|
| DAMAGE ASSESSMENT: The process
of assessing damage, following a disaster, to
computer hardware, vital records, office facilities,
etc. and determining what can be salvaged or
restored and what must be replaced. |
| damages a monetary settlement
awarded to a party that is injured through a
breach of contract |
| Data Base development: Creating
files on your site for dynamic data - information
that changes frequently in response to user
input. (i.e. password accounts, order forms
connected to inventory etc.) Sometimes requires
custom programming such as Active Server Scripts,
CGI, PHP or Java Scripts. However, the desired
data should be served to your visitors seamlessly,
on demand. |
| DATA CENTER RECOVERY: The component
of Disaster Recovery which deals with the restoration,
at an alternate location, of data centers services
and computer processing capabilities. SIMILAR
TERMS: Mainframe Recovery. |
| DATA CENTER RELOCATION: The
relocation of an organization's entire data
processing operation. |
| data cleaning services Companies
that provide one or more of the specialized
services that are part of data cleansing. The
success of database marketing is dependent on
the quality of the data. Eliminating dirty
data (e.g., disparities and contradictions,
errors, missing data, and so on) is an important
part of data management. It involves a number
of intricate and sophisticated steps, such as
data correction and validation, standardization
of names and addresses, gender assignment, geo-
and postal coding, and ZIP+4 processing. Software
programs that cleanse data are an alternative
to data cleaning services. |
| Data Element - The basic unit
of identifiable and definable information. A
data element occupies the space provided by
fields in a record or blocks on a form. It has
an identifying name and value or values for
expressing a specific fact. For example, a data
element name |
| data processing the transformation
of data into a form useful for a specific purpose |
| data numerical or verbal descriptions
that usually result from some sort of measurement |
| Database Management Program
A program (sometimes called a database manager)
that allows multiple users within a system to
store and access information in a database.
The system maintains the integrity of the data
(its availability and organization) and permits
only those with access privileges to use it. |
| database management program software
that allows users to electronically store large
amounts of data and to transform the data into
information |
| database management system
(dbms) |
| database a single collection
of data stored in one place that can be used
by people throughout an organization to make
decisions |
| day trading Literally, the
purchase and sale of stocks made in the span
of one day. The growth of online discount brokers
has greatly expanded the number of people engaged
in day trading; growing numbers are playing
the market as a full-time occupation. For managers
of highly valued and thinly traded Internet
companies, day traders can make or break a stock,
buying or selling on a whim or a tip. |
| DEAD HAND - A term used to
indicate the continuing hold of a settlor or
a testator, who has been dead for many years,
upon living individuals or organizations that
are confronted with conditions which the settlor
or the testator could not have foreseen. See
also Statutes of Mortmain. |
| Debenture - Debt instrument
evidencing the holder's right to receive interest
and principal installments from the named obligor.
Applies to all forms of unsecured, long-term
debt evidenced by a certificate of debt. |
| Debenture a fixed interest
investment in a company, which has priority
for interest payments, generally redeemable
after the lapse of a specified time |
| debenture bond a bond backed
only by the reputation of the issuing corporation |
| debentures — You need to trust
in a company and its strength to give this type
of loan, which isn’t backed by collateral. |
| debit card a card that electronically
subtracts the amount of your purchase from your
bank account at the moment the purchase is made |
| Debit To debit is to place
an entry on the left-hand side of an account.
A debit in a liability account makes it smaller.
A debit in an asset account makes it larger. |
| Debit: An entry on the left
side of a ledger account. |
| Debt Capital - Business financing
that normally requires periodic interest payments
and repayment of the principal within a specified
time. |
| debt capital money from external
sources used to finance a business. See also
equity capital. |
| debt capital borrowed money
obtained through loans of various types |
| Debt Financing - The provision
of long term loans to small business concerns
in exchange for debt securities or a note. |
| DEBT FINANCING This is financing
in which you get a loan from someone or somewhere
and go into debt! You are obligated to repay
the money at some predetermined interest rate. |
| Debt Financing. Financing through
borrowing capital that must be repaid. Discretionary
Income. Disposable personal income less amount
spent for necessities such as food, shelter,
medical expenses, etc. Disposable Personal Income.
Individual "after-tax" income. |
| Debt Instrument. A generic
term representing any written promise to repay
the debt. |
| Debt ratio A solvency ratio
measuring the total debt level of a business.
The debt ratio is calculated by dividing total
liabilities by total liabilities plus net worth.
Values greater than 1.0 indicate the business
has negative net worth (is insolvent). |
| Debt Service - the regular
payments required to keep a loan current. |
| Debt Service Coverage. The
borrower's annual net operating income before
debt service and taxes divided by the annual
debt service. A measure of how safe the loan
is to the lender. |
| Debt Service. The cash required
to pay the interest and principal due (usually
during one year) on outstanding debt. |
| Debt that which is owed. If
you borrow money, buy something on credit or
receive more money on an account than is owed,
you have a "debt. |
| Debt/Equity Ratio. A measure
of long-term financial solvency of a firm showing
the relationship between borrowed capital and
owner's equity. Debt/Equity ratio is calculated
by taking long-term debt and dividing it by
Total Equity. A high ratio might indicate room
for capital expansion. |
| Debt-Financing: A method of
financing by borrowing money; a loan that must
be repaid, such as a bank loan. |
| Debtor a person or business
who owes money |
| Debt-To-Equity Ratio. Total
liabilities divided by total shareholders' equity.
This is a measure of the cushion available to
creditors should the firm be forced to liquidate.
The ratio is sometimes calculated by dividing
total long-term debt by shareholders' equity. |
| debt-to-net-worth ratio — Also
debt-equity ratio. To get it, you divide liabilities
by stockholders’ equity. This is a general measure
of how safe creditors can feel about their loans.
Creditors often avoid lending to companies with
a high debt-equity ratio. |
| debt-to-owners’ equity a financial
ratio calculated by dividing total liabilities
by owners’ equity |
| decentralized organization an
organization in which management consciously
attempts to spread authority widely in the lower
levels of the organization |
| decision making the act of
choosing one alternative from among a set of
alternatives |
| decisional role a role that
involves various aspects of management decision
making |
| DECLARATION FEE: A one-time
fee, charged by an Alternate Facility provider,
to a customer who declares a disaster. SIMILAR
TERMS: Notification Fee. NOTE: Some recovery
vendors apply the declaration fee against the
first few days of recovery. |
| Declining Balance: The decreasing
amount you owe on a debt as you make installment
payments. |
| DEDICATED LINE: A preestablished
point to point communication link between computer
terminals and a computer processor, or between
distributed processors, that does not require
dial-up access. |
| Deduction - An item or expenditure
subtracted from adjusted gross income to reduce
the amount of income subject to tax. |
| Deed In Lieu Of Foreclosure.
The delivery of an asset's title to the lender
when the loan is in default. The approach may
benefit both parties by avoiding the expenses
associated with foreclosure and the stigma of
foreclosure. CAUTION. For tax purposes, the
transaction is the same as a sale. |
| Deed of Assignment: 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 |
| Deed of protest: Document evidencing
that a protest has been carried out. |
| Deed Of Trust - A document
under seal which, when delivered, transfers
a present interest in property. May be held
as collateral. |
| deed a written document by
which the ownership of real property is transferred
from one person or organization to another |
| Deep Discount Bond. A bond
where the market price is less than 20% or so
of its face value. Like a zero coupon bond,
the market price of a deep discount bond will
rise faster when interest rates fall and drop
faster when interest rates rise than a bond
that is selling close to its face value. |
| Deep In, Deep Out Of The Money.
A call option whose exercise price is well below
the market price of the underlying stock (deep
in the money) or well above the market price
(deep out of the money). Thus, the premium associated
with buying a deep-in-the-money call option
is high. |
| defalcation To misuse or embezzle
funds. |
| Default to fail to meet an
obligation when due, such as paying a debt. |
| Default. The failure of a debtor
to comply with a provision of a bond indenture
or loan agreement (commonly known as a technical
default) or to make timely payment of interest
or principal when due. |
| Default: Failure to pay a debt
when due, or otherwise failing to comply with
an essential term of a loan payment. |
| Defaults - The nonpayment of
principal and/or interest on the due date as
provided by the terms and conditions of the
note. |
| Defeasance. In corporate finance
it is generally the discharge of old, low-rate
debt without repayment prior to maturity. The
corporation replaces it with newly issued securities
with a lower face value buy paying higher interest
or having a higher market value. The technique
can result in tax and balance sheet advantages. |
| DEFEASIBLE - Capable of being
annulled or rendered void, as a defeasible title
to property. |
| Defense Acquisition Regulatory
Council (Darc) - A group composed of representatives
from each Military department, the Defense Logistics
Agency, and the National Aeronautics and Space
Administration and that is in charge of the
Federal Acquisition Regulation (FAR) on a joint
basis with the Civilian Age |
| Defense Contractor - Any person
who enters into a contract with the United States
for the production of material or for the performance
of services for the national defense. |
| Deferred Charge. An expenditure
carried as an asset until the amount represents
a true expense for the period. For example,
if a one-year insurance premium is paid three
months before the end of the fiscal year, three
months of the premium would be an expense in
the year paid, nine months would be an expense
of the following year. Thus, 9/12 of the premium
would be a deferred charge. In this case it
would be represented by an account called prepaid
insurance. Deferred income is the opposite situation.
For example, six months rent received in advance.
Any amount not properly credited to the current
period would be represent a liability. |
| DEFERRED COMPENSATION - The
postponement of payment for services presently
rendered until a future time. |
| Deferred compensation. An arrangement
that allows an employee to receive part of a
year's pay in a later year and not be taxed
in the year the money was earned. |
| Deferred Interest Bond. A bond
where interest payments are not made currently,
but at a later date. Similar to a zero coupon
bond which pays 'interest' and principal at
maturity. The interest, in effect, is compounded
and paid at maturity. Market prices for such
bonds are much more volatile than bonds which
pay interest currently. |
| Deferred Loan - Loans whose
principal and or interest installments are postponed
for a specified period of time. |
| Deferred Payment Credit: A
type of letter of credit which provides for
payment some time after presentation of the
shipping documents by the exporter (i.e. x days
after sight). |
| deficiency An internal control
shortcoming or opportunity to strengthen internal
controls. |
| DEFICIENCY JUDGMENT - A judgment
for the balance of a debt after the security
has been exhausted; as a deficiency judgment
following the foreclosure of a mortgage. See
also Judgment. |
| deflation — Opposite of inflation.
Decrease in the general price of consumer goods
and services. |
| delegation assigning part
of a manager’s work and power to other workers |
| Delinquent: A credit account
which is past due. |
| demand (usually a bill of exchange). |
| Demand an order to comply with
an obligation. In business, paying on "demand"
means that the obligation must be satisfied
immediately when requested. |
| demand deposit — Checking account.
So named because you can demand your money—or
write a check—without clearing it with the bank
first. |
| demand deposit an amount on
deposit in a checking account |
| Demand Deposit. The technical
name for a checking account or any other type
of account where the funds can be withdrawn
without prior notice. |
| Demand Loan. A loan with no
set maturity date. The loan is payable whenever
the lender chooses to call it. |
| demand the quantity of a product
that buyers are willing to purchase at each
of various prices |
| demand the quantity of a product
that buyers are willing to purchase at each
of various prices |
| democratic leader one who
holds final responsibility but also delegates
authority to others, who help determine work
assignments; communication is active upward
and downward |
| Demurrage: Charges made for
storing goods at the port of destination while
awaiting |
| denial of service (dos) attack
A malicious attack generally perpetrated by
a hacker intent on disrupting individuals ability
to get to Websites or e-mail. In the most common
form of DoS, the attacker sends so many messages
to a Website that regular users cant get through
or it shuts down completely. DoS is a criminal
act, even when done as a prank, and major attacks
are aggressively investigated by the Department
of Justice. |
| department store a retail
store that (1) employs twenty-five or more persons
and (2) sells at least home furnishings, appliances,
family apparel, and household linens and dry
goods, each in a different part of the store |
| DEPARTMENTAL RECOVERY TEAM:
A group of individuals responsible for performing
recovery procedures specific to their department. |
| departmentalization by customer grouping
activities according to the needs of the various
customer populations |
| departmentalization by function grouping
jobs that relate to the same organizational
activity |
| departmentalization by location grouping
activities according to a defined geographic
area in which they are performed |
| departmentalization by product grouping
activities related to a particular product or
service |
| departmentalization the process
of grouping jobs into manageable units |
| Depletion The book entry reduction
in the value of a natural resource asset due
to "using up" the natural resource. For example,
the using up (depletion) of gravel deposits,
petroleum reserves, or other natural resource
property. |
| Depletion. A system similar
to depreciation that allows the owner of natural
resources (for example: a coal mine or an oil
well) to deduct a portion of the cost of the
asset during each year of its presumed productive
life. |
| depreciation — Dividing the
cost of an asset over that asset’s usable life.
When dealing with a $200,000 factory expected
to be used for 10 years, you would count $20,000
a year as expenses. Assets are considered unusable
if they don’t work well anymore or are obsolete. |
| Depreciation - If property
acquired to use in a business has a useful life
longer than one tax year, part of it must be
deducted in each year, for example, office equipment,
buildings, machinery, and equipment. |
| Depreciation - The gradual
erosion of the usability and value (possibly
due to obsolescence) of an enterprise's fixed
assets. In some cases depreciation can be declared
as a tax deduction. |
| DEPRECIATION Decrease in the
value of equipment over time. Depreciation of
equipment used for business is a tax-deductible
expense. |
| depreciation expense gradual
reduction of the value of a fixed asset and
gradual application of this cost to the expenses
of a business over the useful life of the asset. |
| Depreciation Recapture. When
tangible personal property is sold, the tax
gain is based on the difference between the
asset's adjusted basis and the selling price.
Any gain up to the amount of depreciation taken
is deemed depreciation recapture and taxed as
ordinary income. |
| depreciation schedule a table
showing depreciable assets, the year each was
purchased, its cost, the percentage by which
it is depreciated each year and written down
current value. |
| Depreciation The book entry
reduction in the value of a tangible asset (buildings,
equipment, vehicles, inventory, etc.) attributable
to age, wearing out, and/or obsolescence. |
| Depreciation The decline in
value of a limited-life tangible asset, such
as a building, machine, vehicle, equipment,
furniture, etc., due to age, and to the normal
wear and tear of use. In general, depreciation
assigns to a fiscal period a portion of the
original cost of the capital cost asset. |
| depreciation the process of
apportioning the cost of a fixed asset over
its useful life |
| Depreciation. A method of recovering
your purchase price or other basis in an asset
over its life rather than deducting the full
amount immediately. An expense for book purposes
or a deduction for tax purposes. Depreciation
is often different for book and tax purposes. |
| Depreciation. A system that
allows a business or individual to deduct a
portion of the cost of an asset ("recover its
cost") during each year of its predetermined
"life" (or "recovery period"). |
| Depreciation: The expense
recognized in writing off the cost of a plant
or machine over its useful life, giving consideration
to wear and tear, obsolescence, and salvage
value. Methods vary. Examples are straight line
(SL), accelerated methods such as sum-of-the-years
digits (SYD), and double-declining balance (DDB)
methods. Primarily accelerated depreciation
is chosen for a business' tax expense but straight
line is chosen for its financial reporting purposes. |
| depression a severe recession
that lasts longer than a recession |
| derivative — A type of investment
whose value depends on the value of other investments,
indices or assets. A stock option is a common
type of derivative. |
| DESCENDANT - One who is descended
in a direct line from another, however remotely
(child, grandchild, great-grandchild). |
| design planning the development
of a plan for converting a product idea into
an actual product |
| desktop publishing program a
software package that enables users to combine
text and graphics in reports, newsletters, and
pamphlets |
| detection risk The risk audit
procedures will lead to a conclusion that material
error does not exist when in fact such error
does exist. |
| detective control A control
designed to discover an unintended event or
result. |
| Devaluation: The official lowering
of the value of one country's currency in terms
of one or more foreign currencies. |
| deviation Departure from prescribed
internal control. Often expressed as a rate
at which the departure occurs. |
| DIAL BACKUP: The use of dial-up
communication lines as a backup to dedicated
lines. |
| DIAL-UP LINE: A communication
link between computer terminals and a computer
processor, which is established on demand by
dialing a specific telephone number. |
| digital certificate The digital
version of an ID card used in conjunction with
a public key encryption system to identify an
owner. Digital certificates are issued by a
third party known as a certificate authority
(CA). Once it is issued by the CA, the digital
certificate is included in a transmission of
an encrypted message to prove that the sender
is truly the person who claims to be sending
the message. A digital certificate is a valuable
component in such transactions as data security
and e-commerce, because it guarantees that the
parties exchanging information are indeed who
they say they are. |
| digital employment advertising
Online postings of job opportunities on the
Internet, including at the sites of companies,
professional organizations, recruitment companies,
and job boards such as Monster.com, CareerPath.com,
CareerMosaic.com, Jobsearch.org, and HeadHunter.net,
the top five career-search sites. |
| digital or electronic cash
An electronic cash account, most often stored
on your computer or a smartcard, is for purchasing
goods online or off. While several digital cash
models are in the rollout stage, the general
notion is that you can make a purchase and have
the cash amount confirmed by the bank, deducted
from your account, and paid to the merchant,
activating the shipping phase of the end product,
all in a few seconds. The use of digital cash
is decidedly not widespread; few major U.S.
banks participate in any digital cash programs,
and even fewer merchants accept any form of
digital cash besides Visa- or Mastercard-enabled
debit cards. |
| digital resume Summaries of
an individuals education, employment history,
and qualifications created in HTML format for
dissemination on the Web or ASCII text format
for e-mailing and submission to online job-search
sites. Digital risumis can be embellished with
photos or video clips, or linked to Websites
that contain relevant supporting information,
such as published articles, research papers,
and work samples. Appropriate links to the sites
of former employers and clients can also be
provided. Specialized software can help job
seekers create digital risumis and can help
employers process and evaluate them. See American
National Standards Institute. |
| digital shopping companions
Browser companion software that operates in
the background and pops up to perform a specific
task: intercept junk e-mail (spam), compare
prices, provide the users password, or manage
personal information online. Some shopping companions-Gator,
for example-act as digital or smart wallets.
They are designed to pop up when the user is
ready to make an online purchase and provide
shipping and billing information with one click.
The information is stored either on the users
computer or on a secure Internet site. A visit
to E-Trade, for example, may trigger an ad paid
for by Schwab, or vice versa. Amazon.coms Alexa,
Brodia.com, CyberCashs InstaBuy, and EntryPoint
are other digital shopping companions. |
| digital-rights management system
A method of protecting the copyright of digitized
content (e.g., music) distributed to consumers
online. A number of companies are working on
digital-rights management systems, but the edge
seems to belong to InterTrust, which has developed
a model called a meta-utility to deal with
both copyright protection and payment. In the
InterTrust model, digital content is packaged
in an encrypted file called a Digibox, which
includes rules-to be determined by the content
distributor-about usage, access, and payment. |
| digitized data that has been
converted to a type of signal that the computers
and telecommunications equipment that make up
the Internet can understand |
| direct costs the costs incurred,
in addition to fixed costs, as a result of manufacturing
a product or providing a service. Direct costs
are made up of direct material, direct labour
and direct manufacturing or servicing costs. |
| Direct Financing Lease(Direct
Lease): A non-leveraged lease by a lessor (not
a manufacturer or dealer) in which the lease
meets any of the definitional criteria of a
capital lease, plus certain additional criteria. |
| DIRECT MAIL – A marketing effort
conducted exclusively by mail. |
| DIRECT MARKETING – Marketing
via leaflets, brochures, letters, catalogs,
or print ads mailed or distributed directly
to current and potential consumers. The direct
marketing industry has grown enormously as a
result of increasingly specialized mailing lists. |
| direct marketing the use of
the telephone and nonpersonal media to introduce
products to consumers, who can then purchase
them by mail or telephone |
| Direct Overhead. Costs directly
associated with the manufacture of goods. That
could include factory lighting, rent, insurance.
Indirect overhead could include office expenses,
R&D, lighting, etc. |
| Direct Placement. Also known
as a private placement, the sale of securities
directly to one or more professional investors
or institutions, frequently insurance companies.
The sale of securities in this fashion avoids
many of the fees typically associated with public
offerings. |
| DIRECT RESPONSE – An advertising
technique that urges the audience to respond
in a particular manner, usually to buy a product,
and provides that audience with the means to
do so. A business reply card (BRC) is a direct
response tool. |
| Direct Sales Method - selling
direct to the end user with promotional efforts
using advertising, direct mail or telephone
sales. |
| direct selling the marketing
of products to ultimate consumers through face-to-face
sales presentations at home or in the workplace |
| DIRECT SKIP - An outright generation-skipping
transfer, either by gift or at death, to a recipient,
known as a -skip person,- who is two or more
generation levels below the transferor. A direct
skip also occurs upon a transfer by gift or
at death to a trust, all of the beneficiaries
of which are skip persons. |
| directing the combined processes
of leading and motivating |
| direct-mail advertising promotional
material that is mailed directly to individuals |
| director’s guarantee a personal
guarantee given by a director of a company that
s/he will be personally responsible for a debt
or other liability of the company. Usually requested
in credit applications, leases, loans and hire
purchase agreements. |
| Directors Directors are elected
by the shareholders. They manage or direct the
affairs of corporation. Typically, the directors
make only major business decisions and monitor
the activities of the officers. |
| direct-response marketing a
type of marketing that occurs when a retailer
advertises a product and makes it available
through mail or telephone orders |
| Disappearing Deductible. An
insurance policy where losses below a certain
amount are excluded. Those above a certain amount
are paid in full and those in between are paid
a multiple of the loss. |
| DISASTER PREVENTION CHECKLIST:
A questionnaire used to assess preventative
measures in areas of operations such as overall
security, software, data files, data entry reports,
microcomputers, and personnel. |
| DISASTER PREVENTION: Measures
employed to prevent, detect, or contain incidents
which, if unchecked, could result in disaster. |
| DISASTER RECOVERY ADMINISTRATOR:
The individual responsible for documenting recovery
activities and tracking recovery progress. |
| DISASTER RECOVERY COORDINATOR:
The Disaster Recovery Coordinator may be responsible
for overall recovery of an organization or unit(s).
