price
to a "fair market value".
|Country risk: Risk that
economic or political instability in the
buyer's country will interfere with the
buyer's ability to pay for goods supplied.
|coupon — A detachable
part of traditional bond certificates.
You present these to the issuer to collect
your interest payments.
|coupon rate — A bond’s
annual interest rate, stated as a percentage
of what was originally paid for the bond.
Gets its name from traditional bond certificates,
which have coupons you detach and return
to the issuer to collect your interest
|coupon reduces the retail
price of a particular item by a stated
amount at the time of purchase
meets the classroom, or a hybrid of college
course and software. Most people have
their initial courseware experience when
they plug in their first computer and
get a tutorial. Courseware can also provide
training and education for specific software
programs, as well as computer business
applications. The actual courseware program
can come in the form of a CD-ROM, a Website,
or even an old-fashioned instructional
video. Courseware is also frequently used
as ancillary material for computer training
|court of limited jurisdiction a
court that hears only specific types of
|court of original jurisdiction the
first court to recognize and hear testimony
in a legal action
|Covenants. Promises included
in an agreement to perform or not to perform
certain acts. For example, a loan may
contain a covenant that the borrower's
debt-to-equity ratio cannot exceed 2 to
|cover note a temporary
certificate of insurance issued by an
insurance company to give immediate insurance
cover until a formal document is prepared
|Cover note: Insurance
document evidencing that insurance cover
for a consignment has been taken out,
but not giving full details.
|cracker Someone who intentionally
breaks into a computer system, breaching
computer security, usually with the intent
of stealing information or disabling the
system. Sometimes the cracker is engaging
in hacking activity simply for the challenge;
other times, to demonstrate a weakness
in a particular Websites security. Crackers
can be sophisticated corporate criminals
or precocious high school kids stretching
their programming muscles. Either way,
hacking for destructive purposes is a
criminal offense, and the authorities
actively prosecute crackers.
|craft union an organization
of skilled workers in a single craft or
|CRATE & SHIP: A strategy
for providing alternate processing capability
in a disaster, via contractual arrangements
with an equipment supplier to ship replacement
hardware within a specified time period.
SIMILAR TERMS: Guaranteed Replacement,
|creative selling selling
products to new customers and increasing
sales to present customers
|CREATIVE TEAM – The art
director, copywriter, and artist, working
together to develop an advertisement or
campaign. At Michael J. Motto Advertising,
the account executive directs this team.
|Credit an entry made
on the right hand side of an account and
indicating a gain to a liability, owner’s
equity or revenue account.
|credit application a
form to be completed by an applicant for
a credit account, giving sufficient details
to allow the seller to establish the applicant’s
|credit are irrevocably
assigned to the assignee.
|credit control any policy
designed to increase or decrease credit.
Using third-party guarantees such as a
cosigner, the pledging of assets, an insurance
company bond, or a letter of credit to
provide additional security for a loan.
|credit limit the upper
limit of credit that a business will allow
a customer to have.
|Credit Rating - A grade
assigned to a business concern to denote
the net worth and credit standing to which
the concern is entitled in the opinion
of the rating agency as a result of its
|Credit Rating: An evaluation
of your qualifications to receive credit,
based largely on your past credit history.
|CREDIT REPORT A listing
of an individual or company's history
of repaying past loans and other liabilities.
|Credit Report: A report
given by a credit-reporting agency about
your credit worthiness based on your present
financial condition, experience and past
|Credit Risk Insurance:
Insurance that covers the risk of nonpayment
for delivered goods.
|credit union a financial
institution that accepts deposits from,
and lends money to, only those people
who are its members
|credit immediate purchasing
power that is exchanged for a promise
to repay borrowed money, with or without
interest, at a later date
|Credit: An entry on
the right side of a ledger account.
|Creditor a person or
business to whom money is owed.
|crime a violation of
a public law
|CRISIS MANAGEMENT: The
overall coordination of an organization's
response to a crisis, in an effective,
timely manner, with the goal of avoiding
or minimizing damage to the organization's
profitability, reputation, or ability
|CRISIS SIMULATION: The
process of testing an organization's ability
to respond to a crisis in a coordinated,
timely, and effective manner, by simulating
the occurrence of a specific crisis.
|CRISIS: A critical event,
which, if not handled in an appropriate
manner, may dramatically impact an organization's
profitability, reputation, or ability
|CRITICAL FUNCTIONS: Business
activities or information which could
not be interrupted or unavailable for
several business days without significantly
jeopardizing operation of the organization.
|critical path the sequence
of production activities that takes the
longest time from start to finish
|CRITICAL RECORDS: Records
or documents which, if damaged or destroyed,
would cause considerable inconvenience
and/or require replacement or recreation
at considerable expense.