SIMILAR TERMS: Business Recovery Coordinator. |
| DISASTER RECOVERY PERIOD: The
time period between a disaster and a return
to normal functions, during which the disaster
recovery plan is employed. |
| DISASTER RECOVERY PLAN: The
document that defines the resources, actions,
tasks and data required to manage the business
recovery process in the event of a business
interruption. The plan is designed to assist
in restoring the business process within the
stated disaster recovery goals. |
| DISASTER RECOVERY PLANNING:
The technological aspect of business continuity
planning. The advance planning and preparations
which are necessary to minimize loss and ensure
continuity of the critical business functions
of an organization in the event of disaster.
SIMILAR TERMS: Contingency planning; business
resumption planning; corporate contingency planning;
business interruption planning; disaster preparedness. |
| DISASTER RECOVERY SOFTWARE:
An application program developed to assist an
organization in writing a comprehensive disaster
recovery plan. |
| DISASTER RECOVERY TEAMS (Business
Recovery Teams): A structured group of teams
ready to take control of the recovery operations
if a disaster should occur. |
| DISASTER RECOVERY: The ability
to respond to an interruption in services by
implementing a disaster recovery plan to restore
an organization's critical business functions. |
| DISASTER: Any event that creates
an inability on an organizations part to provide
critical business functions for some predetermined
period of time. SIMILAR TERMS: Business Interruption;
Outage; Catastrophe. |
| Disbursement - The actual payout
to borrower of loan funds, in whole or part.
It may be concurrent with the closing, or follow
it. |
| Disbursements funds paid out
of a business in settlement of obligations. |
| Disbursing Officer - An employee
authorized to pay out cash or issue checks in
settlement of vouchers approved by a certifying
officer. |
| discharge by mutual assent termination
of a contract by mutual agreement of all parties |
| Discipline designed to identify,
attract, and retain a company’s most valuable
customers. Theoretically, CRM can provide a
unified enterprise-wide view of the customer
to cultivate high-level relationships that can
lead to improved loyalty and profits. Effective
CRM requires an integrated sales, marketing,
and service strategy. CRM has resurfaced because
technology has ameliorated its implementation.
Information systems make it possible to capture
detailed customer information and distribute
it throughout the company. An astute CRM strategy
can anticipate needs; tailor messages, products,
and services; create value; anticipate problems;
and improve the customers overall experience
in dealing with the company. |
| disclaimer (disclaim) A statement
that the auditor is unable to express an opinion
as to the presentation of financial statements
in conformity with U.S. GAAP. |
| disclosure Revealing information.
Financial statement footnotes are one way of
providing necessary disclosures. |
| Discount a deduction made from
the normal cost or purchase price. |
| discount brokers — Discount
stock brokers are to full-service brokers as
warehouse stores are to boutiques. You don’t
expect much, if any, advice from your discount
broker on what to buy. She or he usually doesn’t
expect you to pay as much as you would at full-service
brokers. A discount broker’s main job is to
carry out your requests to buy and sell. |
| discount rate the interest
rate that the Federal Reserve System charges
for loans to member banks |
| Discount Rate. 1. The rate
used to compute discounted cash flows or the
present value of an investment. 2. The interest
rate that the Federal Reserve charges member
banks for loans. |
| discount store a self-service,
general-merchandise outlet that sells goods
at lower-than-usual prices |
| Discount Yield. The yield on
a security sold at a discount. U.S. treasury
bills are sold at a discount. The face amount
is returned to the investor at maturity. The
annual yield is computed by dividing the discount
by the face amount, then multiplying by the
number of days in the year (360) and dividing
by the number of days to maturity. |
| discount a deduction from
the price of an item |
| Discount. This term can have
a number of meanings, depending on the context.
When used in connection with a loan, it's where
the bank deducts its interest payment before
giving the loan proceeds to the borrower. For
example, where $100 is borrowed at 10% for one
year, the borrower receives only $90. For bonds,
it's the difference between the current market
price and the face amount of the bond. |
| Discounted Cash Flow. The application
of a factor, based on the cost of the firm's
capital or prevailing interest rates (with a
possible adjustment for risk), to the cash inflows
and outflows from a project or investment. Also
called net present value analysis. |
| Discounting of bills: Where
the payee of a term bill requires payment immediately,
a bank may discount the bill, i.e. make immediate
payment, deducting an amount for |
| discovery sampling Acceptance
sampling (sampling to determine whether internal
control compliance is greater than or less than
the tolerable deviation rate) when expected
attribute occurrence rate is zero. |
| discretionary income disposable
income less savings and expenditures on food,
clothing, and housing |
| discretionary order an order
to buy or sell a security that lets the broker
decide when to execute the transaction and at
what price |
| Dishonoured the word used to
describe a cheque, which the bank will not pay,
because the customer’s account lacks sufficient
funds. |
| disintermediation Cutting out,
or displacing, the middleman, or intermediary,
between producers and consumers in transactions.
By facilitating connections between producers
and consumers, the Internet has struck fear
into the hearts of middlemen in a variety of
industries. Travel and insurance agents, stockbrokers,
and bankers are among those experiencing disintermediation,
as newly empowered consumers buy airline tickets,
insurance, securities, and mortgages without
their services. |
| Disintermediation. When individuals
(or other entities) take money out of savings
accounts and put the funds in money market accounts. |
| Dispatch: An amount paid by
a vessel's operator to a charter if loading
or unloading is completed in less time than
stipulated in the charter party. |
| DISPLAY AD – An illustrated
advertisement in a newspaper or magazine. |
| disposable income personal
income less all additional personal taxes |
| disruptive technology A phrase
coined by Clayton Christensen of the Harvard
Business School to describe any technology that
overturns a traditional business model. It could
apply to the steam engine in the age of sail,
for example, as well as to the Internet in the
age of paper linearity. |
| Dissolution Is the termination
of a corporation's legal existence. Dissolution
may be caused many ways including, failure to
file annual reports, failure to pay certain
taxes, bankruptcy, or voluntary dissolution
of the corporation by the shareholders and directors.
Business Filings does perform voluntary dissolution
filings. |
| Dissolution: Methods by which
a corporation concludes its business and liquidates.
Dissolutions may be involuntary because of bankruptcy
or credit problems or voluntary on the initiation
of the directors or shareholders of a corporation. |
| distance learning The process
of obtaining education or training from a site
where you are not present at the time it is
being given. This can run the gamut: Students
can attend a seminar beamed to 100 business
schools around the country and patched into
a large-screen television. Or an engineer can
receive onsite training via the computer to
solve a malfunction on a North Atlantic oil
rig. See e-learning. |
| DISTRIBUTED PROCESSING: Use
of computers at various locations, typically
interconnected via communication links for the
purpose of data access and/or transfer. |
| Distribution Channel - the
path your product follows to be delivered to
the end user. This may be through distributors,
retail outlets, self service outlets, vending
machines, telephone sales, direct mail sales,
etc. |
| Distributions to owners Distributions
of business funds to the owners of a business.
(Also called withdrawals, monthly draw, or draw.) |
| Distributor - an enterprise
that purchases your products for resale to their
customers who are usually retail outlets. The
distributor expects to receive a significant
price discount for providing the distribution
service. |
| Distributor: A foreign agent
who sells for a supplier directly and most often
collects all payments from customers and maintains
an inventory of the supplier's products. |
| diversification — An investing
technique. The idea is to buy lots of different
types of investments so if the value of one
nose dives, you’re not suicidal. |
| DIVERSIFICATION - The process
of spreading the investment of a fund both as
to type of securities and as to industries. |
| diversification the process
of spreading assets among several types of investments
to lessen risk |
| Divestiture - Change of ownership
and/or control of a business from a majority
(non-disadvantaged) to disadvantaged persons. |
| divestiture the process of
dismantling a company and selling off different
parts |
| Dividend - A distribution of
the earnings of a corporation. Dividends may
be in the form of cash, stock or property. All
dividends must be declared by the board of directors.
Syn. stock dividend. See also dividend yield. |
| Dividend a distribution of
the profits of a company among its members or
shareholders. |
| Dividend A dividend is a distribution
of money or property paid by the corporation
out of the corporation's profits to shareholders.
Dividend payments are subject to double taxation,
the corporation pays tax on its profits and
the dividend recipient must pay income taxes
on the dividend payment, the same money is taxed
twice. The directors of the corporation decide
if a dividend payment is to be made and it can
only be made if the corporation has profits. |
| Dividend Exclusion. Regular
(not S) corporations can exclude from income
70% of dividends received. If the corporation
owns 20% or more of the stock of the other corporation,
it can exclude 80%. A 100% exclusion is provided
for 80% plus owned corporations. |
| Dividend Payout Ratio. The
ratio of the annual dividend to the earnings
of a company. Stable, mature companies (such
as utilities) typically have a high payout ratio. |
| dividend a distribution of
earnings to the stockholders of a corporation |
| Dividend: That portion of
a corporation's earnings that is paid to the
stockholders. |
| Dividend: A distribution of
money or property paid by the corporation to
a shareholder based on the amount of shares
held. Dividends must be paid out of the corporations
net earnings and profits. The board of directors
has the authority to declare or withhold dividends
based on sound business discretion. |
| dividends — Payments corporations
make to their shareholders. The per-share amount
is determined by corporate earnings. |
| Dock receipt: A receipt issued
by an ocean carrier to acknowledge receipt of
a shipment at the carrier's dock or warehouse. |
| Dock Statement: A receipt issued
by an ocean carrier to acknowledge the receipt
of a shipment at the carrier's dock or warehouse
facilities. |
| document (documentary) (documentation)
Written or printed paper that bears information
that can be used to furnish decisive evidence.
Could also be a recording, computer readable
information, or a photograph. |
| document management The computerized
management of electronic and paper-based documents.
A document management system generally includes
an optical scanner and optical character recognition
(OCR) system to convert paper documents into
electronic form, some form of database management
system (DBMS), and a search mechanism. |
| Document of title: A transport
document (usually a bill of lading) which (when
appropriately made out) entitles the bearer
to claim the goods from the carrier. |
| Documentary collection: Procedure
in which banks in the buyer's and seller's country
act for the seller by presenting commercial
documents to the buyer along with a payment |
| Documentary credit: sometimes
used as another name for a letter of credit. |
| DOG AND PONY SHOW (colloquial)
– An elaborate pitch or presentation of an advertising
campaign. |
| Doing Business As (DBA) A "DBA",
also known as an "assumed name", is typically
completed by making a filing at the county level
where the business is located. This filing does
not change the official name of the corporation;
however, it allows the company to use additional
names. |
| dollar-cost-averaging — A system
of buying securities at regular intervals with
a fixed-dollar amount. The investor buys by
the dollar’s worth rather than by the number
of shares. If the number of dollars stays constant,
investments buy more shares when prices are
low and fewer when prices are high. Temporary
downswings in price benefit the investor who
continues to buy in good times and bad, as the
price at which shares are sold exceeds the average
purchase price. |
| Domain name: a unique name
assigned to a numerical address that identifies
your site on the World Wide Web. |
| Domestic Corporation A corporation
is a domestic corporation in the state where
it has incorporated. |
| domestic corporation a corporation
in the state in which it is incorporated |
| Domestic corporation: A corporation
is a domestic corporation in the state in which
it is incorporated. See also Foreign corporation. |
| domestic system a method of
manufacturing in which an entrepreneur distributed
raw materials to various homes, where families
would process them into finished goods to be
offered for sale by the merchant entrepreneur |
| dot-commercial Interactive
marketing that is a hybrid of television advertising
and online media. Instead of just flashing up
the Website address, the television commercial
sends consumers to a Website for a specific
activity: to view alternative endings for the
spot, provide input on how the script evolves,
order free customized CDs, etc. |
| Double Taxation Corporations
are treated as a separate legal taxable entity
for income tax purposes. Therefore, corporations
pay tax on their earnings. If corporate earnings
are distributed to shareholders in the form
of dividends, the corporation does not receive
the reasonable business expense deduction, and
dividend income is taxed as regular income to
the shareholders. Thus, to the extent that earnings
are distributed to shareholders as dividends,
there is a double tax on earnings at the corporate
and shareholder level. S corporations and LLCs
are pass-through entities which are not subject
to the double tax. |
| double-entry bookkeeping a
system in which each financial transaction is
recorded as two separate accounting entries
to maintain the balance shown in the accounting
equation |
| Double-Entry Bookkeeping. An
accounting system where every debit made to
one account has a corresponding credit made
to another account. |
| Dow Jones Industrial Average
— An important stock market indicator, used
to judge the stock market’s general well-being
and how well your stocks are doing comparatively.
It measures the performance of 30 industrial
stocks. When the media reports that the market
rose 20 points, they’re really saying the Dow
rose 20 points. |
| DOWNLOADING: Connecting to
another computer and copying a program or file
from that system. |
| draft issued by the exporter’s
bank, ordering the importer’s bank to pay for
the merchandise, thus guaranteeing payment once
accepted by the importer’s bank |
| Draft: Another name for a bill
of exchange. |
| Drawee: Party on whom a bill
of exchange is drawn, i.e. who is required to
make payment. In the context of collections,
usually the buyer. In letters of credit, the
drawee is usually a bank. |
| Drawer the person who writes
a cheque in payment for goods or services. |
| Drawer: Party drawing up the
bill of exchange. Usually also the payee, to
whom the money is due. Often used to designate
the 'seller'. |
| Drawings Account: The account
used to show the withdrawals of earnings by
the owner(s) of a sole proprietorship or partnership. |
| Drawings withdrawals of assets
(usually cash) from a business by a sole proprietor
or a partner. |
| Drawings: Distribution to
the owner(s) of a sole proprietorship or partnership. |
| DRIVE TIME – The hours when
the most commuters are in their cars. During
"drive time," radio advertising costs more because
of increased listenership. |
| DROP SHIPMENT A shipment directly
from the manufacturer to the end user. |
| dual date If a major event
comes to the auditor's attention between the
report date and issuance of the report, the
financial statements may include the event as
an adjustment or disclosure. The auditor dual
dates the audit report (as of the end of fieldwork,
except footnote XX, which is dated later). |
| dual-purpose test Audit procedures
are classified as substantive tests or tests
of controls. If a procedure provides both types
of evidence it is a dual-purpose test. |
| Due Diligence - The careful
investigation by the underwriters that is necessary
to ensure that all material information pertinent
to an issue has been disclosed to prospective
investors. |
| Due Diligence. The thorough
investigation of a potential acquisition candidate,
real estate investment, etc. Often used to refer
to the investigation of a company for an initial
public offering. |
| Due-On-Sale. A clause in a
mortgage that stipulates any balance remaining
on a mortgage is due when the underlying property
is sold. |
| DUMMY – A rough layout of assembled
work for a brochure or other printed piece. |
| dumping exportation of large
quantities of a product at a price lower than
that of the same product in the home market |
| Dumping: Exporting/importing
merchandise into a country below the domestic
price or the costs incurred in production and
shipment. |
| DUNS (Data Universal Numbering
System) A database maintained by Dun and Bradstreet
that is used by the Government to identify each
contractor and their location(s). This number
is required to register with the Central Contractor
Register (CCR) that is used by the government's
electronic commerce/electronic data interchange
(EC/EDI) system called FACNET. You can obtain
a DUNS number at no cost by calling Dun and
Bradstreet at 800-333-0505. |
| Duty: A tax on imports imposed
by the customs authority of a country. Duties
are generally based on the value of the product
being imported (ad valorem), weight, or quantity
(specific duties), or a combination of value
and other factors (compound duties). Also known
as a tariff. |
| E.C. (EUROPEAN COMMUNITY or
EUROPEAN COMMON MARKET) is a trading block of
countries in Europe that have agreed on common
regulations on cross-border trade. |
| EA is Enrolled Agent. |
| Eap Counselor - Conducts confidential
consultations with troubled employees who so
request or who are referred for objective analysis
of a personal problem and for identification
of the best available assistance and/or professional
services needed to resolve the employee |
| Earned income credit. A tax
credit available to individuals with low earned
income. An individual is entitled to the full
amount of this credit even if it exceeds the
amount of tax otherwise due. |
| EARNED INCOME is that income
realized by the provisioning of goods and services. |
| Earned income. Income earned
by working for it. Interest, dividends and other
kinds of profits are examples of unearned income. |
| EARNED SURPLUS - The profits
of an enterprise that remain undistributed and
which have been made through the regular operations
of the enterprise |
| Earning Power - The demonstrated
ability of a business to earn a profit, over
time, while following good accounting practices.
When a business shows a reasonable profit on
invested capital after fully maintaining the
business property, appropriately compensating
its owne |
| EARNING POWER is earnings before
interest and taxes (EBIT) divided by total assets. |
| Earnings Form. Business interruption
insurance where the payment is a specified amount
only when the loss is caused by an insured peril. |
| earnings per share — The amount
of money a company makes per share of common
stock. This figure is calculated by taking net
income and dividing it by the number of common
shares outstanding. |
| EARNINGS PER SHARE (EPS) is
the amount of net income (earnings) related
to each share of stock; computed by dividing
net income by the number of shares of common
stock outstanding during the period. |
| earnings per share a financial
ratio calculated by dividing net income after
taxes by the number of shares of common stock
outstanding |
| Earnings per Share: The computation
of a corporation's earnings based on the number
of stock shares outstanding at a given point
in time. |
| EARNINGS RETENTION is the proportion
of net income that is not paid in dividends.
A firm earning $80 million after taxes and paying
dividends of $20 million has a retention rate
of $60 million/$80 million, or 75%. A high retention
rate makes it more likely a firm's income and
dividends will grow in future years. |
| Easement - A right or privilege
that a person may have on another's land, as
the right of a way or ingress or egress. |
| EASEMENT - An acquired right
of use or enjoyment, falling short of ownership,
which a person may have in the land of another;
as one-s right-of-way over another-s land. |
| EBITDA means Earnings Before
Interest, Taxes, Depreciation and Amortization,
but after all product / service, sales and overhead
(SG&A) costs are accounted for. Sometimes referred
to as Operating Profit. |
| EBITDARM is an acronym for
Earnings Before Interest, Taxes, Depreciation,
Amortization, Rent and Management fees. |
| e-business the organized effort
of individuals to produce and sell, for a profit,
the products and services that satisfy society’s
needs through the facilities available on the
Internet |
| e-commerce buying and selling
activities conducted online |
| E-commerce: the order processing programming,
software and/or standards that enables one to
accept and process product orders over the Internet. |
| ECONOMIC BOOK VALUE allows
for a book value analysis that adjusts the assets
to their market value. This valuation allows
valuation of goodwill, real estate, inventories
and other assets at their market value. |
| economic community an organization
of nations formed to promote the free movement
of resources and products among its members
and to create common economic policies |
| Economic Life(Useful Life):
The period of time during which an asset will
have economic value and be usable. |
| economic model of social responsibility the
view that society will benefit most when business
is left alone to produce and market profitable
products that society needs |
| Economic Order Quantity (EOQ).
The most economical quantity to purchase, balancing
ordering costs with carrying costs. |
| ECONOMIC VALUE (EV) is the
value of an asset deriving from its ability
to generate income. |
| ECONOMIC VALUE ADDED (EVA)
measures the difference between the return on
a companies capital and the cost of that capital.
A positive EVA indicates that value has been
created for shareholders; a negative EVA signifies
value destruction. |
| economics the study of how
wealth is created and distributed |
| Economies of Scale. Efficiencies
associated with larger-scale operations. For
example, it might cost a manufacturer $100 to
manufacture one unit, $180 for two units, $240
for three units, and so on, such that the average
cost per unit decreases as production volume
increases. |
| economy the system through
which a society answers the two economic questions—how
wealth is created and distributed |
| edi “Electronic Data Interchange”
is the use of communication between an entity
and customers or suppliers to transact business
electronically. Purchase, shipping, billing,
cash receipt, and cash disbursements can be
completed entirely by exchanging electronic
messages. |
| edit check Reasonableness,
validity, limit, and completeness tests that
are programmed routines designed to check input
data and processing results for completeness,
accuracy and reasonableness. |
| edp “Electronic Data Processing”.
Processing of information by computer as opposed
to handwritten records. |
| effective income tax rate The
income tax provision (expense) shown on an income
statement divided by the pretax income. This
differs from the statutory rate because of deductions,
credits, and exclusions. |
| effective internal control
Reasonable assurance that the entity’s operational
objectives are achieved, that published financial
statements are reliably prepared, and applicable
laws and regulations are complied with. |
| Effective Lease Rate: The effective
rate (to the lessee) of cash flows resulting
from a lease transaction. To compare this rate
with a loan interest rate, a company must include
in the cash flows any effect the transactions
have on federal tax liabilities. |
| effectiveness Producing a desired
outcome. An audit procedure is effective if
the evidence supports a correct conclusion. |
| efficiency The ratio of the
audit evidence produced to audit resources used. |
| EFFICIENT MARKET THEORY is
the hypothesis that market prices reflect the
knowledge and expectations of all investors.
Within this theory, investors who adhere to
it believe it to be highly improbable that market
movement can be predicted, i.e., using darts
to chose stocks are just as effective as stock
or market analysis. |
| ELECTION - The choice of an
alternative right or course. For example, the
right of a widow to take the share of her deceased
husband-s estate to which she is entitled under
the law, despite a contrary provision in the
will, is known as the widow-s election. |
| Electronic Data Interchange
- Transmission of information between computers
using highly standardized electronic versions
of common business documents. |
| electronic funds transfer (EFT)
system a means of performing financial transactions
through a computer terminal or telephone hookup |
| ELECTRONIC VAULTING: Transfer
of data to an offsite storage facility via a
communication link rather than via portable
media. Typically used for batch/journaled updates
to critical files to supplement full backups
taken periodically. |
| ELEEMOSYNARY - Pertaining or
devoted to legal charity; as an eleemosynary
institution. |
| embargo a complete halt to
trading with a particular nation or in a particular
product |
| embedded control performance
deals with unexpected changes to data. |
| embezzlement To take assets
in violation of trust. |
| Embezzlement. Theft or use
of money or property by an individual in whose
care the money or property had been entrusted. |
| Embezzlement: The act of an
employee stealing money or assets of the company. |
| EMC (EXPORT MANAGEMENT COMPANY)
is a private company that serves as the export
agent for manufacturers, being paid by commission
or retainer. Merchandise is not normally purchased
by the EMC. |
| EMERGENCY PREPAREDNESS: The
discipline which ensures an organization, or
community's readiness to respond to an emergency
in a coordinated, timely, and effective manner. |
| EMERGENCY PROCEDURES: A plan
of action to commence immediately to prevent
the loss of life and minimize injury and property
damage. |
| EMERGENCY: A sudden, unexpected
event requiring immediate action due to potential
threat to health and safety, the environment,
or property. |
| Emerging Small Business - A
small business concern whose size is no greater
than 50 percent of the numerical size standard
applicable to the Standard Industrial Classification
code assigned to a contracting opportunity. |
| Employee Assistance Program
(Eap) Coordinator - Coordinates the activities
of Central Office or regional counselors, maintains
a community resource list, of available professional
assistance to troubled employees and a current
roster of EAP counselors for the area of his/her
jurisdiction. |
| employee benefit a reward
in addition to regular compensation that is
provided indirectly to employees |
| employee ownership a situation
in which employees own the company they work
for by virtue of being stockholders |
| EMPLOYEE RELIEF CENTER (ERC):
A predetermined location for employees and their
families to obtain food, supplies, financial
assistance, etc., in the event of a catastrophic
disaster. |
| Employee stock ownership plan
(ESOP). A type of profit-sharing plan in which
benefits come in the form of stock in the employer. |
| employee training the process
of teaching operations and technical employees
how to do their present jobs more effectively
and efficiently |
| Employer Identification Number
(EIN) - used to identify the tax accounts of
employers, sole proprietors, corporations, partnerships,
and other entities. |
| EMPLOYER IDENTIFICATION NUMBER
(EIN) A number obtained by a business from the
IRS by filing form SS-4. If you are a sole proprietorship,
your EIN is your social security number. |
| Employment Taxes - federal
income tax withholding, social security and
Medicare taxes, and federal unemployment tax. |
| empowerment making employees
more involved in their jobs by increasing their
participation in decision making |
| encryption is scrambling data
so it is meaningless to anyone but the intended
recipient, who has the key to unscramble the
data. |
| ENCUMBERED is when an asset
is owned by one party subject to the legal claims
of another party. One example is a homeowner
that owns a home that is subject to (encumbered
by) the claims of the mortgage holder. |
| ENCUMBRANCE is a) a right or
interest in land owned by someone other than
the owner of the land itself; examples include
easements, leases, mortgages, and restrictive
covenants; or, b) in government accounting,
an encumbrance is an anticipated expenditure,
or funds restricted for anticipated expenditures,
such as for outstanding purchase orders. |
| endorsement the payee’s signature
on the back of a negotiable instrument |
| Endorsement. A written agreement
modifying a standard insurance policy to meet
certain conditions or to complete a policy. |
| Endorsement: Signing on the
back of a document so as to assign a right or
benefit to another party. Endorsement by the
seller may be necessary for transport documents,
insurance documents, bills of exchange or many
other documents. |
| endowment life insurance life
insurance that provides protection and guarantees
the payment of a stated amount to the policyholder
after a specified number of years |
| engagement letter A letter
that represents the understanding about the
engagement between the client and the CPA. The
letter identifies the financial statements and
describes the nature of procedures to be performed.
It includes an explanation of the objectives
of the procedures, an explanation that the financial
information is the responsibility of the company's
management, and a description of the form of
report. |
| Engagement: The assumption
of payment responsibility in respect of a letter
of credit, e.g.when an Advising bank agrees
to add its confirmation to a credit. |
| Enterprise - Aggregation of
all establishments owned by a parent company.
An enterprise can consist of a single, independent
establishment or it can include subsidiaries
or other branch establishments under the same
ownership and control. |
| ENTERPRISE VALUE (EV) is a
measure of a company's value. Enterprise value
is calculated by: market capitalization plus
debt and preferred shares minus cash and cash
equivalents. In effect, enterprise value is
the theoretical takeover price, i.e., in the
event of a buyout an acquirer would have to
take on the company's debt but would pocket
its cash. |
| ENTERPRISE ZONE is a depressed
neighborhood, usually in an urban area, where
businesses are given tax incentives and are
not subject to some government regulations.
These advantages are designed to attract new
business in the zone. |
| Entity an individual (sole
trader), partnership, a body corporate, a corporation,
an incorporated association or body of persons,
a trust or superannuation fund. |
| ENTITY CONCEPT is the concept
that financial accounting and reporting relates
only to the activities of a specific business
entity and not to the activities of the owners
of that entity. |
| ENTITY, in business, is a separate
or self-contained existence that provides goods
or services. |
| Entity. A partnership, corporation,
LLC, S corporation, trust, estate, or joint
venture of any kind recognized for tax purposes. |
| ENTREPRENEUR - A person who
assumes the financial risks associated with
the start-up, operation, and management of a
business. |
| Entrepreneur - One who assumes
the financial risk of the initiation, operation
and management of a given business or undertaking. |
| Entrepreneur a person who organises
and manages a business, but usually only applied
to people who have shown exceptional ability
and imagination in launching and succeeding
with new business ventures. |
| ENTREPRENEUR is the person
who assumes the financial risk of the initiation,
operation and management of a given business
or undertaking. He/She is primarily a financial
and/or professional risk taker almost to the
extreme. |
| ENTREPRENEUR Someone who is
willing to assume the responsibility, risk and
rewards of starting and operating a business. |
| entrepreneur a person who
risks time, effort, and money to start and operate
a business |
| Entrepreneur. An individual
who organizes and owns a business for the purpose
of creating long-term wealth. The responsibility
and risk associated with the business are also
the entrepreneur's. |
| Entrepreneur: One who takes
on the financial risk of the initiation, operation
and management of a business. |
| environment The 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 and practices. |
| Environmental Protection Agency
(EPA) the federal agency charged with enforcing
laws designed to protect the environment |
| EPS (earnings per share) is
the amount of net income (earnings) related
to each share of stock; computed by dividing
net income by the number of shares of common
stock outstanding during the period. |
| Equal Employment Opportunity
Commission (EEOC) a government agency with
power to investigate complaints of employment
discrimination and power to sue firms that practice
it |
| EQUIPMENT LOAN is a loan used
for the purchase of capital equipment. |
| Equipment Schedule: A document
that describes in detail the equipment being
leased or purchased. For a lease, it may also
state the lease term, commencement date, repayment
schedule and location of the equipment. |
| Equities stocks and shares
invested in a business and not bearing fixed
interest. |
| Equity - a percentage ownership
of an enterprise, usually in the form of stock. |
| Equity - An accounting term
used to describe the net investment of owners
or stockholders in a business. Under the accounting
equation, equity also represents the result
of assets less liabilities. |
| EQUITY - The value of the business
which exceeds the claims or liens of others
against it. |
| EQUITY ACCOUNTING is the practice
of showing in a company's accounts the share
of undistributed profits of another company
in which it holds equity ownership (usually
below 50%). The share of profit shown is usually
equal to its share of the equity in the other
company. The profit may not actually be paid
over, but the equity holding company has a right
to this share of the undistributed profit. |
| EQUITY CAPITAL is a form of
financing where equity in a business is sold
to private investors. |
| equity capital money provided
by the business owner/s to finance the business. |
| equity capital money received
from the owners or from the sale of shares of
ownership in the business |
| Equity Financing - The provision
of funds for capital or operating expenses in
exchange for capital stock, stock purchase warrants
and options in the business financed, without
any guaranteed return, but with the opportunity
to share in the company's profits. Equity financi |
| EQUITY FINANCING This involves
"selling" a portion of your company to an outside
investor. You have no obligation to repay the
funds. In general, venture capital firms provide
this type of funding. |
| Equity Financing. Selling partial
ownership in the business to raise capital. |
| EQUITY is, normally, ownership
or percentage of ownership in a company or items
of value. |
| Equity Kicker. See Kicker,
below. |
| EQUITY METHOD is a method of
accounting for investments in associated companies. |
| EQUITY MULTIPLIER (EM) shows
the amount of assets owned by the firm for each
equivalent monetary unit owner claims held by
stockholders, i.e., the equity multiplier measures
how many dollars of assets an institution supports
with each dollar of capital. If a firm is totally
financed by equity, the equity multiplier will
equal 1.00, while the larger the number the
more highly leveraged is the firm. EM compares
assets with equity: large values indicate a
large amount of debt financing relative to equity.
EM, thus, measures financial leverage and represents
both profit and risk measurement. EM affects
a firm’s profit because it has a multiplier
impact on Return on Assets (ROA) to determine
the firm’s Return on Equity (ROE). EM is also
a risk measure because it reflects how many
assets can go into default before a company
becomes insolvent. The EM ratio is best compared
to industry averages. |
| Equity Participant: The owner
participant, trustor owner, or grantor owner. |
| Equity Partnership - A limited
partnership arrangement for providing start-up
and seed capital to businesses. |
| Equity The ownership of a shareholder
in a corporation. |
| Equity The value of an enterprise
or property that is owned; the actual value
of the owner's financial interest in an enterprise. |
| equity theory a theory of
motivation based on the premise that people
are motivated to obtain and preserve equitable
treatment for themselves |
| Equity: The difference between
the market value of a property and the outstanding
mortgage balance. |
| error Unintentional misstatements
or omissions in financial statements. Errors
may involve mistakes in gathering or processing
accounting data, incorrect estimates from oversight
or misinterpretation of facts, and mistakes
in application of principles relating to amount,
classification, presentation or disclosure. |
| Escalation. 1. Additional rent
payments owed by a tenant based on the increase
in the costs of operating the building. See
Base, above. 2. A clause in a purchase contract
providing for upward adjustment of the contract
price if specified contingencies occur. |
| Escrow Accounts - Funds placed
in trust with a third party, by a borrower for
a specific purpose and to be delivered to the
borrower only upon the fulfillment of certain
conditions. |
| ESCROW Temporary monetary deposit
with an independent third party by agreement
between two parties. The escrow money is released
when certain agreed conditions have been met. |
| Escrow: An account established
to monitor the repayment of an owner-financed
type of contract while holding the transfer
document – sometimes known as a contract-collections
loan. These accounts can be bought, sold or
used as collateral for bank-held loans. |
| ESOP (Employee Stock Ownership
Plan). A plan where employees have a vested
interest (stock ownership) in the company |
| Establishment - A single-location
business unit, which may be independent -- called
a single- establishment enterprise-- or owned
by a parent enterprise. |
| ESTATE is the entire group
of assets owned by an individual at the time
of his or her death. The estate includes all
funds, personal effects, interests in business
enterprises, titles to property-real estate
and chattels, and evidences of ownership such
as stocks, bonds and mortgages owned, notes
receivable, etc. All claims against an estate
must be duly filed with the Executor or Administrator
of the estate, and approved by the court of
law under which the will is being probated or
the line of heritage is being determined before
the indebtedness may be satisfied. |
| ESTATE TAXES are the Federal
taxes levied on the transfer of property from
the deceased to his or her heirs, legatees or
devisees. |
| esteem needs our need for
respect, recognition, and a sense of our own
accomplishment and worth |
| ESTIMATE – The proposed or
expected budget for an advertising effort. Prior
to the inception of any promotional project
or ad campaign, Motto Advertising provides its
clients with a detailed cost estimate. |
| Estimated Tax - regular, estimated
payments on income during the year. |
| Estimated tax. Quarterly down
payments on a year's taxes that are required
(on April 15, June 15, September 15, and January
15) if the total year's taxes will exceed $1,000
and the amount is not covered by withholding. |
| estimation sampling is sampling
to estimate the actual value of a population
characteristic within a range of tolerable misstatement. |
| ETC (EXPORT TRADING COMPANY)
is a private company that usually purchases
items from domestic manufacturers, then sells
them to foreign markets. The difference between
an EMC and an ETC is sometimes insignificant,
i.e., an EMC may occasionally take title of
goods, while an ETC may sometimes work strictly
on commission without purchasing the goods.
The difference is what the company normally
does. |
| ethics the study of right
and wrong and of the morality of the choices
individuals make |
| Euro Dollars: US funds deposited
in banks outside the United States. This usually
means banks in Europe or the European Union. |
| Euro: The single currency of
the European Economic and Monetary Union (EMU)
introduced in January 1999. EMU members are
Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, Netherlands, Portugal,
and Spain. |
| EV (economic value) is the
value of an asset deriving from its ability
to generate income. |
| EVENT RISK is the risk that
the ability of an issuer to make interest and
principal payments will change because of rare,
discontinuous, and very large, unanticipated
changes in the market environment such as (1)
a natural or industrial accident or some regulatory
change or (2) a takeover or corporate restructuring. |
| everyday low prices (EDLP) setting
low prices for products on a consistent basis
rather than setting higher prices and frequently
discounting them |
| evidence (evidential matter)
includes written and electronic information
(such as checks, records of electronic fund
transfers, invoices, contracts, and other information)
that permits the auditor to reach conclusions
through reasoning. |
| examination An examination
of prospective financial statements is evaluation
of preparation of the prospective statements,
support underlying assumptions, and presentation.
The accountant reports whether, in his or her
opinion, the statements are presented in conformity
with AICPA guidelines and the assumptions provide
a reasonable basis for the responsible party's
forecast. The accountant should be independent,
proficient, adequately plan the engagement,
supervise assistants, and obtain sufficient
evidence to provide a reasonable basis for the
report. |
| examine (examining) As an audit
procedure, to examine something is to look at
it critically. |
| except for A qualified opinion.
An auditor can qualify the audit opinion for
both departures from U.S. GAAP in the financial
statements and for restrictions on the scope
of the audit. The opinion paragraph of the qualified
report is worded "In our opinion, except for..." |
| Excess in an insurance policy,
excess clauses specify that the policyholder
will be responsible for a portion of claims
under certain conditions. |
| Excess Liability Insurance.
A policy that covers losses that exceed those
covered under another policy. For example, your
regular policy covers losses up to $300,000.
You purchase an excess liability policy that
covers losses from $300,000 to $2,000,000. In
effect, an excess liability policy is one with
a very high deductible. Also known as an umbrella
policy. |
| Exchange permit: A government
permit sometimes required by the importer's
government to enable the import firm to convert
its own country's currency into foreigh currency
. |
| Exchange rate: The price of
one currency in terms of another. |
| EXCISE TAX is a tax imposed
by federal, state, and local governments on
an act, occupation, privilege, manufacture,
sale, or consumption that is not deductible
(e.g., tobacco, gasoline and spirits). This
term is in increasing usage to describe almost
every tax other than income tax and property
tax. |
| excise tax a tax on the manufacture
or sale of a particular domestic product |
| exclusive distribution the
use of only a single retail outlet for a product
in each geographic area |
| execute (execution) To carry
out an internal control procedure, such as to
sign and mail a check after inspecting supporting
documents. |
| EXECUTOR is a legal entity,
frequently an individual, known before death
to a testator, who is named in the testator's
will to carry out the desires of the deceased
after his death as designated in the will. Executors
must be approved by the court of law probating
the will. An executor pays all indebtedness
as claimed by creditors of the estate, with
the approval of the court of law, and then carries
out or executes the will according to the terms
set forth by the testator. |
| EXEMPLIFIED COPY - A copy of
a record or document witnessed or sealed or
certified to, as required by law, for the purpose
of a particular transaction. |
| EXEMPTION EQUIVALENT - See
Applicable Exclusion Amount. |
| EX-FACTORY is where a seller's
responsibility ends when the buyer at point
of origin, i.e., factory, accepts merchandise.
This can also be written as Ex-Warehouse, Ex-works,
etc. |
| EX-IM: The US Export/Import
bank. |
| existence Assertions about
existence deal with whether assets or liabilities
exist at a given date. For example, management
asserts that finished goods inventories in the
balance sheet are available for sale. |
| EXISTING USE VALUE (EUV) is
the price at which a property can be sold on
the open market assuming that it can only be
used for the existing use for the foreseeable
future. |
| EXONERATION - The act of relieving
one of what otherwise would be or might be a
liability or a duty. |
| expectancy theory a model
of motivation based on the assumption that motivation
depends on how much we want something and on
how likely we think we are to get it |
| EXPECTED VALUE OF PERFECT INFORMATION
(EVPI) is the difference between the expected
value with (additional) perfect information
and the expected value with current information.
The expected value of perfect information is
the maximum amount a decision maker should pay
for additional information that gives a perfect
signal as to the state of nature. |
| EXPENDABLE TRUST FUND is a
governmental fiduciary fund held in a trustee
capacity by a governmental agency that accounts
for assets and activities restricted to a specific
purpose in accordance to formal intent. The
principal of the fund can be expended towards
only the activity specified, e.g., Unemployment
Compensation Fund, Employee Benefits Fund, etc. |
| expenditure Cash paid or liability
incurred. |
| EXPENDITURE is a cost incurred
in the normal course of business to generate
revenues. See expenses. |
| Expenses - costs incurred (other
than purchases) to carry on a business. |
| EXPENSES are the daily costs
incurred in running and maintaining a business.
See expenditure. |
| Expenses costs incurred by
a business in earning income, for example, rent,
advertising, wages etc. |
| Expenses Costs incurred for
business purposes during an accounting period.
(Costs incurred in connection with earning revenues.) |
| expenses the costs incurred
in operating a business |
| Experience Rating System. Insurance
premiums in such a system are based on the insured's
past experience. |
| Expiry date: The date when
a letter of credit is no longer valid - i.e.
the date beyond which it cannot be used. |
| explanatory A paragraph added
to an audit report to explain something, such
as the reason for a qualified or adverse opinion. |
| explicitly Fully and clearly
expressed, leaving nothing implied. |
| EXPLORATORY RESEARCH is a method
used when gathering primary information for
a market survey where targeted consumers / customers
are asked very general questions geared toward
eliciting a lengthy answer. |
| export — A domestically produced
good sold abroad. What Japan made its fortunes
on–exports to the U.S. and elsewhere. |
| EXPORT BROKER is an entity
that brings together foreign buyers with domestic
manufacturers for a fee, generally providing
little other services. An EMC, who is also a
middleman, often provides extensive services
to complete the transaction as well. |
| Export Broker: An individual
or firm that brings buyers and sellers together
for a fee, but does not rake part in the actual
sales transaction. |
| EXPORT DECLARATION is the official
paperwork required of exporters so trade transactions
and goods can be tracked. |
| EXPORT LICENSE is the governmentally
issued legal permit to export merchandise. In
the U.S., it is either a general license requiring
no additional paperwork or a validated license
for certain federally controlled items. |
| Export License: A general export
license covers the exportation of goods not
restricted under the terms of a validated export
license. No formal application or written authorization
is needed to ship exports under a general export
license. |
| Export Management Company (EMC):
A private firm that transacts export business
on behalf of its client companies in return
for a commission, salary, or retainer. |
| Export Subsidies: Any form
of government payment that helps an exporter
or manufacturing concern to lower its export
costs. |
| Export-Import Bank of the United
States an independent agency of the U.S. government
whose function it is to assist in financing
the exports of American firms |
| exporting selling and shipping
raw materials or products to other nations |
| EXPOSURE – The number of potential
consumers reached through specific medium. |
| express warranty a written
explanation of the responsibilities of the producer
(or seller) in the event that a product is found
to be defective or otherwise unsatisfactory |
| extend means to multiply one
number by another (to test extensions is to
test the accuracy of multiplication done by
the client). To extend audit procedures is to
apply additional audit procedures to obtain
more evidence. |
| extended coverage insurance
protection against damage caused by wind, hail,
explosion, vandalism, riots or civil commotion,
falling aircraft, and smoke |
| EXTENDED OUTAGE: A lengthy,
unplanned interruption in system availability
due to computer hardware or software problems,
or communication failures. |
| Extended Period of Indemnity:
You may purchase, as an option, an endorsement
to extend the time of recovery after you resume
operations to cover the reduction in income
when you require addition time to return to
normal levels of revenue. |
| external recruiting the attempt
to attract job applicants from outside the organization |
| EXTRA EXPENSE COVERAGE: Insurance
coverage for disaster related expenses which
may be incurred until operations are fully recovered
after a disaster. |
| Extra Expense Coverage: The
insurance company provides coverage for the
necessary additional expenses needed to continue
business when a covered loss damages or destroys
your property. Examples include extra pay for
overtime work to speed the restoration of the
business, the extra cost of moving your operations
to a temporary location, and rental of substitute
equipment. |
| Extra Risk. An insured that
does not fall within the standard risk range.
Insurance can only be obtained for a higher
than normal premium or with less coverage. |
| Extra-Expense Insurance. A
policy that pays for any extraordinary expenses
incurred to keep a business in operation after
a loss caused by an insured peril. |
| EXTRAORDINARY ITEM is a nonrecurring
occurrence that must be explained to shareholders
in an annual or quarterly report of financial
or operational results. |
| Ex-works (EXW): Buyer bears
all costs and assumes all risks for the consignment
once it has left the seller's premises. |
| e-zines small online magazines |
| F.A.S. (FREE ALONG SIDE), e.g.
“F.A.S. New York”, means that, for instance,
if goods are shipped from the State of Nevada
in the U.S. to Madrid, Spain, no charges for
shipment are made to the importer until the
goods are "free alongside the vessel" in New
York. After this point, charges may be applied
to the importer. |
| F.O.B. (FREE ON BOARD), e.g.