Marketing effort in which a company uses
one of its sales channels to promote another.
For example, a company may promote its
bricks-and-mortar retail locations on
its Website, or promote its Website in
|crossed cheque a cheque
across which two parallel lines have been
drawn. The effect of crossing a cheque
is to direct your bank to pay the cheque
only through another bank account.
|cross-functional team a
group of employees from different departments
who work together on a specific team
A plan by which each stockholder or partner
in a closely held business agrees to purchase
the interest of a departing stockholder
or partner. Usually funded by life insurance
on the lives of the other stockholders
or partners. (Note, cross-purchase agreements
can become unwieldy when more than four
owners are involved.)
|cultural diversity (or
workplace diversity) differences among
people in a work force due to race, ethnicity,
|cumulative effect of
changing to a new accounting principle
is the effect on retained earnings at
the beginning of the current period. It
is included in net income after extraordinary
items. Only the direct effect (net of
income tax effect) is considered.
— Preferred stock that is due dividends,
even if payments are delayed until the
company can afford them. The amount owed
builds until the dividends are paid. Owners
are entitled to their payments before
common-stock owners can collect theirs.
|Cumulative Voting This
method of voting is intended to create
adequate representation of minority shareholders.
Cumulative voting allows shareholders
to aggregate their votes in favor of fewer
candidates than there are slots available.
|Cumulative voting: A
voting right of shareholders which allows
votes for directors to be spread among
the various nominees. This right protects
the voting strength of minority shareholders.
The amount of votes in cumulative voting
is based on the number of shares held
times the number of director positions
to be voted on. The shareholder can then
allocate the total cumulative votes in
|currency devaluation the
reduction of the value of a nation’s currency
relative to the currencies of other countries
|Currency option: Foreign
exchange transaction in which a party
buys the right (but not the obligation)
to buy or sell a given amount of foreign
currency at a given exchange rate at either:
a given future date or at any point within
a future time period.
|Current Assets - Assets
that can be converted quickly to cash.
|current assets — Cash
and assets that are expected to be used,
sold or converted to cash in the near
future, usually one year. A sporting goods
store’s current assets would include the
money in the register and its bicycles,
as well as short-term insurance policies
and marketable securities—securities expected
to be turned into cash in one year.
|Current Assets - Cash
and other assets that are expected to
be converted into cash within the next
twelve months. Examples include such liquid
items as cash and equivalents, accounts
receivable, inventory and prepaid expenses.
|CURRENT ASSETS - The
assets which can be quickly converted
to cash. Cash, investment accounts, inventories
and accounts receivable are in this category.
|Current assets Cash and
other assets that normally will be sold
or used up within one year. Categories
include: cash, marketable securities (value
is lower of cost or current market), receivables,
inventories, prepaid expenses, and time
deposits that mature within the accounting
|current assets includes
cash, short-term deposits, customers’
accounts, stock (includes work in progress,
raw materials and finished goods), that
will be converted into cash during the
normal course of business, within a year.
|current assets assets
that can be quickly converted into cash
or that will be used in one year or less
|Current Assets. Includes
cash and other resources that can be converted
into cash or used within the normal operations
of a business within a relatively short
period of time, usually less than one
|Current Assets: Cash
or other assets you expect to use in the
operation of the firm within one year.
|Current Assets: Current
assets are those assets of a company that
are expected to be converted to cash,
sold, or consumed during the normal operating
cycle of the business (usually one year).
Examples are cash, accounts receivable,
short-term investments, US government
bonds, inventories, and prepaid expenses.
|Current Liabilities -
All debts incurred in the normal day-to-day
business and due within one calendar year.
|current liabilities —
These liabilities must be paid in a relatively
short time, usually one year. Taxes are
|CURRENT LIABILITIES -
Those obligations intended to be paid
in one year or less, usually from earnings.
|Current liabilities Debts
or accrued amounts owed that are to be
paid within a year. Current liability
categories include: accounts payable,
notes payable, taxes payable, current
portion of principal on intermediate-term
or long-term debt, cash dividends payable,
accrued interest and other accrued liabilities.
|current liabilities short-term
debts such as bank overdraft, creditors
and provisions set aside to pay taxation
and other commitments (for example, holiday
or long service leave) and expected to
come due within one year of the Balance
|current liabilities debts
that will be repaid in one year or less
Debts and other amounts owed to creditors
by the business entity due within one
year. Includes wages payable, accounts
payable, dividends payable, taxes payable,
and so forth.