“F.O.B New York”, is where the importer would
pay all costs for shipping from one point (New
York) on to the final destination. |
| F.O.R. (FREE ON RAILROAD) is
where goods will be delivered by the exporter
to a railway station. The importer is responsible
from this point on. |
| FACILITIES: A location containing
the equipment, supplies, voice and data communication
lines, to conduct transactions required to conduct
business under normal conditions. SIMILAR TERMS:
Primary Site, Primary Processing Facility, Primary
Office Facility. |
| FACT SHEET – A standard page
in a company’s press kit, the fact sheet gives
a brief description of the company’s business
and area of expertise, the company’s address(es),
phone numbers, principals, date of establishment,
etc. A well-prepared fact sheet saves the journalist
hours of time – and increases the company’s
chance of press coverage. |
| factor a firm that specializes
in buying other firms’ accounts receivables |
| Factor: To sell accounts receivable
at a discount before they are due. |
| Factoring involves the cash
purchase of a business’ sales invoices at a
discount, after which, the factoring company
collects the invoiced amounts from the business’
customers. Factoring is used where the business
needs immediate cash. |
| FACTORING is the practice of
buying debt at a discount, e.g., if somebody
owes you $10,000 payable within a year, a factoring
lender may pay you $9,000 for the debt. You
receive $9,000 cash quickly, but at the cost
of the $1,000 discount. |
| factors of production the
resources used to produce goods and services—natural
resources, labor, capital, and entrepreneurship |
| factory system a system of
manufacturing in which all of the materials,
machinery, and workers required to manufacture
a product are assembled in one place |
| FAILURE OF ISSUE - Failure,
by nonexistence or death, of lineal descendants
(children, grandchildren, and on down the line). |
| Fair And Reasonable Price -
A price that is fair to both parties, considering
the agreed-upon conditions, promised quality,
and timeliness of contract performance. "Fair
and reasonable" price is subject to statutory
and regulatory limitations. |
| Fair Labor Standards Act —
One of the key federal laws protecting workers.
This is the one you drop into conversation if
your boss wants you not to claim all that overtime
you’re working. Established minimum wage and
40-hour work week. States that workers get 1.5
times regular hourly pay if they work more than
40 hours in a week. |
| FAIR LABOR STANDARDS ACT is
a U.S. federal law that enforces a group of
minimum standards that employers must abide
by when hiring employees. |
| Fair Market Purchase Option:
An option to purchase leased property at the
end of the lease term at its then fair market
value. The lessor does not have the ability
to retain title to the equipment if the lessee
chooses to exercise the purchase option. |
| FAIR MARKET VALUE is the price
at which a willing seller will sell and a willing
buyer will buy, in an arms- length transaction,
when neither is under compulsion to sell or
buy and both have reasonable knowledge of relevant
facts. |
| Fair Market Value. The price
at which an item can be sold by a willing seller
to a willing buyer, neither of which are under
any pressure to buy or sell. Furthermore, it's
assumed that both parties are dealing rationally,
have knowledge of relevant facts, and are not
related. |
| Fair Market Value: The price
at which a willing seller will sell, and a willing
buyer will buy, when neither is under compulsion
to sell or buy and both have reasonable knowledge
of relevant facts. |
| family branding the strategy
in which a firm uses the same brand for all
or most of its products |
| family of funds exists when
one investment company manages a group of mutual
funds |
| fasab Federal Accounting Standards
Advisory Board. An organization that sets GAAP
in the United States for federal government
entities. |
| fasb Financial Accounting Standards
Board. A nongovernment private organization
that sets GAAP in the United States for profit
making entities and not-for-profit nongovernmental
organizations. |
| FASB is the Financial Accounting
Standards Board |
| FASB: Financial Accounting
Standards Board. The private organization responsible
for establishing the standards for financial
accounting and reporting in the United States. |
| Fashion Goods - goods where
style is important and price is secondary. These
products could include clothing, jewelry, furniture,
draperies, and dishes, but can sometimes be
stretched into other areas such as umbrellas,
walking canes, cigarette holders, etc. |
| Fast Track Negotiating: Authority
provided by the U.S. Congress to the Executive
Branch to negotiate amendment-proof trade agreements. |
| FBWT, in finance, is Fund Balance
With Treasury |
| FCIA (FOREIGN CREDIT INSURANCE
ACT) is an ExImBank program that offers credit
insurance against losses due to political conflict
or buyer default. |
| feasibility study an examination
of a particular project or business to assess
its chances of operating successfully, before
committing large amounts of money to it. |
| feature article a piece of
up to 3,000 words prepared by an organization
for inclusion in a particular publication |
| Federal Acquisition Regulation
(Far) - The body of regulations which is the
primary source of authority governing the government
procurement process. The FAR, which is published
as Chapter 1 of Title 48 of the Code of Federal
Regulations, is prepared, issued, and maintained
under the joint aus |
| federal deficit a shortfall
created when the federal government spends more
in a fiscal year than it receives |
| Federal Deposit Insurance Corporation
(FDIC) — A child of the Great Depression, this
independent federal agency is supposed to inspire
confidence in banks. It insures deposits up
to $100,000 in member commercial banks, so depositors
can get their money back if a bank goes belly
up. |
| Federal Insurance Contributions
Act (FICA). Social security taxes (for both
old-age, survivors and disability insurance-OASDI-and
Medicare). |
| Federal Reserve System — Group
of banks that regulate the U.S. money supply,
sets rules designed to keep commercial and savings
banks solvent and provides emergency loans to
those banks. Overseen by a board appointed by
U.S. presidents. The chairman of that board
is very powerful, and his actions are closely
watched by investors. |
| Federal Reserve System the
central bank of the United States that is responsible
for regulation of the banking industry |
| Federal Tax Identification
Number This is a number assigned to a corporation
or other business entity by the federal government
for tax purposes. Banks generally require a
tax identification number to open bank accounts.
The federal tax identification number is also
known as the Employer Identification Number
(EIN). |
| Federal Trade Commission (FTC) a
five-member committee charged with the responsibility
of investigating illegal trade practices and
enforcing antitrust laws |
| Federal Trade Commission Act
— Law that established the Federal Trade Commission
to enforce antitrust rules. The act gave the
FTC the right to define unfair methods of competition
and make rules to prevent such practices. |
| FEDERAL UNEMPLOYMENT TAX ACT
(FUTA) is a U.S, federal law providing guidelines
for the unemployment compensation system. A
Federal tax is paid by all liable employers
to fund the administration of Federal and State
unemployment insurance programs and the extended
benefits program. FUTA provides for payments
of unemployment compensation to workers who
have lost their jobs. Most employers pay both
a federal and a state unemployment tax. |
| Federal Unemployment Tax Act
(FUTA). Unemployment taxes. |
| FEU:A Forty-Foot Equivalent
Unite, or 40-foot dry cargo container. |
| FFO - FUNDS FROM OPERATIONS
is used by real estate and other investment
trusts to present the cash flow from trust operations
i.e., earnings plus depreciation and amortization. |
| FHA Loan: A loan insured by
the Federal Housing Administration, which may
be made by any mortgage lending institution
qualified to make such loans. |
| FICA (FEDERAL INSURANCE CONTRIBUTIONS
ACT) is the U.S. law requiring U.S. employers
to match the amount of Social Security tax deducted
from an employee's paycheck. |
| FICTITIOUS NAME is often referred
to as a DBA, "Doing Business As," a fictitious
name is frequently used by sole proprietors
or partnerships to provide a name, other than
those of the owners or partners, under which
the business will operate. |
| Fictitious name: See Assumed
name. |
| Fictitous Name See doing business
as. |
| fidelity bond an insurance
policy that protects a business from theft,
forgery, or embezzlement by its employees |
| Fidelity Bond. A bond which
pays an employer up to an amount stated in the
bond for losses caused by dishonesty or infidelity
on the part of an employee. |
| fidelity guarantee insurance
insurance against losses resulting from the
dishonesty of employee/s. |
| Fiduciary - A person legally
appointed and authorized to hold assets in trust
for another person and manage those assets for
the benefit of that person. |
| FIDUCIARY A person or company
entrusted with assets owned by another party
(beneficiary), and responsible for investing
the assets until they are turned over to the
beneficiary. |
| Fiduciary. A person to whom
property is entrusted to hold, control, or manage
for another. The fiduciary of a trust is the
person who is legally responsible for managing
the assets of the trust in a competent manner. |
| field work The performance
of audit procedures outside the CPA's office.
Much field work, but not all, is done in the
client's offices after the balance sheet date. |
| FIFO (first-in, first-out)
is an inventory cost flow whereby the first
goods purchased are assumed to be the first
goods sold so that the ending inventory consists
of the most recently purchased goods. |
| fifo “First In First Out” inventory
cost flow. |
| FIFO: First In First Out type
of inventory valuation. The first goods purchased
are assumed to be the first goods sold. |
| FILE BACKUP: The practice of
dumping (copying) a file stored on disk or tape
to another disk or tape. This is done for protection
case the active file gets damaged. |
| FILE RECOVERY: The restoration
of computer files using backup copies. |
| FILE SERVER: The central repository
of shared files and applications in a computer
network (LAN). |
| Filing status. One of four
tax ranks determined by your marital status,
your dependents and the way you file your tax
return: (1) single, (2) married filing jointly,
(3) married filing separately and (4) head of
household. Filing status determines your tax
rates and your eligibility for various tax benefits
(for example: alimony deduction, IRA deduction,
standard deduction, etc.). |
| FILLER – A short, interesting,
sometimes humorous news item used to fill leftover
space on the page. The most widely read "articles"
in any newspaper, fillers constitute an excellent
(and often overlooked) vehicle for obtaining
press coverage for an organization. |
| Finance Charge: According to
federal regulations, the total cost in dollar
terms a borrower must pay, directly or indirectly,
to obtain credit. The lender must disclose it. |
| Finance Lease (See Single Investor
Lease): Typically, a finance lease is a full-payout,
noncancellable agreement, in which the lessee
is responsible for maintenance, taxes, and insurance. |
| finance money resources |
| FINANCIAL ANALYSIS is analysis
of a company's financial statement, usually
by accountants or financial analysts. |
| Financial document: a document
relating to payment. The bill of exchange is
the financial document most commonly used in
collections and letters of credit. Promissory
notes are also sometimes used in collections. |
| financial forecasts present
expected future financial position, results
of operations, and cash flows based on expected
conditions. |
| financial institution confirmation
request A confirmation sent to the client's
bank or other financial institution asking the
bank to confirm direct to the auditor information
about balances at a particular date. |
| FINANCIAL LEVERAGE is the use
of debt to increase the expected return on equity.
Financial leverage is measured by the ratio
of debt to debt plus equity. |
| financial leverage the use
of borrowed funds to increase the return on
owners’ equity |
| financial management all the
activities concerned with obtaining money and
using it effectively |
| financial manager a manager
who is primarily responsible for the organization’s
financial resources |
| financial plan a plan for
obtaining and using the money needed to implement
an organization’s goals |
| financial planner an individual
who has had at least two years of training in
securities, insurance, taxation, real estate,
and estate planning and has passed a rigorous
examination |
| financial ratio a number that
shows the relationship between two elements
of a firm’s financial statements |
| FINANCIAL REPORTING RELEASE
(FRR), in the U.S., is the policy releases and
pronouncements from the SEC (Securities Exchange
Commission). |
| Financial Reports - Reports
commonly required from applicants request for
financial assistance, e.g.: *** Balance Sheet
- A report of the status of a firm's assets,
liabilities and owner's equity at a given time.
*** Income Statement - A report of revenue and
expense which s |
| FINANCIAL RESULTS usually refers
to the summary financial results provided in
compliance to the GAAP guidelines. They can
cover any period(s), but usually cover either:
single month, quarter, or annual periods. |
| financial statements formal
reports prepared from accounting records describing
the financial position and performance of the
business. |
| financial year an accounting
period of 12 months, often coincident, for convenience,
with the fiscal year (1 July to 30 June). |
| Financing - New funds provided
to a business, by either loans or purchase of
debt securities or capital stock. |
| financing obtaining money resources.
Businesses usually have to obtain finance at
some time, either to go into business or expand
operations. |
| Financing The provision of
operating funds to a business (by either loans
or purchase of debt securities or capital stock). |
| fire insurance insurance that
covers losses due to fire |
| First-in, first-out (FIFO).
A rule that applies to the sale of part of a
group of similar items (such as inventory, shares
of the same stock, etc.) that assumes the first
ones acquired were the first ones sold. This
is important if the items in the group were
acquired or manufactured at different times
or for different costs. The rule may be overridden
by identifying the specific item sold, if possible.
(See "Last-in, first-out (LIFO).") |
| first-line manager a manager
who coordinates and supervises the activities
of operating employees |
| FISCAL is an accounting period
of 12 months. |
| fiscal policy government influence
on the amount of savings and expenditures; accomplished
by altering the tax structure and by changing
the levels of government spending |
| Fiscal Tax Year - 12 consecutive
months ending on the last day of any month other
than December, or a 52-53 week year. |
| FISCAL YEAR Any 12-month period
used by a company or government as an accounting
period. |
| Fiscal Year Any twelve-month
period used by a business as its fiscal accounting
period. |
| FISCAL YEAR is the declared
accounting year for a company, but it is not
necessarily in conformance to a calendar year
(January through December). However, it does
cover twelve months, 52 weeks, 365 days. For
example, the U.S. government fiscal year ends
September 30, i.e. October 1 through September
30 is their fiscal or accounting year. |
| Fiscal Year: A business' reporting
year, covering a 12-month month period. (Not
necessarily ending on December 31.) |
| FIXED ASSET TURNOVER measures
management's ability to generate revenues from
investments in fixed assets. FAT considers only
the firm's investment in property, plant and
equipment and is extremely important in high
asset firms such as manufactures and telecommunications
companies. Generally, the higher this ratio:the
smaller the investment required to generate
sales, thus the more profitable the firm. indicates
the firm has less money tied up in fixed assets
for each dollar of sales revenue. A declining
ratio may indicate that the firm has over-invested
in plant, equipment, or other fixed assets. |
| Fixed Assets - (sometimes called
long term assets) these are usually non-liquid
assets that are integral to the enterprise's
day-to-day business operations such as plants,
equipment, furniture and real estate. |
| fixed assets — A company’s
nonliquid assets, such as its office building
or factory. |
| FIXED ASSETS (NET) / NET WORTH
measures liquidity by comparing "fixed" assets
with "fixed" capital. A lower ratio indicates
proportionately smaller investment and a better
"cushion" for creditors in case of liquidation.
This may be important if the fixed assets are
not easily used in other businesses. The presence
of substantial leased fixed assets (not shown
on the balance sheet) may deceptively lower
this ratio. Therefore smaller is better, i.e.,
greater than .75 (75%) should merit caution. |
| FIXED ASSETS (NET) is all property,
plant, leasehold improvements and equipment,
net of accumulated depreciation or depletion. |
| FIXED ASSETS are those assets
of a permanent nature required for the normal
conduct of a business, and which will not normally
be converted into cash during the ensuring fiscal
period. For example, furniture, fixtures, land,
and buildings are all fixed assets. However,
accounts receivable and inventory are not. |
| Fixed assets Assets with expected
lives greater than intermediate-term assets
and not expected to be sold in the foreseeable
future. Categories include: land, natural resources,
buildings and fixed equipment, patents and other
intangibles, and securities held as investments.
If not entered as intermediate-term assets,
the cash surrender value of life insurance.
(Also called long-term assets.) |
| fixed assets the land, buildings,
vehicles, materials and equipment owned by a
business, which are used to earn revenue rather
than being for sale. |
| fixed assets assets that will
be held or used for a period longer than one
year |
| Fixed Assets. Business assets
such as buildings and equipment that will be
used over a long period of time-usually one
year or longer. |
| Fixed Assets: Permanent assets
of a company required for the regular conduct
of business which will not be converted into
cash during the next year. Examples are land,
building, furniture and fixtures. |
| FIXED CHARGE is those expenses
incurred each time a batch of product is produced.
Primarily consists of ordering cost for the
raw material, engineering costs for machine
setup and preparation for the production run,
and work order processing cost; also known as
SETUP COST. |
| FIXED CHARGE RATIO is calculated:
total fixed costs/total expenses. |
| FIXED COST A production cost
which does not vary significantly with the volume
of output. An example would be administrative
costs. (Also see VARIABLE COST). |
| fixed cost a cost that is
incurred no matter how many units of a product
are produced or sold |
| Fixed Cost: Fixed costs are
operating expenses that are incurred when providing
necessities for doing business and have no relation
to the volume of production and sales (as opposed
to "variable costs"). Examples are rent, property
taxes, and interest expense. |
| fixed costs — Costs that don’t
vary with sales volume. Rent is a fixed cost;
companies need to pay it whether they make money
that month or not. Other fixed costs are insurance
payments and executives’ salaries. |
| Fixed Costs - expenses that
do not change regardless of production increases
or decreases, for example, rent, insurance,
interest on loans, etc. |
| Fixed Costs - The day-to-day
cost of doing business that is pre-committed,
such as salaries, insurance, lease expenses,
utilities, etc. |
| FIXED COSTS are operating expenses
that are incurred to provide facilities and
organization that are kept in readiness to do
business without regard to actual volumes of
production and sales. Fixed costs remain relatively
constant until changed by managerial decision.
Within general limits they do not vary with
business volume. Examples of fixed costs consist
of rent, property taxes, and interest expense. |
| fixed costs costs, which are
incurred by a business whether it is operating
to generate income or not and which do not necessarily
increase or decrease as a total volume of production,
increases or decreases. Rent, for example, must
be paid whether or not any business is accomplished. |
| Fixed Costs. Costs that do
not vary with the number of units produced.
For example, depreciation. In the long run all
costs are variable and some costs have both
a fixed and variable component. |
| Fixed Costs. Fixed amounts
that do not vary with changes in the volume
of sales or production, i.e. rent, depreciation,
interest payments. |
| Fixed Costs: Expenses that
do not change during the normal operation of
the business. These expenses remain constant
regardless of the changes in sales. |
| FIXED EXPENSES are those expenses
that must be paid each month and do not fluctuate
with the sales volume. |
| FIXED FEE is a set price for
the completion of a project. It is easier for
the customer to budget, but provides higher
risk for the contractor due to cost overruns. |
| Fixed forward contract: Currency
is bought or sold at a given future date. |
| Fixed Interest Rate Loan: A
loan on which the interest rate is set or constant
for the term of the loan. |
| Fixed Price Contract. A contract
which provides for a firm price. |
| fixed-rate loans — A loan whose
interest rate doesn’t change. A conventional
mortgage is an example. |
| FLAT LEASE is a lease where
the cost is fixed for a specific period of time. |
| flexible benefit plan compensation
plan whereby an employee receives a predetermined
amount of benefit dollars to spend on a package
of benefits selected to meet individual needs |
| FLEXIBLE BUDGET is based upon
different levels of activity. It is a very useful
tool for comparing actual costs experienced
to the cost allowable for the activity level
achieved, i.e. it is dynamic in nature as compared
to static. A series of budgets can be readily
developed to fit any activity level. Flexible
budgeting distinguishes between fixed and variable
cost, thereby allowing for a budget that can
be automatically adjusted to the level of activity
actually attained. |
| flexible manufacturing system
(FMS) a single production system that combines
robotics and computer-aided manufacturing |
| flextime a system in which
employees set their own hours within employer-determined
limits |
| float — Provides financial
breathing room if you’re short of cash. This
is the value of the money that stays in your
account until a check you wrote is processed. |
| floor planning a method of
financing where the title to merchandise is
given to lenders in return for short-term financing |
| Flow Chart - A graphical representation
for the definition, analysis, or solution of
a problem, in which symbols are used to represent
operations, data, flow, equipment, etc. |
| flowchart A schematic representation
of a sequence of operations in an accounting
system or computer program. Also called a flow
diagram, flow sheet. |
| FLOWER BONDS - Certain U.S.
government Treasury bonds, which normally may
be bought at a discount and used at par to pay
the federal estate tax of a decedent in whose
estate the bonds are included. |
| Flow-Through Entity. An entity
where the income, losses, and certain other
items of income and deduction are passed through
to the owners. For example, partnerships, trusts,
and S corporations. |
| FLYER – A handbill or loose
sheet with a printed advertisement. |
| FOB: Free-On-Board Destination.
The seller of merchandise bears the shipping
costs and maintains ownership until the merchandise
is delivered to the buyer. |
| FOCUS GROUP – A group of potential
consumers used in a market research effort,
which is usually designed to determine the likely
effectiveness of a product or advertising strategy. |
| foot a column is to add a column
of numbers. |
| FOOTING is the sum of a column
of figures. |
| FOOTING, in accounting, is
the sum of a column of figures. |
| Force majeure: The title of
a standard clause in a marine contract exempting
the parties for nonfulfillment of their obligations
as a result of conditions beyond their control
- such as floods, war, etc. |
| Foreclosure - The act by the
mortgagee or trustee upon default, in the payment
of interest or principal of a mortgage of enforcing
payment of the debt by selling the underlying
security. |
| Foreign Corporation A corporation
is referred to as a foreign corporation in all
states except for the state where it is incorporated.
If a corporation is "transacting business" in
a state other than where it is incorporated,
it must register for a certificate of authority
to transact business in the other state or possibly
lose access to that state's courts and face
fines. |
| foreign corporation a corporation
in any state in which it does business except
the one in which it is incorporated |
| Foreign corporation: A corporation
is referred to as a foreign corporation in all
states other than the one in which it is actually
incorporated. In order to conduct active business
affairs in a different state, foreign corporation
must be registered with the other state for
the authority to transact business and it must
pay an annual fee for this privilege. |
| foreign currency. |
| Foreign Direct Investment:
Foreign investment in plant and equipment. |
| Foreign Equity Requirements:
Investment rules that limit foreign ownership
to a minority holding is a company. |
| Foreign exchange: The currency
of a foreign country. |
| FOREIGN SALES AGENT or REPRESENTATIVE
is an entity that works to sell your merchandise
in a foreign country. Equivalent to the “Manufacturer's
Representative” in the U.S. |
| Foreign Trade Zone: Also known
as Free Trade Zones, or FTZs, they are ports
designated by the government of a country for
the duty-free entry of non-prohibited goods.
Merchandise may be stored, displayed, assembled,
packaged, or used for manufacture within the
zone and re-exported without duties being levied. |
| foreign-exchange control a
restriction on the amount of a particular foreign
currency that can be purchased or sold |
| FORENSIC ACCOUNTING provides
for an accounting analysis that is suitable
to a court of law which will form the basis
for discussion, debate and ultimately dispute
resolution. Forensic accounting encompasses
investigative accounting and litigation support.
Forensic accountants utilize accounting, auditing
and investigative skills when conducting an
investigation. Equally critical is the ability
to respond immediately and to communicate financial
information clearly and concisely in a courtroom
setting. |
| form utility utility created
by converting raw materials, people, finances,
and information into finished products |
| form utility utility created
by converting raw materials, people, finances,
and information into finished products |
| Forward contract: A contract
for the sale or purchase of a given amount of
foreign currency at a future time at a rate
of exchange that is fixed when the contract
is made. |
| Forward option contract: Currency
must be bought or sold within a given period
of time. |
| FORWARD RECOVERY: The process
of recovering a data base to the point of failure
by applying active journal or log data to the
current backup files of the data base. |
| Forward Supply Contract. A
contract for future supply of definite quantities
of goods or services over a fixed period. |
| Foul Bill of Lading: A receipt
for goods issued by a carrier with the indication
that the goods were damaged when received from
the shipper. |
| Franchise a business arrangement
in which knowledge, expertise and often a trade
mark or trade name are licensed to an operator,
generally for an initial fee and a yearly payment. |
| FRANCHISE A franchise is a
form of licensing. The franchiser provides his
services through a series of franchisees. Before
investing in any franchise, check with the International
Franchise Association at 1 800 543 1038 to see
if the |
| franchise is a member in good
standing. |
| Franchise Tax Is a tax on the
privilege of carrying on business as a corporation
or LLC in a state. The value of the franchise
tax may be measured by amount of earnings, total
value of capital or stock, or by amount of business
done. In some states, like California, the franchise
tax is simply an income tax. |
| franchise a license to operate
an individually owned business as though it
were part of a chain of outlets or stores |
| Franchise: A business that
has been licensed to sell the product of a manufacturer
or to offer a particular service in a given
area. |
| Franchisee the purchaser of
a franchise licence who operates one or more
outlets of the franchise business. |
| franchisee a person or organization
purchasing a franchise |
| Franchisee. Affiliated dealers
for distribution of products, services or methods
in franchising obtained by franchiser. |
| Franchiser. The business entity
which provides the franchisee the right and
license to sell a product or service and possibly
to use the business system developed by the
company. |
| Franchising - A continuing
relationship in which the franchisor provides
a licensed privilege to the franchisee to do
business, and offers assistance in organizing,
training, merchandising, marketing and managing
in return for a consideration. Franchising is
a form of |
| franchising — Setting up a
system like McDonald’s. A company (the franchiser)
grants the right to use its name and sell its
products to a person or group (the franchisee). |
| franchising the actual granting
of a franchise |
| Franchising. Form of licensing
by which the owner (franchiser) of a product,
service or method obtains distribution through
affiliated dealers (franchisees). |
| Franchisor the owner of a franchise
system |
| franchisor an individual or
organization granting a franchise |
| fraud A deliberate deception
to secure unfair or unlawful gain. False representation
intended to deceive relied on by another to
that person's injury. Fraud include fraudulent
financial reporting undertaken to render financial
statements misleading, sometimes called management
fraud, and misappropriation of assets, sometimes
called defalcations. |
| Free and Clear. In real estate
the term is used to indicate that the investment
analysis has ignored any debt on the property.
(Debt can distort the analysis by increasing
the return if the interest rate is lower than
the rate of return on property and vice versa
if the interest rate is higher.) |
| FREE CASH FLOW is net income
plus non-cash charges to income, specifically
depreciation and amortization less capital expenditures,
to sustain the basic business. |
| free enterprise the system
of business in which individuals are free to
decide what to produce, how to produce it, and
at what price to sell it |
| FREE ON BOARD (FOB) Commercial
term in which the seller's obligations are fulfilled
when the goods reach a point specified in the
contract. |
| Free On board (FOB): An Incoterm
whereby the seller pays for loading the items
to be purchased onto the vessel, but not for
the cost of carriage or insurance. |
| Free Port: An area such as
a port city into which merchandise may legally
be moved without payment of duties. |
| FREE TRADE AGREEMENT is an
agreement between countries that will result,
over an agreed period of time, in an elimination
of duties for goods flowing between the signatories. |
| FREE TRADE ZONE (FTZ) is an
area, usually a port of entry, designated by
the country for duty-free entry of goods. As
long as the goods do not go into the country
from the FTZ, no duty is assessed. While in
the FTZ, goods may be processed, packaged, serviced
or displayed. |
| FREEHOLD ESTATE - A legal estate
in land, commonly referred to as an estate of
inheritance. There are three freehold estates:
fee simple, fee tail, and life estate. |
| Free-trade zone: A port designated
by the government of a country for duty-free
entry on any non-prohibited good. Merchandise
may be stored, used or manufactured in the zone
and reexported without duties being paid. |
| FREIGHT FORWARDER is an individual
or firm that provides for the packing and shipping
of merchandise. Generally they also assist with
export and other documentation. |
| Freight Forwarders' Receipt:
Transport document issued by Freight Forwarder.
Not a document of title. |
| frequency distribution a listing
of the number of times each value appears in
a set of data |
| FREQUENCY, in advertising,
is the number of times you hope to reach your
target audience through your advertising campaign. |
| frequent user incentive a
program developed to reward customers who engage
in repeat (frequent) purchases |
| FRF is an acronym for French
Francs. |
| FRR see FINANCIAL REPORTING
RELEASE. |
| FSA has several possible meanings,
e.g. Flexible Spending Account (employee benefit
offered by some companies) or Funding Standard
Account. |
| FTP ( File transfer protocol)
or Telnet: process used to upload or download
files to be stored on a server. |
| Full And Open Competition -
With respect to a contract action, "full and
open" competition means that all responsible
sources are permitted to compete. |
| FULL DISCLOSURE, generally,
is the requirement to disclose all relevant
or material facts to a transaction. |
| Full Payout Lease: A lease
in which the lessor recovers, through the lease
payments, all costs incurred in the lease plus
an acceptable rate of return, without any reliance
upon the leased equipment's future residual
value. |
| FULL RECOVERY TEST: An exercise
in which all recovery procedures and strategies
are tested (as opposed to a Partial Recovery
Test.) |
| Full Service Retail Sales Method
- selling from a sales outlet directly to the
end user at retail prices with sales personnel
who can explain the purpose and value of the
product or service. |
| full-service brokers — Like
the full-service island at the gas station.
You usually pay more, but you also get more–in
this case a wide range of services including
advice on what stocks to buy and sell. The “self-serve”
variety of broker is called a discount broker,
who generally just handles trades. |
| full-service wholesaler a
middleman that performs the entire range of
wholesaler functions |
| functional middleman a middleman
that helps in the transfer of ownership of products
but does not take title to the products |
| FUNDAMENTAL ANALYSIS is a method
used to evaluate the worth of a security by
studying the financial data of the issuer. Performing
fundamental analysis will teach you a lot about
a company, but virtually nothing about how it
will perform in the stock market. Apply this
analysis on two competing companies and it becomes
clearer which the better investment choice is. |
| fusion insurance covers loss
caused by damage to an electric motor by an
electric current, and is particularly important
for refrigerated stocks. |
| FUTA see FEDERAL UNEMPLOYMENT
TAX ACT. |
| futures contract — An agreement
to buy or sell a commodity or financial instrument
at a specific price and on a set date. Unlike
an option, in that the seller must sell and
the buyer must buy at the established time.
Futures can be traded among parties. |
| G&A usually refers to the indirect
overhead costs contained within the General
and Administrative expense / cost categories
(see also SG&A). |
| G-7(Group of Seven): Seven
industrial countries - the US, Japan, Germany,
France, The United Kingdom, Italy and Canada
- whose leaders have met at annual economic
summits since 1975 to coordinate economic policies. |
| gaap “Generally Accepted Accounting
Principles.” According to Rule 203 of the AICPA
Code of Professional Conduct, GAAP for nongovernment
entities include (in a conflict the source earlier
in the list prevails): 1. FASB Statements and
Interpretations, APB Opinions, ARBs. 2. FASB
Technical Bulletins, AICPA Guides and AICPA
Statements of Position. 3. Positions of the
FASB Emerging Issues Task Force and AICPA Practice
Bulletins. 4. AICPA accounting interpretations,
FASB staff "Qs and As", and widely recognized
industry practices. 5. Other accounting literature,
such as FASB Concepts Statements, textbooks,
articles. |
| GAAP: Generally Accepting
Accounting Principles. A priority listing made
up of statements of accounting principles issued
by the AICPA (American Institute of Certified
Public Accountants) and FASB (Financial Accounting
Standards Board) |
| gaas “Generally Accepted Auditing
Standards.” The ten auditing standards adopted
by the membership of the AICPA. Auditing standards
differ from audit procedures in that "procedures"
relate to acts to be performed, whereas "standards"
deal with measures of the quality of the performance
of those acts and the objectives to be attained
by use of the procedures undertaken. |
| GAI is Guaranteed Annual Income. |
| Gantt chart a graphic scheduling
device that displays the tasks to be performed
on the vertical axis and the time required for
each task on the horizontal axis |
| Garage Liability Insurance.
A policy for businesses that work with autos.
The policies provide coverage for operations
in progress and completed operations as well
as the premises. |
| gasb Government Accounting
Standards Board. A nongovernment private organization
that sets GAAP in the United States for governmental
entities. |
| GASB is the Governmental Accounting
Standards Board |
| GATT (GENERAL AGREEMENT ON
TARIFFS AND TRADE) is a multilateral treaty
that aims to reduce trade barriers and increase
trade. The GATT was an interim treaty process
that has now culminated in the World Trade Organization
(WTO). |
| GATT: The Generalized Agreement
on tariffs and Trade, a multilateral treaty
designed to help reduce trade barriers between
the signatory countries and to promote trade
through tariff concessions. |
| GEARING is the proportion of
the capital employed of a company that is financed
by lenders rather than shareholders. |
| GEARING RATIO measures the
percentage of capital employed that is financed
by debt and long term financing. The higher
the gearing, the higher the dependence on borrowing
and long term financing. Whereas, the lower
the gearing ratio, the higher the dependence
on equity financing. Traditionally, the higher
the level of gearing, the higher the level of
financial risk due to the increased volatility
of profits. Financial manager face a difficult
dilemma. Most businesses require long term debt
in order to finance growth, as equity financing
is rarely sufficient, on the other hand, the
introduction of debt and gearing increases financial
risk. A high gearing ratio is positive; a large
amount of debt will give higher return on capital
employed but the company dependent on equity
financing alone is unable to sustain growth.
Gearing can be quite high for small businesses
trying to become established, but in general
they should not be higher than 50%. Shareholders
benefit from gearing to the extent that return
on the borrowed money exceeds the interest cost
so that the market value of their shares rise. |
| Gearing the ratio between the
business’s debt and equity finance. |
| General Agreement on Tariffs
and Trade (GATT) — An international accord meant
to stimulate trade. It encourages lowering tariffs
and abolishing quotas that restrict imports. |
| General Agreement on Tariffs
and Trade (GATT) an international organization
of nations dedicated to reducing or eliminating
tariffs and other barriers to world trade |
| general controls Policies and
procedures to assure proper operation of computer
systems, including controls over data center
and network operations, software acquisition
and maintenance, and access security. |
| General Crime Exclusions. Refers
to perils in an insurance policy that are excluded
because they are usually covered under another
type of policy. |
| General export license: A type
of export license for which individually validated
export licenses are not required. No individual
authorization is needed to ship exports under
a general export license. |
| GENERAL GIFT - See General
Legacy. |
| general journal A book of original
entry in a double-entry system. The journal
lists transactions and indicates accounts to
which they are posted. The general journal includes
all transactions which aren't included in specialized
journals used for cash receipts, cash disbursements,
and other common transactions. |
| general journal a book of
original entry in which typical transactions
are recorded in order of their occurrence |
| General Journal: (GJ) A book
or original entry in a double-entry system.
The journal lists transactions and indicated
accounts to which they are posted. The general
journal includes all transactions which aren't
included in specialized journals used for cash
receipts, cash disbursements, and other common
transactions. |
| general ledger A record to
which monetary transactions are posted (in the
form of debits and credits) from a journal.
It is the final record from which financial
statements are prepared. General ledger accounts
are often control accounts which report totals
of details included in subsidiary ledgers. |
| GENERAL LEDGER is the accounting
records that show all the financial statement
accounts of a business. |
| general ledger a book of accounts
that contains a separate sheet or section for
each account |
| General Ledger: (GL) A book
in which monetary transactions of a business
are posted (in the form of debits and credits)
from a journal. It is the final record from
which financial statements are prepared. The
general ledger accounts are often the control
accounts which report totals of details included
in subsidiary ledgers. |
| GENERAL LEGACY - A gift, by
will, of personal property which is not a particular
thing as distinguished from all others of the
same kind, as a gift of a stated amount of money;
to be distinguished from specific legacy. |
| general merchandise wholesaler a
middleman that deals in a wide variety of products |
| general obligation bond a
bond backed by the full faith, credit, and unlimited
taxing power of the government unit that issued
it |
| GENERAL OBLIGATION BONDS -
Bonds that are secured by all of the assets
of the corporation rather than by specified
property. |
| general partner — General partners
are liable for all of their partnership’s debts. |
| general partner a person who
assumes full or shared responsibility for operating
a business |
| GENERAL PARTNERSHIP is one
or more partners who are jointly and severally
responsible or liable for the debts of the partnership. |
| general partnership a business
co-owned by two or more general partners who
are liable for everything the business does |
| GENERAL POWER OF APPOINTMENT
- The power of the donee (the one who is given
the power) to pass on an interest in property
to whomsoever he pleases, including himself
or his estate. See also Power of Appointment. |
| General Property Form. A standard
form for insuring commercial buildings and their
contents. |
| general standard In the ten
U.S. generally accepted auditing standards there
are three general standards: 1. The examination
is to be performed by a person or persons having
adequate technical training and proficiency
as an auditor. 2. In all matters relating to
the assignment, an independence in mental attitude
is to be maintained by the auditor. 3. Due professional
care is to be exercised in the performance of
the examination and preparation of the report. |
| generalized audit software
Packaged computer programs used on a variety
of computers during audit field work to read
computer files, select information, perform
calculations, create data files and print reports
in a format specified by the auditor. |
| Generalized System of Preferences
(GSP): A. U.S. program that grants duty-free
treatment, on a product-by-product basis, to
developing countries. This program is intended
to help developing nations start selling to
U.S. markets. |
| generally accepted accounting
principles (GAAP) — Rules and procedures generally
accepted by accountants. The rules guide them
in assessing and reporting on a company’s finances. |
| GENERALLY ACCEPTED AUDITING
STANDARDS (GAAS), in the US, are the broad rules
and guidelines set down by the Auditing Standards
Board of the American Institute of Certified
Public Accountants (AICPA). In carrying out
work for a client, a certified public accountant
would apply the generally accepted accounting
principles (GAAP); if they fail to do so, they
can be held to be in violation of the AICPA's
code of professional ethics. |
| GENERATION-SKIPPING TAX - A
tax imposed on any generation-skipping transfer
at a flat rate computed with reference to the
maximum federal estate rate applicable at the
time of the transfer. |
| GENERATION-SKIPPING TRANSFER
- Any taxable distribution or taxable termination
with respect to a generation-skipping trust
or any direct skip from a transferor. |
| Generation-skipping transfer
tax. An extra tax on gifts or on-death transfers
of money or property that would otherwise escape
the once-per-generation transfer taxes that
apply to gifts and estates. For example: a gift
from a grandfather to a granddaughter skips
a generation and might be subject to this tax. |
| GENERATION-SKIPPING TRUST -
Any trust having beneficiaries who belong to
two or more generations younger than the grantor. |
| GENERATOR: An independent source
of power usually fueled by diesel or natural
gas. |
| generic product (or brand) a
product with no brand at all |
| GIF: web format for graphics. |
| GIFT CAUSA MORTIS - A gift
of personal property made by a person in expectation
of death, completed by actual delivery of the
property, and effective only if the donor dies;
to be distinguished from gift inter vivos. |
| GIVEAWAY – A novelty or gift
used in a promotion. Banks frequently offer
giveaways, or prizes, to customers opening accounts. |
| GLOBAL CUSTODY is a term used
within the investment banking industry in defining
securities/monetary instruments that are traded
internationally by Global Custodians. Those
securities would be held in "Global Custody".
Chase Bank originated the concept of providing
Global Custody trading services for institutional
investors trading in foreign markets in 1974.
Banks recognized as Global Custodians provide
their customers with Global Custody services
in respect to securities traded and settled
not only in the country in which the Global
Custodian is located but also in numerous other
countries throughout the world. |
| GLOBAL DEPOSITORY RECEIPTS
are receipts evidencing ownership in the underlying
shares of a foreign company. Generally, U.S.
banks and trusts issue American depository receipts
(ADR) and American depository shares (ADS).
They hold the foreign company securities underlying
the receipts in their vaults. In addition to
the underlying securities, the receipts entitle
the shareholder to all dividends and capital
gains. The bank or trust company issuing the
receipts may have denominated the receipts in
a currency other than the currency underlying
the foreign security. U.S. and European banks
and trust companies usually issue global depository
receipts (GDR), which are receipts in the shares
of global offering of a foreign issuer who has
issued two securities simultaneously in two
markets, usually publicly in non-U.S. markets
and privately in the U.S. market. European banks
and trust companies generally issue European
depository receipts (EDR), sometimes called
continental depository receipts (CDR) when issued
in bearer form, which evidence ownership in
foreign securities. |
| GOAL is the milestone the organization
aims to achieve that evolves from the strategic
issues. They transform strategic issues into
specific performance targets that impact the
entire organization. They can be qualitative
or quantitative. Dependent upon usage, GOALS
are general in nature, while OBJECTIVES are
specific, measurable and time-based. In some
organizations, the meanings for GOAL and OBJECTIVE
are reversed. |
| goal an end result that the
organization is expected to achieve over a one-to-ten
year period |
| goal-setting theory a theory
of motivation suggesting that employees are
motivated to achieve goals they and their managers
establish together |
| going concern assumption assumes
the company will continue in operation long
enough to realize its investment in assets through
operations (as opposed to sale). Presenting
assets at historical cost is justified by assuming
productive assets will be used rather than sold.
This makes market values irrelevant and supports
accounting methods which match the actual cost
of an asset to periods benefited. |
| GOING CONCERN refers to the
liquidity of a concern. If the concern is illiquid,
the viability of that concern being able to
continue to operate is in doubt. |
| Golden parachutes. Bonuses
payable to key executives in the event control
of their corporation changes, as in the case
of a takeover. "Excess" golden parachute payments
are subject to tax penalties. |
| GOODWILL is that intangible
possession which enables a business to continue
to earn a profit that is in excess of the normal
or basic rate of profit earned by other businesses
of similar type. The goodwill of a business
may be due to a particularly favorable location,
its reputation in the community, or the quality
of its employer and employees. The evidence
that goodwill exists is the proven ability to
earn excess profits. Goodwill is created on
the books of a newly purchased company to the
extent that the purchase price of the company
is greater than the value of its net tangible
assets. |
| Goodwill the excess price asked
for the sale of a business over the value of
its physical assets; an intangible asset, the
price of which represents a payment for the
existing client base and future profits. |
| goodwill the value of a firm’s
reputation, location, earning capacity, and
other intangibles that make the business a profitable
concern |
| Goodwill. An intangible asset
that attaches to the successful operation of
a business. Favorable factors such as location,
product superiority, service reputation, and
quality personnel often generate goodwill. |
| Goodwill: An intangible asset
that exists when a business is valued at more
than the fair market value of its net assets.
Goodwill is usually due to reputation, good
customer relations, etc. |
| government auditing standards
A book issued by the comptroller general of
the United States, sometimes called the "yellow
book." Government Auditing Standards contains
standards for audits of government organizations,
programs, activities, and functions and of government
assistance received by contractors, not-for-profit
organizations, and other nongovernment organizations.
These standards, which include designing the
audit to provide reasonable assurance of detecting
material misstatements resulting from noncompliance
with provisions of contracts or grant agreements
that have a direct and material effect on determination
of financial statement amounts, are to be followed
when required by law, regulation, agreement,
contract, or policy. For financial audits, Government
Auditing Standards prescribes fieldwork and
reporting standards beyond those required by
GAAS. |
| government-owned corporation a
corporation owned and operated by a local, state,
or federal government |
| GRACE PERIOD |
| Graduated Payment Mortgage.
A loan where the initial payments are lower
than the amount needed to amortize the loan.