Debts payable within one year, including
current portions of any long-term debt.
Liabilities to be paid within one year
of the balance sheet date.
|CURRENT RATIO - A ratio
which indicates a business' ability to
pay current liabilities as they become
due. It is calculated as the ratio of
current assets to current liabilities.
|Current ratio A liquidity
ratio measuring the ability of a business
to pay its current obligations when due.
The current ratio is calculated by dividing
total current assets by total current
liabilities. Most managers and lenders
want the current ratio to be 2.00 or greater.
|current ratio Total current
assets divided by total current liabilities.
|current ratio a financial
ratio computed by dividing current assets
by current liabilities
|Current Ratio. A commonly
used method of measuring a firm's short
term solvency by indicating its ability
to pay current debts from current assets.
Current ratio is calculated by dividing
current assets by current liabilities.
|Current Ratio: Also
known as Working Capital Ratio. A measure
of liquidity of business. Equal to current
assets divided by current liabilities.
|Current Yield. The yield
of a bond or similar instrument, taking
into account only the current interest
and the price paid. Computed by dividing
the annual interest by the purchase price.
|custodian One that has
possession or is in charge of something.
Some entities entrust marketable investment
securities to a bank which is custodian
of the company's securities.
|customary pricing certain
goods priced primarily on the basis of
control systems (cics)An online transaction
processing (OLTP) program developed by
IBM. Combined with the COBOL language,
it has become one of the most common programs
for creating customer transaction systems.
See online transaction processing.
centers (cics)Traditional customer call
centers are morphing into customer interaction
centers. CICs integrate all customer contact-by
phone, fax, e-mail, the Web, and other
marketing technologies. Considered an
integral part of customer relationship
management (CRM), CICs are expected to
become the operating control point for
collecting and disseminating customer
data within an organization. CICs function
as the chief portal through which customers
receive company information.
marketing A one-to-one marketing model
in which information gathered throughout
the history of the customer’s relationship
with the company is used to market to
that customer in a way that promotes trust,
loyalty, and, therefore, increased sales.
Customer relationship marketing is an
important part of customer relationship
|customer support The
range of services a company provides to
assist customers in using its products
efficiently and effectively. Effective
customer support can answer questions,
troubleshoot problems, provide replacement
parts or repairs, assist with development
of applications, or offer technical assistance.
Customer support is an integral component
of customer relationship management. See
customer relationship management.
|customer support, real-time
Providing customer support on an around-the-clock
|customer surveys A form
of market research in which customers
respond to particular questions or provide
opinions. Surveys use a variety of techniques
(interviews, focus groups, opinion polls,
questionnaires) and media (telephone,
fax, Internet, direct mail, publications).
|Customhouse Broker: An
individual or company licensed by the
government to enter and clear good through
|customs (or import) duty a
tax on a foreign product entering a country
|Customs: The government
authorities designated to collect duties
levied by a country on imports and exports.
The term also applies to the procedures
involved in such a collection.
|cutoff Designating a
point of termination. An auditor uses
tests of cutoff to obtain evidence that
transactions for each year are included
in the financial statements of the appropriate
|cyberfraud The most common
form of cyberfraud is online credit card
theft. While data break-ins have received
much publicity, a more common form of
theft is the ordering of goods from stolen
or invented credit card numbers. In addition,
word travels very quickly on the e-commerce
grapevine, and one incidence of cyberfraud
can scare off consumers and mean a permanent
loss of traffic to a site. Other common
forms of cyberfraud are nondelivery of
paid products purchased through online
auctions and nondelivery of merchandise
or software bought online.
|cyberspace A metaphorical
term that describes the invisible world
where digital signals from a computer
are transmitted. When you click on a Website
or the send button in your e-mail program,
you are sending data through cyberspace
|cybersquatting The practice
of purchasing a well-known domain name
(such as mcdonalds.com) in hopes of selling
it at a big profit. When Internet commerce
exploded, cybersquatting became a hotly
contested practice as large corporations
found that domain names similar to their
trademarks and brands had already been
registered. This practice is currently
being contested in various legal battles.
terrorism conducted in cyberspace, where
criminals attempt to disrupt computer
or telecommunications service. With the
bulk of the world digitally connected,
there is a grave vulnerability to attack.
Hackers have the ability to spread a computer
virus or launch a denial of service attack,
with relative ease and anonymity. The
ripple effect of bringing down a system
in Sunnyvale, Calif., or Herndon, Va.,
can have ramifications in London or Calcutta.
High-tech security to ward off cyberterrorism
is a growing and vital business.
Our consultants provide business advice to help you start, plan, operate, manage, market, develop, position, improve and grow your business.