Debt service grows each year till it reaches
a set amount. Used to increase the affordability
of a home or real estate investment. |
| Graduated Payment Mortgage:
A residential mortgage with monthly payments
that start at a low level and increase according
to a predetermined schedule. |
| GRANDCHILD EXCLUSION - For
generation-skipping tax purposes, a limited
special exclusion that applies to certain direct
skips to grandchildren made before January 1,
1990. It allowed an individual to transfer up
to $2 million to each of his grandchildren without
incurring generation-skipping tax. Also known
as the -Gallo- exclusion. |
| GRANTEE is the person or entity
to whom property or assets are transferred. |
| GRANTOR is the person or entity
who transfers property or assets. |
| grapevine the informal communications
network within an organization |
| GRAPHIC DESIGN – Any form of
visual artistic representation. |
| GRAPHIC DESIGNER – The person
responsible for producing artistic representations,
usually under the guidance of an art director
or creative director. |
| graphics program software
that enables users to display and print pictures,
drawings, charts, and diagrams |
| GREEK – The gibberish or nonsense
text placed in a "dummy" to signify where the
copy will eventually be. |
| grievance procedure a formally
established course of action for resolving employee
complaints against management |
| GROSS CONTRIBUTION is the starting
amount prior to any relevant deductions have
been made to the gross amount, e.g., Gross Contribution
to Margin. |
| Gross Domestic Product (GDP)
- A measure of the market value of goods and
services produced by a nation. Unlike Gross
National Product, GDP excludes profits made
by U.S. firms overseas, as well as the share
of reinvested earning in U.S. firms' foreign-based
operations. |
| gross domestic product (GDP)
— Key indicator of an economy’s health, this
is the value of all the goods and services produced
by a country in a given period of time. Used
to be called Gross National Product, or GNP. |
| Gross Domestic Product (Gdp)
- The most comprehensive single measure of aggregate
economic output. Represents the market value
of the total output of the goods and services
produced by a nation's economy. |
| gross domestic product (GDP) the
total dollar value of all goods and services
produced by all people within the boundaries
of a country during a one-year period |
| Gross income. All income that
might be subject to tax. Most "realized" increases
in wealth are considered income. The main exceptions
for individuals are gifts, inheritances, increases
in value of property prior to sale, loan repayments
and some personal injury awards. For businesses,
investments in their capital are not considered
income. |
| Gross Lease. As opposed to
a net lease, a gross lease is one where the
tenant is responsible for either none of the
increase in operating expenses of the building,
or only the amount above a stop. If a base or
stop is involved, the lease is sometimes known
as a modified gross lease. |
| GROSS MARGIN OR GROSS PROFIT
- Net sales minus cost of goods sold. |
| gross margin percentage The
gross margin from an income statement divided
by net sales revenue. |
| Gross National Product (Gnp)
- A measure of a nation's aggregate economic
output. Since 1991 GDP, a slightly different
calculation, has replaced GNP as a measure of
U.S. economic output. |
| gross national product (GNP)
— Out-of-date name for gross domestic product
(GDP). GDP is a key indicator of an economy’s
health; it’s the value of all the goods and
services produced by a country in a given period
of time. |
| Gross Profit - revenues less
cost of sales. |
| gross profit — Sales revenue
minus the cost of making or buying the things
that were sold (cost of goods sold). If a manufacturer
sold 10 bikes for $300 a piece, and each bike
cost him $250 to make, the company’s gross profit
is $500. |
| GROSS PROFIT is net sales minus
cost of sales. |
| GROSS PROFIT MARGIN ON SALES
(GPM) is one of the key performance indicators.
The gross profit margin gives an indication
on whether the average markup on goods and services
is sufficient to cover expenses and make a profit.
GPM shows the relationship between sales and
the direct cost of products/services sold. It
measures the ability of both to control costs
and to pass along price increases through sales
to customers. The gross profit margin should
be stable over time. A persistent gradual decrease
is likely to indicate that productivity needs
to be increased to return profitability back
to previous levels. |
| Gross profit The excess of
net operating revenues (sales less discounts
and returns) over the net cost of goods sold
(cost of purchases less discounts and returns). |
| gross profit the excess of
net sales over cost of goods sold usually expressed
as a percentage. |
| gross profit a firm’s net
sales less the cost of goods sold |
| Gross Profit. Also known as
gross margin, determined by subtracting cost
of goods from net sales. |
| Gross Profit: The amount by
which the net sales exceed the cost of goods
sold |
| Gross Receipts - income received
from one's business. Examples of documents that
show gross receipts include cash register tapes,
bank deposit slips, invoices, receipt books,
charge slips, and Form 1099-MISC. |
| GROSS RECEIPTS is the total
amount received prior to the deduction of any
allowances, discounts, credits, etc. |
| gross sales — Revenue from
a company’s total sales before deducting for
returns and discounts. |
| GROSS SALES is the total revenue
at invoice value prior to any discounts or allowances. |
| gross sales the total dollar
amount of all goods and services sold during
the accounting period |
| Gross Sales: Total recorded
sales before deducting any sales discounts or
sales returns and allowances. |
| Gross the total overall amount.
For example, gross profit is the trading profit
of a business without any deductions for business
expenses. |
| GROSS WEIGHT is the weight
of a shipment including packing material. |
| Gross weight: The total weight
of a shipment, including goods and packing. |
| GROUP ACCOUNTS are the financial
statements of a group of companies. These are
usually presented in the form of consolidated
accounts. |
| GROUP is a number of individual
companies assembled together; often having some
unifying relationship. |
| groupware one of the latest
types of software that facilitates the management
of large projects among geographically dispersed
employees as well as such group activities as
problem solving and brainstorming |
| growth funds — Mutual funds
that invest in companies that pay little or
no dividends and reinvest their profits in expansion
and in research and development. You buy these
if you’re willing to give up dividend income
in return for a chance at big gains in the stock
price over time. |
| GST-free some supplies are
GST-free, which means you do not charge GST
for them but you are entitled to claim input
tax credits for anything acquired or imported
to use in your business. |
| GUARANTEE Pledge by a third
party to repay a loan in the event that the
borrower cannot. A special case is a PERSONAL
guarantee in which you personally guarantee
an obligation. |
| GUARANTEE see WARRANTY |
| Guaranteed Loan - A loan made
and serviced by a lending institution under
agreement that a governmental agency will purchase
the guaranteed portion if the borrower defaults. |
| GUARANTEED/INSURED LOANS Programs
in which the federal government makes an arrangement
to indemnify a lender against part or all of
any defaults by those responsible for repayment
of loans. An example is a small business loan
guaranteed by the SBA. |
| GUARDIAN AD LITEM - A person
appointed by a court to represent and defend
a minor or an incompetent person in connection
with court proceedings; sometimes called a special
guardian. |
| GUARDIAN DE SON TORT - One
who, although not a regularly appointed guardian,
takes possession of an infant-s or an incompetent
person-s property and manages it as if he were
guardian, thereby making himself accountable
to the court. |
| Guideline Lease: A lease written
under criteria established by the IRS to determine
the availability of tax benefits to the lessor. |
| GUTTER – The white space formed
by the inner margins on two facing pages. |
| HALFTONE – An image formed
by printing close-set dots of varying sizes
on paper or other "hard" media. |
| HALON: A gas used to extinguish
fires effective only in closed areas. |
| HANDBILL – A small, printed
advertising sheet or flyer distributed by hand. |
| HANGING POWER OF WITHDRAWAL
- A Crummey power of withdrawal that lapses
only when and to the extent that the lapse will
not result in a release of a general power of
appointment. A hanging power can permit more
property to be transferred to a trust and qualify
for the annual exclusion than would be the case
if the donee were given a -five and five- Crummey
power. |
| hard copy A printed copy of
information as opposed to information stored
in computer readable form. |
| HARD COSTS is the purchase
price of actual assets. For example, the purchase
price of a new printing press would be the hard
cost. The soft costs are additional fees for
items like factoring-invoiced installation,
prepaid and extended warranties, or service
contracts for the new equipment. |
| Hard Costs. The direct costs
of acquiring a business (such as the purchase
price), constructing a building (brick and mortar),
etc., as opposed to legal, accounting, consulting,
financing, costs, which are called soft costs. |
| Hard Disk (or Hard Drive):
The "file cabinet" of the machine. This is the
memory that your computer will use to store
the results from the programs (and to store
those programs). Hard Disk is currently specified
in Gigabytes (billions of characters |
| HARD SELL – A general term
to describe any aggressive advertising technique. |
| hard-core unemployed workers
with little education or vocational training
and a long history of unemployment |
| Hardware - A term used to describe
the mechanical, electrical and electronic elements
of a data processing system. |
| hardware A computer and associated
physical equipment involved in data-processing
or communications functions as opposed to software
or computer programs that provide instructions
the computer follows. |
| hardware control Computer controls
built into physical equipment by the manufacturer. |
| Hardware: A computer and associated
physical equipment (as opposed to "software"). |
| HARMONIZED SYSTEM is an internationally
agreed upon classification system for trade.
It provides code numbers to specify a goods
classification; thereby making customs duty
determination more predictable. |
| Harmonized Systems: A globally
developed schedule of tariff nomenclature arranged
in six-digit codes so that all participating
countries can classify traded goods on a common
basis. Beyond the six digit level, countries
are free to introduce national distinctions
for tariff and statistical purposes. The U.S.
adaptation of this system is the Harmonized
Tariff Scheduled of the United States. |
| hash total A control total
which has no meaning in itself other than for
control, e.g., total social security numbers
of employees paid. |
| Hazard Insurance - Insurance
required showing lender as loss payee covering
certain risks on real and personal property
used for securing loans. |
| HEAD OF HOUSEHOLD is a U.S.
income tax filing status that can be used by
an unmarried person who maintains a home for
a dependent (or nondependent relative) during
the tax year. |
| Head of household. A filing
status available to qualifying single parents
(or others supporting certain dependents) that
allows lower taxes than the normal rates for
singles. |
| HEAD SHOT – A glossy 8 x 10-inch
photo focused on the face, usually of an actor
or model. |
| health maintenance organization
(HMO) an insurance plan that directly employs
or contracts with selected physicians and hospitals
to provide healthcare services in exchange for
a fixed, prepaid monthly premium |
| healthcare insurance insurance
that covers the cost of medical attention, including
hospital care, physicians’ and surgeons’ fees,
prescription medicines, and related services |
| HEDGE is a transaction or action
that tends to reduce the risk. |
| hedges protect an entity against
the risk of adverse price or interest-rate movements
on its assets, liabilities, or anticipated transactions.
A hedge is used to avoid or reduce risks by
creating a relationship by which losses on positions
are counterbalanced by gains on separate positions
in another market. |
| HIDDEN PERSUADERS – A range
of subtle or subliminal advertising messages. |
| HIGH PRIORITY TASKS: Activities
vital to the operation of the organization.
Currently being phased out due to environmental
concerns. SIMILAR TERMS: Critical Functions |
| high-risk investment an investment
made in the uncertain hope of earning a relatively
large profit in a short time |
| hire purchase system for financing
the purchase of plant and equipment, where the
ownership is vested with the lender until the
final payment is made. The borrower is required
to place a deposit and make periodic (usually
monthly) repayments at a flat rate of interest. |
| HISTORICAL COST ACCOUNTING
is an accounting principle requiring all financial
statement items to be based on original cost.
It is usually based upon the dollar amount originally
exchanged in an arm's-length transaction; an
amount assumed to reflect the fair market value
of an item at the transaction date. |
| Hold Harmless. An agreement
where one party agrees to release another party
from any legal liability that may occur as the
result of a specific event. |
| Holdback. The portion of a
loan not paid out to the borrower until a certain
requirement is completed. For example, a lender
may release 10% of the total amount of a loan
on completion of the foundation, an additional
15% when rough plumbing is in, etc. |
| Holding Company A corporation
that has no other function except owning stock
in and supervising management of other business
entities. |
| HOLDING COMPANY is a company
which owns or controls other companies. (Control
can occur through the ownership of 50 per cent
or more of the voting rights or through the
exercise of a dominant influence.) |
| HOLOGRAPHIC WILL - A will entirely
in the handwriting of the testator. |
| Homeowner’s Insurance: An insurance
policy that combines liability coverage and
hazard insurance. |
| HOOK – A clever phrase or melody
used to capture the consumer’s attention and
help make the advertising message more memorable. |
| hostile takeover a situation
in which the management and board of directors
of the firm targeted for acquisition disapprove
of the merger |
| HOTSITE: An alternate facility
that has the equipment and resources to recover
the business functions affected by the occurrence
of a disaster. Hot-sites may vary in type of
facilities offered (such as data processing,
communication, or any other critical business
functions needing duplication). Location and
size of the hot-site will be proportional to
the equipment and resources needed. SIMILAR
TERMS: Backup site; Recovery site; Recovery
Center; Alternate processing site. |
| hourly wage a specific amount
of money paid for each hour of work |
| human resources management all
the activities involved in acquiring, maintaining,
and developing an organization’s human resources |
| human resources manager a
person charged with managing the organization’s
human resources programs |
| human resources planning the
development of strategies to meet a firm’s human
resources needs |
| HUMAN THREATS: Possible disruptions
in operations resulting from human actions (i.e.,
disgruntled employee, terrorism, etc.). |
| HURDLE RATE is a term used
in the budgeting of capital expenditures meaning
the REQUIRED RATE OF RETURN in a DISCOUNTED
CASH FLOW analysis. If the expected rate of
return on an investment is below the hurdle
rate, the project is not undertaken. The hurdle
rate should be equal to the INCREMENTAL COST
OF CAPITAL. |
| HYBRID INSTRUMENT is a package
containing two or more different kinds of risk
management instruments that are usually interactive. |
| hygiene factors job factors
that reduce dissatisfaction when present to
an acceptable degree, but do not necessarily
result in high levels of motivation, according
to the motivation-hygiene theory |
| HYPE – Extreme promotion of
a person, idea, or product. |
| HYPOTHECATION - Originally,
a pledge to secure an obligation without delivery
of title or possession; now, generally any pledge
to secure an obligation, such as the hypothecation
of securities for a loan. |
| HYPOTHECATION, in securities,
is the pledging of securities to brokers as
collateral for loans made to cover short sales
or purchase securities. In banking, it is the
pledging of property to secure a loan. |
| IDENTIFIABLE ASSETS and LIABILITIES
are those assets and liabilities of a business
that can be disposed of without disposing of
the entire business. It includes both tangible
and intangible assets. |
| IMA, in accounting, refers
to the Institute of Management Accountants. |
| image processing systems use
scanning to convert documents into electronic
images to facilitate storage. Reference and
source documents may not be retained after conversion. |
| immaterial Of no importance.
Something in financial statements that will
not change decisions of investors. |
| Immediate Notice. In insurance
parlance, a clause requiring the insured to
provide notice to the insurer (or a representative)
as soon as reasonably possible following a loss. |
| IMPACT – The degree of success
of a campaign; the reaching of consumers. |
| IMPAIRED ASSETS, in banking,
applies to all problem assets which banks hold,
and is not limited to problem loans. In addition
to loans, it also captures off- balance sheet
exposures and assets which have come onto banks
balance sheets through enforcement of security
conditions. |
| Impersonal Service at Customer's
Site - this service usually involves working
with the customer's property and seldom deals
with factors that the customer deems confidential.
Examples of this type of service would be: lawn
service, typewriter repair, office cleaning,
trucking service, etc. |
| Impersonal Service at Servicer's
Site - this service usually involves working
with the customer's property and seldom deals
with factors that the customer deems confidential.
The service is traditionally provided at the
servicer's enterprise. Examples of this type
of service would be: auto mechanic, TV repair,
etc. |
| Impersonal Service, Volume
- this type of service is usually designed such
that the same service will satisfy the needs
of all customers. It is often the case that
the servicer and the customer never meet. Examples
of this type of service would be: classified
ads, storage lockers, money changers, etc. |
| implicitly Implied or understood
even though not directly expressed. |
| implied control performance
deals with expected changes to data. |
| implied warranty a guarantee
imposed or required by law |
| import (or customs) duty (or
tariff) a tax that is levied on a particular
foreign product entering a country |
| import (or customs) duty (or
tariff) a tax that is levied on a particular
foreign product entering a country |
| Import Licenses: Licenses
required by some countries to bring in a foreign-made
good. In many cases, import licenses are also
used by the issuing country to control the quantity
of imported items. |
| import quota a limit on the
amount of a particular good that may be imported
into a country during a given period of time |
| importing purchasing raw materials
or products in other nations and bringing them
into one’s own country |
| Imprest Funds. Funds set aside
as a cash reserve for expenditures expressly
designated. Also, a petty cash fund. |
| IMPREST see PETTY CASH |
| IMPUTED COSTS refer to the
cost of an asset, service, or company that is
not physically recorded in any accounts but
is implicit in the product. |
| Imputed interest. A portion
of a future payment that is treated as interest
if parties to the transaction do not provide
a stated amount of interest at a rate acceptable
to the IRS. (See "Applicable Federal Rates (AFRs).")
This prevents improper use of certain tax advantages
(capital gains rates or tax deferral). For example:
if a business sells an asset on the installment
basis, part of all future payments is treated
as interest whether the transaction states it
or not. |
| IMPUTED VALUE is the logical
or implicit value that is not recorded in any
accounts, e.g., in the projection of annual
figures, values are imputed for months for which
the actual values are not yet known. |
| In a collection, a bank may
be asked to do this if a bill of exchange is
not |
| incentive payment a payment
in addition to wages, salary, or commissions |
| Incentive stock option. A stock
option that may be granted to an employee under
tax-favored terms. |
| INCIDENTS OF OWNERSHIP - The
rights of the insured or his estate to the economic
benefits of an insurance policy which make the
proceeds of the policy subject to estate tax. |
| INCOME CAPITALIZATION: First
you must determine the capitalization rate -
a rate of return required to take on the risk
of operating the business (the riskier the business,
the higher the required return). Earnings are
then divided by that capitalization rate. The
earnings figure to be capitalized should be
one that reflects the true nature of the business,
such as the last three years average, current
year or projected year. When determining a capitalization
rate you should compare with rates available
to similarly risky investments. |
| income from continuing operations
— Revenue minus expenses, including taxes. This
doesn’t include income from discontinued operations,
like a closed arm of the corporation; extraordinary
items or the financial effect of a change in
accounting principles. |
| INCOME is money received by
a person or organization because of effort (work),
or from return on investments. |
| Income money that is being
earned by the business. |
| Income Statement - (sometimes
called Profit & Loss statement) a statement
of revenues and expenses. |
| INCOME STATEMENT - A report
listing the revenues and expenses of a business,
resulting in a net income (profit) or loss. |
| income statement a financial
document that shows how much money (sales) came
in and how much money (costs) was paid out.
Subtracting the costs from the sales gives you
your profit and all three are shown on the income
statement. |
| Income statement A financial
statement that identifies business profit or
loss over a specified period of time, usually
a year or other accounting period. (Also called,
a profit and loss statement, or a P&L statement.) |
| income statement a summary
of a firm’s revenues and expenses during a specified
accounting period |
| Income Statement: An accounting
form that reports business revenues, expenses
and the resulting profit or loss for a particular
period of time. Also called profit-and-loss
statement or statement of income and expenses. |
| INCOME TAXES PAYABLE is income
taxes due including current portion of deferred
taxes. |
| incompatible duties Internal
control systems rely on separation of certain
duties to reduce the chance of errors or fraud.
Duties are incompatible if they should be separated
for control. For example, one person should
not be in a position to both embezzle funds
and to hide the embezzlement by changing the
recorded accountability. |
| incorporation the process
of forming a corporation |
| Incorporator The person or
entity that prepares, files and signs the articles
of incorporation. Business Filings Inc. acts
as an incorporator for many new companies. |
| Incorporator: The person who
signs the Articles of Incorporation. Usually
a person, but some states allow a corporation
or partnership to be an incorporator. |
| incorrect acceptance The risk
of incorrect acceptance is the risk the sample
supports the conclusion that the recorded balance
is not materially misstated when it is materially
misstated. |
| incorrect rejection The risk
of incorrect rejection is the risk the sample
supports the conclusion that the recorded balance
is materially misstated when it is not materially
misstated. |
| Incoterms: International commercial
terms used nearly universally in letters of
credit, international contracts and other documents.
These include who pays for carriage, loading,
unloading, insurance, duties etc. The common
Incoterms are CIF, FOB, CFR, and Ex Works.
They are compiled and published by the International
chamber of Commerce |
| INCREMENTAL COST OF CAPITAL
is the weighted cost of the additional capital
raised in a given period. Weighted cost of capital,
also called composite cost of capital, is the
weighted average of costs applicable to the
issues of debt and classes of equity that compose
the firm’s capital structure. Also called marginal
cost of capital. |
| Incubator - A facility designed
to encourage entrepreneurship and minimize obstacles
to new business formation and growth, particularly
for high technology firms, by housing a number
of fledgling enterprises that share an array
of services. These shared services may |
| Indeminity Clause: A clause
in which the one party indemnifies the other.
In leasing, generally a clause whereby the lessee
indemnifies the lessor from loss of tax benefits. |
| Indemnify To reimburse or compensate.
Directors and officers of corporations are often
reimbursed or indemnified for all the expenses
they may have incurred during the incorporation
process. |
| Indemnify: To reimburse or
compensate. Directors and officers of corporations
are often reimbursed or indemnified for all
the expenses they may have incurred in incorporating. |
| indemnity insurance risk protection
for actions for which a business is liable.
Insurance that a business carries to cover the
possibility of loss from lawsuits in the event
the business or its agents were found at fault
when an action occurred. |
| INDEMNITY Obligation of one
party to reimburse another party for losses
which have occurred or which may occur. |
| INDENTURE - A mutual agreement
in writing between or among two or more parties
whereof usually each party has a counterpart
or duplicate; originally so called because the
parts were indented by a notched cut or line
so that the two parts could be fitted together. |
| INDENTURE is an agreement between
lender and borrower which details specific terms
of the bond issuance. Specifies legal obligations
of bond issuer and rights of bondholders. There
is usually a indenture document spelling out
the specific terms of a bond as well as the
rights and responsibilities of both the issuer
of the security and the holder. |
| Indenture of Trust: (Indenture)
An agreement between the owner trustee and the
indenture trustee: The owner trustee mortgages
the equipment and assigns the lease and rental
payments under the lease as security for amounts
due to the lenders. Same as a security agreement
or mortgage. |
| INDEPENDENT – An agency which
functions alone, not controlled or influenced
by a larger corporation. Michael J. Motto Advertising
is an independent agency, free to act solely
in our clients’ best interests. |
| Independent And Qualified Public
Accountants - Public accountants are independent
when neither they nor any of their family have
a material, direct or indirect financial interest
in the borrower other than as an accountant.
They are qualified, unless there is contrary
evidence, when they are either (1 |
| Independent Contractor - someone
who is self-employed. |
| independent In all matters
relating to the assignment, an independence
in mental attitude is to be maintained by the
auditors. This means freedom from bias, which
is possible even when auditing one's own business
(independence in fact). However, it is important
that the auditor be independent in appearance
(that others believe the auditor is independent). |
| independent retailer a firm
that operates only one retail outlet |
| INDIRECT COST is that portion
of cost that is indirectly expended in providing
a product or service for sale and is included
in the calculation of COST OF GOODS SOLD, e.g.
rent, utilities, equipment maintenance, etc. |
| individual branding the strategy
in which a firm uses a different brand for each
of its products |
| Individual Retirement Account
(Ira) - A retirement investing tool for employed
individuals that allows an annual contribution
of 100% of earned income up to a maximum of
$2,000. Some or all of the contribution may
be deductible from current taxes, depending
on the individual's adjusted gross |
| individual retirement account
(IRA) — You may place $2,000 a year in these
accounts, which are used to invest in stocks,
certificates of deposit, etc. The contributions
may be tax deductible depending on whether you’re
covered by a company retirement plan and whether
your adjusted gross income is low enough. IRAs
accumulate money tax-deferred. |
| induction training training
for new employees regarding conditions of service,
physical layout of the workplace, safety rules,
local conventions and customs and supervisory
procedures. |
| Industrial Property Form. An
all-risk or specific peril type of insurance
for manufacturers or businesses engaged in processing. |
| INDUSTRIAL REVENUE BOND (I.R.B.)
is a bond issued by local government agencies
in favor of corporations. |
| Industrial Revenue Bond (Irb)
- A tax-exempt bond issued by a state or local
government agency to finance industrial or commercial
projects that serve a public good. The bond
usually is not backed by the full faith and
credit of the government that issues it, but
is repaid solely from t |
| industrial union an organization
of both skilled and unskilled workers in a single
industry |
| industry ratio the standard
or "average" percentage of expenses spent by
firms in a similar type of business (ie firms
in the same industry). |
| inflation — An increase in
the general price of consumer goods and services.
What the Federal Reserve chairman is always
trying to keep under control so it doesn’t harm
the economy. |
| INFLATION ACCOUNTING is a system
of accounting which, unlike historical cost
accounting, takes into account changing prices. |
| Inflation Endorsement. A clause
in a homeowners policy where the coverage is
automatically increased periodically to account
for changes in a price index. |
| INFLATION is an increase in
the general price level of goods and services;
alternatively, a decrease in the purchasing
power of the dollar or other currency. |
| inflation a general rise in
the level of prices |
| infomercial a program-length
televised commercial message resembling an entertainment
or consumer affairs program |
| informal group a group created
by the members themselves to accomplish goals
that may or may not be relevant to the organization |
| informal organization the
pattern of behavior and interaction that stems
from personal rather than offical relationships |
| information society a society
in which large groups of employees generate
or depend on information to perform their jobs |
| information systems consist
of infrastructure (physical and hardware components),
software, people, procedures (manual and automated),
and data. |
| information data that are
presented in a form useful for a specific purpose |
| informational role a role
in which the manager either gathers or provides
information |
| INFRASTRUCTURE is the resources
(as personnel, buildings, or equipment) required
for an activity. |
| inherent limitation The potential
effectiveness of an entity's internal control
is subject to inherent limitations. Human fallibility,
collusion, and management override are examples. |
| inherent risk The susceptibility
of a balance or transaction class to error that
could be material, when aggregated with other
errors, assuming no related internal controls. |
| initial public offering (IPO) the
first time a corporation sells common stock
to the general public |
| initial public offering (IPO) the
first time a corporation sells common stock
to the general public |
| injunction a court order requiring
a person or group either to perform some act
or to refrain from performing some act |
| injunctions — Courts issue
these to stop a person or group from doing something
that might cause future harm. |
| INK (slang) – Print publicity;
press coverage. Michael J. Motto Public Relations
gets its clients lots of good "ink." |
| Inland bill of lading: A bill
of lading used in transporting good overland
to the exporter's international carrier. |
| inland marine insurance insurance
that protects against loss or damage to goods
shipped by rail, truck, airplane, or inland
barge |
| Innovation - Introduction of
a new idea into the marketplace in the form
of a new product or service, or an improvement
in organization or process. |
| input control Computer controls
designed to provide reasonable assurance that
transactions are properly authorized before
processed by the computer, accurately converted
to machine readable form and recorded in the
computer, that data files and transactions are
not lost, added, duplicated or improperly changed,
and that incorrect transactions are rejected,
corrected and, if necessary, resubmitted on
a timely basis. |
| input tax credits you are entitled
to an input tax credit for the GST included
in the price you pay for an acquisition or the
GST paid for an importation if it is for use
in your enterprise. |
| input taxed some supplies are
input taxed, which means you do not charge GST
for them but neither are you entitled to input
tax credits for anything acquired or imported
to make the supply. |
| inquire (inquiry) Ask questions
of client personnel. |
| INSERT – A printed sheet or
sheets inserted into a publication or enclosed
with a mailing. |
| Insolvency - The inability
of a borrower to meet financial obligations
as they mature, or having insufficient assets
to pay legal debts. |
| INSOLVENCY occurs when a business
is unable to pay debts as they fall due. |
| inspect (inspection) As an
audit procedure, to scrutinize or critically
examine a document. As part of a CPA firm's
quality control system, to monitor the effectiveness
of the system. |
| inspection the examination
of the quality of work in process |
| Installation Goods - products
requiring large and expensive capital investments
that will have a long life. This could include
homes, office buildings, manufacturing facilities,
and other types of commercial facilities or
equipment such as tractors, printing presses,
cranes and robotic assembly line processors. |
| INSTALLMENT SALE is selling
property and receiving the sales price over
a series of payments, instead of all at once
at the close of the sale, is an installment
sale. Unless you elect out, you will report
the gain on that transaction as you receive
it through the series of payments. |
| Installment: One of a series
of payments to pay off a loan. |
| Institute Cargo Clauses: Standard
conditions of insurance cover for goods, established
by the Institute of London Underwriters. This
is also referred to as clauses A, B and C. |
| institutional advertising advertising
designed to enhance a firm’s image or reputation |
| institutional investors pension
funds, insurance companies, mutual funds, banks,
and other organizations that trade large quantities
of securities |
| insurable risk a risk that
insurance companies will assume |
| Insurance certificate:Document
giving details of insurance cover for a consignment.
The certificate will cross-reference a master
insurance policy and must be countersigned. |
| insurance company (or insurer) a
firm that agrees, for a fee, to assume financial
responsibility for losses that may result from
a specific risk |
| Insurance cover note:- Insurance
document evidencing that insurance cover for
a consignment has been taken out, but not giving
full details. |
| insurance policy the contract
between an insurer and the person or firm whose
risk is assumed |
| Insurance policy: Document
setting out full details of insurance in force.
A policy MAY refer to a single consignment and
be sent with the other commercial documents.
More commonly there is an open policy for all
the shipper's consignments. For each consignment
an insurance certificate is issued, cross-referencing
the policy. |
| insurance the protection against
loss the purchase of an insurance policy affords |
| insurer (or insurance company) a
firm that agrees, for a fee, to assume financial
responsibility for losses that may result from
a specific risk |
| INTANGIBLE ASSET is an asset
that is not physical in nature. Examples are
things like copyrights, patents, intellectual
property, or goodwill. An intangible asset is
the opposite of tangible asset. |
| Intangible Assets - non-physical
assets such as patents, trademarks, a customer
base, brand recognition of your products, etc.
This is sometimes called goodwill. |
| intangible assets those assets
of a business, which cannot be assigned a firm,
fixed value, such as leases, franchises, goodwill
and patent rights. |
| intangible assets assets that
do not exist physically but that have a value
based on the rights or privileges they confer
on a firm |
| INTANGIBLES (NET) are intangible
assets, including goodwill, trademarks, patents,
catalogs, brands, copyrights, formulas, franchises,
and mailing lists, net of accumulated amortization. |
| integrated marketing communications coordination
of promotional elements to maximize total informational
and persuasive impact on customers |
| Integrated Operations. Two
or more business operations which are conducted
as though they were one single economic unit. |
| integrated test facility A
"dummy" unit (e.g., a department or employee)
is established. Test (fictitious) transactions
are posted to the dummy unit during the normal
processing cycle. If test transactions are processed
correctly that provides evidence that transactions
of other units are processed correctly as well. |
| integrity Consistent adherence
to an ethical code. If client management lacks
integrity the auditor must be more skeptical
than usual. |
| Intellectual Property: Intangible
items protected by patents, trademarks and copyrights,
such as creative works and inventions. There
are international organizations that deal solely
with intellectual property, and increased protection
of intellectual property, and increased protection
of intellectual properly rights is an issue
of discussion in GATT, WTO and other talks. |
| intensive distribution the
use of all available outlets for a product |
| Interactivity: programming
elements on your site that personalize it, help
your visitors to interact with the information
on your site or interface directly with you.
Examples: forms for feedback, guest books, a
script that calculates interest rates or inserts
a customers' name, ICQ or Human Click, etc. |
| INTERAGENCY CONTINGENCY PLANNING
REGULATION: A regulation written and imposed
by the Federal Financial Institutions Examination
Council concerning the need for financial institutions
to maintain a working disaster recovery plan. |
| Interest - An amount paid a
lender for the use of funds. |
| interest — What a borrower
pays for the privilege of using someone else’s
money for a given period of time. |
| interest over the term of the
bill. |
| Interest Rate: The cost of
money expressed as an annual percentage. |
| Interest the cost of borrowing
money. |
| Interest: Money paid for the
use of money, usually expressed as an annual
percentage. |
| Interest: The cost of the
use of money. |
| inter-firm comparison a comparison
between the financial and productive performance
of a business with the industry averages. |
| interim audit procedures are
done during the year under audit, before year
end. |
| interim financial information
is financial statements of a time period of
less than a full year. |
| INTERIM ORGANIZATIONAL STRUCTURE:
An alternate organization structure that will
be used during recovery from a disaster. This
temporary structure will typically streamline
chains of command and increase decision-making
autonomy. |
| interlocking directorate an
arrangement in which members of the board of
directors of one firm are also directors of
a competing firm |
| Intermediary Organization -
Organizations that play a fundamental role in
encouraging, promoting, and facilitating business-to-business
linkages and mentor-protTgT partnerships. These
can include both non-profit and for-profit organizations:
chambers of commerce; trade associations; |
| Intermediate-term assets Assets
that normally will be sold or used up during
a period of one to five years. Categories include:
vehicles, machinery, and equipment (may be placed
in personal property category); breeding livestock;
securities not readily marketable; and other
similar assets. The cash surrender value of
life insurance policies sometimes is included. |
| Intermediate-term liabilities
Debts to be paid after the current year or accounting
period but within the next five years. (The
number of years usually is the same as for intermediate-term
assets.) Typical intermediate-term liabilities
include: debt on machinery, equipment, vehicles;
buildings and building remodeling, fixtures,
breeding livestock; and operating capital to
be repaid over two or more years. |
| Intermodal:The use of two or
more modes of transportation to complete a cargo
move; truck/rail/ship, or truck/air, for example. |
| internal auditors are employees
of the client. They are responsible for providing
analyses, evaluations, assurances, recommendations,
and other information to the entity's management
and board. An important responsibility of internal
auditors is to monitor performance of controls. |
| internal control Policies and
procedures designed to provide reasonable assurance
that specific entity objectives will be achieved.
It consists of: the control environment, risk
assessment, control activities, information
and communications, and monitoring. |
| internal control questionnaire
A list of questions about the existing internal
control system to be answered (with answers
such as yes, no, or not applicable) during audit
field work. The questionnaire becomes part of
the audit working papers used to document the
auditor's understanding of the client's internal
controls. |
| internal control weakness A
defect in the design or operation of internal
controls. A material weakness is a reportable
condition which does not reduce to a relatively
low level the risk that material errors or fraud
would not be detected in a timely manner by
employees in the normal course of their duties. |
| Internal Control: Policies
and procedures designed to provide reasonable
assurance that a company's objectives will be
achieved. It consists of control environment,
risk assessment, control activities, information
and communications and monitoring |
| INTERNAL HOTSITES: A fully
equipped alternate processing site owned and
operated by the organization. |
| INTERNAL RATE OF RETURN (IRR)
is also called the dollar-weighted rate of return;
the interest rate that makes the present value
of the cash flows from all the sub-periods in
an evaluation period plus the terminal market
value of the portfolio equal to the initial
market value of the portfolio. |
| internal recruiting considering
present employees as applicants for available
positions |
| international business all
business activities that involve exchanges across
national boundaries |
| International Chamber of Commerce:
International non-governmental body concerned
with promotion of trade and harmonisation of
trading practice. Responsible for drafting and
publishing: |
| International Monetary Fund
(IMF) — An international lending institution
that focuses on stabilizing currencies. The
United States contributes heavily to the fund
and has the greatest number of votes about where
to lend money. This is the group trying to resuscitate
Asia’s troubled economies by pouring in billions
so the countries can repay debt. |
| International Monetary Fund
(IMF) an international bank with more than
150 member nations that makes short-term loans
to countries experiencing balance-of-payment
deficits |
| Internet Marketing: promotion
of your website to draw traffic that will increase
sales of your product via the Web. |
| Internet a worldwide network
of computers linked through telecommunications |
| interpersonal role a role
in which the manager deals with people |
| interpersonal skill the ability
to deal effectively with other people |
| INTERRUPTION: An outage caused
by the failure of one or more communications
links with entities outside of the local facility. |
| intranet a smaller version
of the Internet for use only with a firm |
| intrapreneur an employee who
pushes an innovative idea, product, or process
through the organization |
| introductory paragraph The
first paragraph of the auditor's standard report
which identifies the financial statements audited,
states that the financial statements are the
responsibility of management and that the auditor's
responsibility is to express an opinion on the
financial statements based on the audit. |
| inventory control (or inventory
management) the process of managing inventories
in such a way as to minimize inventory costs,
including both holding costs and potential stock-out
costs |
| inventory control the process
of managing inventories in such a way as to
minimize inventory costs, including both holding
costs and potential stock-out costs |
| Inventory Control. The process
of maintaining sufficient inventory measures
to meet customer needs, weighed against the
cost of carrying inventory to determine an appropriate
inventory level. |
| INVENTORY is anything constituting
inventory for the firm. |
| INVENTORY LOAN is loan that
is extended based upon the, usually, discounted
/ factored value of a business' inventory. |
| inventory tag A tag attached
to inventory items that identifies the inventory
items to aid in counting the physical inventory. |
| Inventory the value of all
the stock of physical items that a business
uses in its production process or has for sale
in the ordinary course of doing business. |
| Inventory Turnover - a ratio
for evaluating sales effectiveness. For a given
accounting period divide total revenue for the
product by the average retail value of the product
inventory. |
| Inventory Turnover (or Turn).
Measures the movement of how rapidly inventory
can be converted into cash within a period.
Turn is calculated by dividing the cost of goods
sold by an average inventory amount. |
| Inventory Turnover Ratio: A
measure of the management of inventory computed
by dividing cost of goods sold (COGS) by the
average inventory for a period of time. |
| inventory turnover a financial
ratio calculated by dividing the cost of goods
sold in one year by the average value of the
inventory |
| INVENTORY TURNS (Period Average)
measures the average efficiency of the firm
in managing and selling inventories during the
last period, i.e., how many inventory turns
the company has per period and whether that
is getting better or worse. It is imperative
to compare a company’s inventory turns to the
industry average. A company turning their inventory
much slower than the industry average might
be an indication that there is excessive old
inventory on hand which would tie up their cash.
The faster the inventory turns, the more efficiently
the company manages their assets. However, if
the company is in financial trouble, on the
verge of bankruptcy, a sudden increase in inventory
turns might indicate they are not able to get
product from their suppliers, i.e., they are
not carrying the correct level of inventory
and may not have the product on hand to make
their sales. If looking at a quarterly statement,
there probably are more or less turns than an
annual statement due to seasonality, i.e., their
inventory levels will be higher just before
the busy season than just after the busy season.
This does not mean they are managing their inventory
any differently; the ratio is just skewed because
of seasonality. NOTE: Comparing the two INVENTORY
TURNS (Period Average and Period End) suggests
the direction in which inventories are moving,
thereby allowing an analysis of efficiency improvements
and/or potential burgeoning inventory problems. |
| INVENTORY TURNS (Period End)
measures the ending efficiency of the firm in
managing and selling inventories during the
last period, i.e., how many inventory turns
the company has per period and whether that
is getting better or worse. It is imperative
to compare a company’s inventory turns to the
industry average. A company turning their inventory
much slower than the industry average might
be an indication that there is excessive old
inventory on hand which would tie up their cash.
The faster the inventory turns, the more efficiently
the company manages their assets. However, if
the company is in financial trouble, on the
verge of bankruptcy, a sudden increase in inventory
turns might indicate they are not able to get
product from their suppliers, i.e., they are
not carrying the correct level of inventory
and may not have the product on hand to make
their sales. If looking at a quarterly statement,
there probably are more or less turns than an
annual statement due to seasonality, i.e., their
inventory levels will be higher just before
the busy season than just after the busy season.
This does not mean they are managing their inventory
any differently; the ratio is just skewed because
of seasonality. NOTE: Comparing the two INVENTORY
TURNS (Period Average and Period End) suggests
the direction in which inventories are moving,
thereby allowing an analysis of efficiency improvements
and/or potential burgeoning inventory problems. |
| Inventory: Goods held for
sale or resale. |
| Inverse Order Of Maturity -
When payments are received from borrowers that
are larger than the authorized repayment schedules
the overpayment is credited to the final installments
of the principal which reduces the maturity
of the loan and does not affect the original
repayment sche |
| inverse The opposite or reverse.
An inverse relationship between two variables
means that when one increases the other decreases. |
| investee The company in which
an investment is held. Often used to describe
an equity method investment, in which the investor
reports a share of the investee's net income. |
| investment bankers — Companies
that help other companies raise capital through
the sale of new stock and bonds. |
| Investment Banking - Businesses
specializing in the formation of capital. This
is done by outright purchase and sale of securities
offered by the issuer, standby underwriting
or "best efforts selling." |
| investment banking firm an
organization that assists corporations in raising
funds, usually by helping sell new issues of
stocks, bonds, or other financial securities |
| Investment Company SBICs (Small
Business Investment Companies) and MESBICs (Minority
Enterprise Small Business Investment Companies)
are SBA-licensed, privately owned and operated
investment companies which provide equity capital
and long-term loans to independent business
concerns. A MESBIC invests only in independent
business concerns having at least 50 percent
ownership by minorities. |
| Investment credit. A credit
against tax available for investment in a limited
range of business property. The general investment
credit was repealed in 1986, but this type of
credit has been enacted and repealed repeatedly
throughout history. |
| INVESTMENT is the purchase
of real property, stocks, bonds, collectible
annuities, mutual fund shares, etc, with the
expectation of realizing income or capital gain,
or both, in the future. Investment is longer
term and usually less risky than speculation. |
| Investment money used to purchase
any capital items for the business and expected
to yield an income. |
| INVESTMENT TAX CREDIT is a
tax credit in the United States that allows
businesses to write-off a portion of the cost
of purchasing equipment for business use. |
| INVESTMENT TURNOVER is a profitability
measure used to calculate the number of times
per year an investment or assets revolve. |
| Invitation For Bids - Formal
solicitations for offerings, to perform procurements
by competitive bids when the specifications
describe the requirements of the government
clearly, accurately, and completely; but avoiding
unnecessarily restrictive specifications or
requirements |
| invoice An itemized list of
goods shipped or services rendered with costs. |
| Invoice document which shows
the customer charges for goods delivered or
work done. |
| invoice financing see factoring |
| INVOICE is an itemized list
of goods shipped usually specifying the price
and the terms of sale. |
| INVOICE, COMMERCIAL is a legal
document that functions internationally as a
bill of sale. It usually contains the exporting
company, contents of the shipment, amount charged,
name of carrying vessel, order number and payment
terms. |
| INVOICE, CONSULAR is an invoice
stamped or endorsed by the consulate of the
country requiring such. |
| Invoice: An itemized list
of goods shipped or services rendered with cost. |
| Involuntary conversion. The
conversion of property into money under circumstances
beyond the control of the owner. For example:
(1) property that is destroyed and "converted"
into an insurance settlement or (2) property
that is seized by the government and "converted"
into a condemnation award. Owners may avoid
tax on any gain that may result (if the insurance
settlement or condemnation award exceeds the
adjusted basis of the property) by reinvesting
in similar property within certain time limits. |
| Inward collection: How a Collecting
or Presenting bank will refer to a collection.
The collection that has been received from an
overseas bank or exporter for presentation to
a buyer in this country for payment. |
| Inward letter of credit: How
an Advising or Confirming bank will refer to
a letter of credit. A letter of credit issued
by an overseas bank for advice to a seller in
this |
| IPO (INITIAL PUBLIC OFFERING)
is the first or primary offering of stock to
the public. |
| Irrevocable Letter of Credit:
A letter of credit in which the specified payment
is guaranteed by the bank if all terms and conditions
are met by the drawee. The opposite of a revocable
letter of credit, which can be canceled or altered
by the drawee, or buyer, after it has been issued
by the drawee's bank. Under UCP 500 all credits
are irrevocable unless explicitly stated to
be revocable. |
| isb Independence Standards
Board. |
| ISSUE, in securities, is stock
or bonds sold by a corporation or a government;
or, the selling of new securities by a corporation
or government through an underwriter or private
placement. |
| Issued shares: The number of
authorized shares of stock that are actually
transferred to shareholders of the corporation.
Also referred to as outstanding shares. See
also Treasury shares. |
| Issuing bank: Bank giving the
primary payment undertaking for a letter of
credit, acting on behalf of a buyer. |
| Itemized deductions. Personal
deductions that may be taken if they total more
than the standard deduction. (See "Standard
deduction.") The following deductions are then
itemized or listed on Schedule A of Form 1040:
medical expenses, charitable contributions,
state and local taxes, home mortgage interest,
real estate taxes, casualty losses, unreimbursed
employee expenses, investment expenses and others. |
| JINGLE – A catchy musical refrain
delivering an advertising message, frequently
used on radio or television. Check out our creative
portfolio to hear some of the memorable jingles
we’ve produced for agency clients. |
| job analysis a systematic
procedure for studying jobs to determine their
various elements and requirements |
| JOB COSTING is the allocation
of all time, material and expenses to an individual
project or job. |
| Job Description - A written
statement listing the elements of a particular
job or occupation, e.g., purpose, duties, equipment
used, qualifications, training, physical and
mental demands, working conditions, etc. |
| job description a list of
the elements that make up a particular job |
| job enlargement expanding
a worker’s assignments to include additional
but similar tasks |
| job enrichment a motivation
technique that provides employees with more
variety and responsibility in their jobs |
| job evaluation the process
of determining the relative worth of the various
jobs within a firm |
| job redesign a type of job
enrichment in which work is restructured to
cultivate the worker-job match |
| job rotation the systematic
shifting of employees from one job to another |
| job security protection against
the loss of employment |
| JOB SHARING Arrangement in
which the responsibilities and hours of one
job position are carried out by two people. |
| job sharing an arrangement
whereby two people share one full-time position |
| job specialization the separation
of all organizational activities into distinct
tasks and the assignment of different tasks
to different people |
| job specification a list of
the qualifications required to perform a particular
job |
| JOINT AND SURVIVORSHIP - A
phrase usually applied to annuities under which,
during the lifetime of both husband and wife,
they are joint beneficiaries of the annuity
and, after the death of either, the survivor
becomes the sole beneficiary. |
| JOINT RETURN is a US income
tax filing status that can be used by a married
couple. The married couple must be married as
of the last day of their tax year in order to
qualify for this filing status. A married couple
can also elect to file as married, filing separate
returns. |
| Joint return. An optional filing
status available to married taxpayers that offers
generally (but not always) lower taxes than
"married filing separately." |
| JOINT STOCK COMPANY is a company
that has some features of a corporation and
some features of a partnership. This type of
company has access to the liquidity and financial
reserves of stock markets as a corporation,
however, as in a partnership; the stockholders
are liable for company debts and have additional
restrictions of a partnership. |
| Joint Venture - The cooperation
of two or more individuals or enterprises in
a specific business enterprise, rather than
in a continuing relationshipS.as in a partnership. |
| joint venture an agreement
between two or more groups to form a business
entity in order to achieve a specific goal or
to operate for a specific period of time |
| Joint venture: An international
business collaboration between foreign interests
and private parties from the host country, in
which two or more parties establish a new business
enterprise to which each contributes and in
which ownership and control are shared. |
| JOINT VENTURES & INVESTMENTS
is the total of investments and equity in joint
ventures. |
| Joint-and-Last Survivor Annuity.
A type of annuity where income is payable during
the lifetimes of two or more annuitants and
continues until the death of the last survivor. |
| Joint-and-Last-Survivorship
Option. When paying out the proceeds of an insurance
policy, payments continue until the death of
the last survivor of two persons. |
| Journal - a book in which one
records each business transaction from supporting
documents. |
| journal A book of original
entry in a double-entry system. The journal
lists all transactions and indicates the accounts
to which they are posted. |
| Journal Entry: A recording
of a transaction where debits equal credits. |
| JOURNAL, in accounting transactions,
is where transactions are recorded as they occur. |
| Journal: A book or original
entry in a double-entry bookkeeping system.
The journal lists all transactions and indicates
the accounts to which they are posted. |
| JPEG, JPG: web format for photographs. |
| Judgment - Judicial determination
of the existence of an indebtedness, or other
legal liability. |
| Judgment By Confession - The
act of debtors permitting judgment to be entered
against them for a given sum with a statement
to that effect, without the institution of legal
proceedings. |
| JUDICIAL ACCOUNTING - An account
of proceedings prepared for submission to a
court having jurisdiction. |
| Junior Mortgage. A lien that
is below that of another mortgage. The holder
of a junior mortgage can usually be satisfied
only after a more senior lender is paid off.
Thus, the interest rate on a junior mortgage
is usually higher. |
| Junk Bond - A high-yield corporate
bond issue with a below-investment rating that
became a growing source of corporate funding
in the 1980s. |
| jurisdiction the right of
a particular union to organize particular workers |
| JUST-IN-TIME (JIT) is a management
philosophy that strives to eliminate sources
of manufacturing waste by producing the right
part in the right place at the right time. |
| just-in-time An inventory system
that attempts to minimize inventory costs that
do not add value for the customer. It arranges
for suppliers to deliver small quantities of
raw materials just before those units are needed
in production. Storing, insuring, and handling
raw materials are costs that add no value to
the product, and so are minimized in a just
in time system. |
| just-in-time inventory system a
system designed to ensure that materials or
supplies arrive at a facility just when they
are needed so that storage and handling costs
are minimized |
| Just-in-time Inventory: An
inventory system that minimizes inventory costs.
It arranges for suppliers to deliver small quantities
of raw materials just before those units are
needed in production. Storing, insuring, and
handling raw materials are costs that add no
value to the product, and so are minimized in
a just in time system. |
| K-1. The information form from
a partnership, S corporation, trust or estate,
which provides the flow-through income and losses
to be reported on an investor's individual return. |
| KEOGH is a pension plan in
the United States that allows a business to
contribute a portion of profits into a tax-sheltered
account. |
| Keogh plan. A retirement plan
available to self-employed individuals. |
| KEY MAN INSURANCE - Protection
of a business firm against the financial loss
caused by death or disability of a vital member
of the firm; a means of protecting the business
from the adverse results of the loss of an individual
possessing special skills or experience. |
| KEYNESIAN GROWTH MODELS are
models in which a long run growth path for an
economy is traced out by the relations between
saving, investing and the level of output. |
| KEYNESIAN MACROECONOMICS is
the theory that shows how a market-based capitalist
economy may reach equilibrium with large scale
unemployment and how government spending may
be used to raise it out of this to a new equilibrium
at the full-employment level of output. |
| Kicker. An additional benefit
a lender or investor receives as an inducement
to make the loan or investment. For example,
a lender may receive an Equity Kicker allowing
him to receive a share of the income from the
property if it exceeds a specified amount or
giving the lender warrants to purchase shares
of stock in the investment at a price below
market value. |
| kiting Drawing a bank check
on insufficient funds to take advantage of the
time interval required for collection. |
| KITING, when used in the context
of banking, refers to the practice of depositing
and drawing checks at two or more banks and
taking advantage of the time it takes for the
second bank to collect funds from the first
bank. Can also refer to illegally increasing
the face value of a check by changing the printed
amount of the check. When used in the context
of securities, it refers to the manipulation
and inflation of stock prices. |
| Kiting: Drawing a bank check
on insufficient funds to take advantage of the
lag time (time interval) required for collection.
(Not Legal) |
| labeling the presentation
of information on a product or its package |
| labor (or union-management)
relations the dealings between labor unions
and business management, both in the bargaining
process and beyond it |
| labor union an organization
or workers acting together to negotiate their
wages and working conditions with employers |
| labor-intensive technology a
process in which people must do most of the
work |
| Labor-Management Relations
Act — Also known as the Taft-Hartley Act. The
law governs unions’ behavior. Among other things,
it forbids unions from forcing prospective employees
to become union members in order to get hired.
It also forbids using dues to run campaigns
for national union elections. |
| laissez-faire leader one who
gives authority to employees and allows subordinates
to work as they choose with a minimum of interference;
communication flows horizontally among group
members |
| LAN (LOCAL AREA NETWORK): Computing
equipment, in close proximity to each other,
connected to a server which houses software
that can be access by the users. This method
does not utilize a public carrier. SEE ALSO
WAN. |
| LAN RECOVERY: The component
of Disaster Recovery which deals specifically
with the replacement of LAN equipment in the
event of a disaster, and the restoration of
essential data and software SIMILAR TERMS: Client/Server
Recovery |
| LAND, in terms of accounting,
is the value of real estate less the value of
improvements, e.g. buildings. |
| lapping A scheme to cover an
embezzlement by using payments made by one customer
to reduce the receivables balance of another
customer. |
| Laptop Computer: A computer
designed specifically to operate without being
plugged into a wall for power. These are commonly
used by business people who are an the road
a lot |
| LARGE-CAP is a stock with a
level of capitalization of at least $5 billion
market value. |
| Last-in, first-out (LIFO).
A rule that applies to the sale of part of a
group of similar items in an inventory that
assumes the last ones acquired were the first
ones sold. This is important if the items in
the group were acquired or manufactured at different
times or for different costs. (See "First-in,
first-out (FIFO).") |
| Latent Defect. A defect which
could not be discovered by ordinary and reasonable
inspection. |
| Latest shipment date: Date
on a letter of credit by which the goods must
have been shipped. When the Letter of Credit
is presented, this date will be checked against
the date on the transport document. |
| LAUNCH – The introduction of
a new product or service. |
| law a rule developed by a
society to govern the conduct of, and relationship
among, its members |
| lay-by an arrangement where
the customer in a retail store makes a deposit
on an article and pays the amount owing in instalments,
while the retailer stores the article until
the last payment has been made. |
| LAYOUT – A design for graphic
advertising production, roughly depicting the
look of the finished advertisement. |
| lead schedule The schedule
at the beginning of a section of audit working
papers that summarizes the detailed schedules. |
| leadership the ability to
influence others |
| leading the process of influencing
people to work toward a common goal |
| Lease - A contract between
the owner (lessor) and the tenant (lessee) stating
the conditions under which the tenant may occupy
or use the property. |
| Lease A contract between the
owner (lessor) and the tenant/user (lessee>
stating the conditions under which the tenant/user
may occupy or use a property, a vehicle, equipment,
etc. |
| Lease a legal contract covering
the possession and use of property, plant or
equipment between the owner (lessor) and another
person (lessee) at a given rent, for a stated
length of time. |
| Lease Rate: (Rental Payment)
The periodic rental payment to a lessor for
the use of assets. Others may define lease rate
as the implicit interest rate in minimum lease
payments. |
| lease an agreement by which
the right to use real estate, equipment, or
other assets is temporarily transferred from
the owner to the user |
| lease an agreement by which
the right to use real estate, equipment, or
other assets is temporarily transferred from
the owner to the user |
| Lease: A contract in which
one party conveys the use of an asset to another
party for a specific period of time at a predetermined
rate. |
| LEASED LINE: Usually synonymous
with dedicated line. |
| LEASEHOLD IMPROVEMENTS are
those repairs and / or improvements, usually
prior to occupancy, made to a leased facility
by the lessee. The cost is then added to fixed
assets and amortized over the life of the lease. |
| Leasehold Interest. The right
to the use of real property created by a lease.
If the rent payable on the lease is below the
current market, the lease has a number of years
to run and is for a very desirable property,
etc. the lease can be a valuable asset, particularly
if the space can be subleased. |
| Leases: Long-term non-cancelable
commitments. In a lease, the lessee acquires
the right to use property owned by the lessor.
Even though no legal transfer of title occurs,
many leases transfer substantially all the risks
and ownership benefits. |
| leasing finance a method of
acquiring business equipment without capital
outlay. the bank or finance company buys the
equipment and leases it to the customer, in
return for regular rental payments for the duration
of the lease period. |
| Ledger - a book that contains
the totals from all of journals. |
| LEDGER, in accounting transactions,
is the book of accounts. |
| LEGAL ENTITY is a person or
organization that has the legal standing to
enter into contracts and may be sued for failure
to perform as agreed in the contract, e.g.,
a child under legal age is not a legal entity,
while a corporation is a legal entity since
it is a person in the eyes of the law. |
| Legal Rate Of Interest - The
maximum rate of interest fixed by the laws of
the various states, which a lender may charge
a borrower for the use of money. |
| Lending Institution - Any institution,
including a commercial bank, savings and loan
association, commercial finance company, or
other lender qualified to participate with SBA
in the making of loans. |
| Lessee a person who enters
into a lease contract as the user of the land,
buildings, plant or equipment. |
| Lessee. A party who rents property
from another under a lease. |
| Lessee: The person gaining
use of the property or equipment being leased. |
| Lessor an owner who allows
his/her land, buildings, plant or equipment
to be used under a lease contract. |
| Lessor. A party who owns property
and leases it to a tenant. |
| Lessor: The party to a lease
agreement who has legal or tax title to the
equipment, grants the lessee the right to use
the equipment for the lease term, and is entitled
to the rentals. |
| LETTER OF CREDIT (LOC) is a
legal document issued by a buyer’s bank that
upon presentation of required documents payment
would be made. Usually confirmed by the seller's
bank, protection is given to the seller that
payment will be made if the goods are shipped
correctly, and protection is given to the seller
that the goods will be shipped before payment
is made. |
| letter of credit a legal document
issued by a financial institution guaranteeing
to pay a seller a stated amount for a specified
period of time |
| letter of credit a legal document
issued by a financial institution guaranteeing
to pay a seller a stated amount for a specified
period of time |
| LETTER OF CREDIT, CONFIRMED
is a letter of credit that is guaranteed by
a bank that is acceptable to a seller (usually
a local bank), regardless of buyer's bank. |
| LETTER OF CREDIT, IRREVOCABLE
is a letter of credit where payment is guaranteed
as long as the seller meets all conditions stipulated.
A revocable letter of credit can be cancelled
or altered by the buyer without permission of
the seller. |
| Letter of Credit: A document
issued by a bank per instructions from a buyer
of goods, authorizing the seller to draw a specified
amount of money under specified terms, usually
the receipt by the bank of certain documents
with a given time. |
| Level Premium Plan. Premiums
due on an insurance policy that remain level
throughout the term, regardless of any dividends
that may be paid. |
| LEVERAGE - The use of outside
money (debt) in relation to the investment (equity)
in the business. |
| LEVERAGE is property rising
or falling at a proportionally greater amount
than comparable investments. For example, an
option is said to have high leverage relative
to the underlying stock because a price change
in the stock may result in a relatively large
increase or decrease in the value of the option.
In general, in finance, leverage is the use
of debt financing. Leverage, within a corporation,
is the use of borrowed money to increase the
return on investment. For leverage to be positive,
the rate of return on the investment must be
higher than the cost of the money borrowed. |
| LEVERAGE RATIOS measures the
relative contribution of stockholders and creditors,
and of the firm's ability to pay financing charges.
Value of firm's debt to the total value of the
firm. |
| Leverage. 1. Financial leverage
is the act of increasing the return on an investment
by borrowing some of the funds at an interest
rate less than your return on the project. 2.
Operating leverage has the same objective, but
you increase your return by increasing cheaper
fixed costs. Leverage can be positive or negative.
If the return on an investment is greater than
the cost of borrowing, leverage is positive.
If the return is less, leverage is negative. |
| Leverage: Debt in relation
to equity in a firm’s capital structure. Measured
by the debt-to-equity ratio. The more debt,
the greater the leverage. |
| Leveraged Buy-Out - The purchase
of a business, with financing provided largely
by borrowed money, often in the form of junk
bonds. |
| leveraged buyout (LBO) — The
purchase of a company using borrowed money.
Usually the buyer secures the loan with the
assets of the company to be purchased. |
| LEVERAGED BUY-OUT (LBO) is
a transaction used for taking a public corporation
private, financed through the use of debt funds:
bank loans and bonds. Because of the large amount
of debt relative to equity in the new corporation,
the bonds are typically rated below investment
grade, properly referred to as high-yield bonds
or junk bonds. Investors can participate in
an LBO through either the purchase of the debt
(i.e., purchase of the bonds or participation
in the bank loan) or the purchase of equity
through an LBO fund that specializes in such
investments. |
| leveraged buyout (LBO) a purchase
arrangement that allows a firm’s managers and
employees or a group of investors to purchase
the company |
| Leveraged Lease: In this type
of lease, the lessor provides an equity portion
(usually 20 to 40 percent) of the equipment
cost and lenders provide the balance on a nonrecourse
debt basis. The lessor receives the tax benefits
of ownership. |
| Liabilities The sum of debts
or obligations of a business. Normally, the
liabilities appear on the credit side of a balance
sheet. This may be further broken down into
current liabilities, long-term liabilities,
etc. |
| liabilities a firm’s debts
and obligations |
| Liabilities. Debts and other
amounts owed by the business to creditors. |
| Liabilities: Loans and other
debts that you or the business must pay. |
| Liability - A legal obligation
to pay a debt owed. Current liabilities are
debts payable within twelve months. Long-term
liabilities are debts payable over a period
of more than twelve months. |
| LIABILITY, in accounting, is
a loan, expense, or any other form of claim
on the assets of an entity that must be paid
or otherwise honored by that entity. |
| LIABILITY, in insurance, is
a term used when analyzing insurance risks that
describes possible areas of financial exposure
/ loss. Presently, there are three forms of
liability coverage that insurers will underwrite:
The first is general liability, which covers
any kind of bodily injury to non-employees except
that caused by automobiles and professional
malpractice. The second is product liability,
which covers injury to customers arising as
a direct result of goods purchased from a business.
The third is public liability, which covers
injury to the public while they are on the premises
of the insured. |
| LIBOR see LONDON INTERBANK
OFFERED RATE. |
| Licensing agreement - an agreement
between two enterprises allowing one to sell
the other's products or services and to use
their name, sales literature, trademarks, copyrights,
etc. in a limited manner. |
| licensing a contractual agreement
in which one firm permits another to produce
and market its product and use its brand name
in return for a royalty or other compensation |
| Licensing: A business arrangement
in which the manufacturer of a product (or a
firm controlling a technology or product) grants
permission to some other group, individual or
corporation to manufacture that product in return
for specified royalties or payments. |
| Lien - A charge upon or security
interest in real or personal property maintained
to ensure the satisfaction of a debt or duty
ordinarily arising by operation of law. |
| LIEN Legal right to hold property
of another party or to have it sold or applied
in payment of a claim. |
| Lien. A legal claim by a creditor
on another's property as security for payment
of a just debt. May also appear as the result
of judgment. |
| Lien. A type of encumbrance
that makes designated property security for
a debt or for an obligation. For example, a
mortgage or a tax judgment. |
| Lien: A legal claim or hold
on property as security for repayment of a debt. |
| Life Income Period-Certain
Annuity. The annuitant is guaranteed payments
for the rest of his life, but should he die
before a certain time, there is a payout based
on a minimum number of payments. |
| life insurance insurance that
pays a stated amount of money on the death of
the insured individual |
| LIFO (last-in, first-out) is
an inventory cost flow whereby the last goods
purchased are assumed to be the first goods
sold so that the ending inventory consists of
the first goods purchased. |
| lifo “Last In First Out” inventory
cost flow. |
| LIFO LIQUIDATION is a reduction
in the reported value of inventory below levels
established in prior years under the LIFO method;
arises when purchases for the period are not
sufficient to offset the sale of inventory in
the period. |
| LIFO RESERVE is the difference
between the ending inventory under LIFO and
FIFO (or other method that might be chosen). |
| LIFO: "Last In First Out"
assumption of inventory valuation. |
| LIKE KIND, in taxes, refers
to property that is similar to another for which
it has been exchanged: real estate exchanged
for real estate, for instance. The definitions
of like kind properties can be found in the
US Tax Code at Section 1031. |
| Like-Kind Exchange. A tax device
for deferring gain on the transfer of a property
by exchanging it for similar property. For example,
you exchange investment property in New Hampshire
for investment property in Colorado. If you
receive no cash or unlike property, there is
no tax on any gain. |
| Like-kind exchanges. Tax-free
swaps of investment property. Commonly used
for real estate. |
| Limit of Liability. When an
insured is covered by more than one policy for
a loss, each insurer pays according to a predetermined
formula. |
| limit order a request that
a stock be bought or sold at a price that is
equal to or better than some specified price |
| limit test (limit check). A
computer program step that compares data with
predetermined limits as a reasonableness test
(hours worked over 60 per week). |
| LIMITATION, in contracts, is
a certain period limited by statute after which
actions, suits, or prosecutions cannot be brought
in the courts. |
| LIMITED LIABILITY COMPANY (LLC)
- A form of business organization that offers
the beneficial tax status of a partnership while
providing its members limited liability. |
| Limited liability company (LLC).
A legal structure that allows a business to
be taxed like a partnership but function generally
like a corporation. An LLC offers members (among
other things) protection against liability for
claims against the business that is not available
in a partnership. |
| Limited Liability Company A
business entity formed upon filing articles
of organization with the proper state authorities
and paying all fees. LLCs provide the limited
liability to their members, and are taxed like
a partnership, preventing double taxation. LLCs
can be formed in every state. |
| limited liability company a
form of business ownership that provides limited
liability protection and is taxed like a partnership |
| Limited Liability Company.
A entity created under state law that is taxed
like a partnership (i.e., income and losses
are passed through to the partners), but where
the liability of the owners is limited to their
investment in the company. That is, they can't
be held personally liable for the debts of the
company. |
| limited liability a feature
of corporate ownership that limits each owner’s
financial liability to the amount of money she
or he has paid for the corporation’s stock |
| Limited Liability: The legal
protection given to stockholders of a corporation.
A stockholder's liability extends only to the
total of his capital contribution. |
| limited partner — An owner
in a limited partnership who’s liable only up
to the amount of money invested. |
| limited partner a person who
contributes capital to a business but has no
management responsibility or liability for losses
beyond the amount he or she invested in the
partnership |
| Limited Partner. An investor
in a partnership whose personal liability is
limited. Such investors are generally considered
passive for income tax purposes. |
| Limited Partnership (Lp) -
An association of two or more partners formed
to conduct a business jointly and in which one
or more of the partners is liable only to the
extent of the amount of money they have invested.
Limited partners do not receive dividends but
enjoy direct flow-th |
| limited partnership a legal
partnership where some owners are allowed to
assume responsibility only up to the amount
invested. |
| limited partnership a business
co-owned by one or more general partners who
manage the business and limited partners who
invest money in it |
| Limited Partnership: A limited
partnership is one in which one or more partners
(but not all) have limited liability up to their
investment to creditors in the event of the
failure of the business. The general partner
manages the business. Limited partners are not
involved in daily activities. |
| LIMITED POWER OF APPOINTMENT
- A power of the donee (the one who has the
power) to pass on an interest in property that
is limited in some way, as to or for whom or
to the time within which he must exercise the
power; also known as a special power. To be
distinguished from a general power of appointment.
Possession of a special power of appointment
does not cause the property subject to the power
to be included in the holder-s estate, whereas
possession of a general power of appointment
will cause such inclusion. All powers that are
not general are special or limited powers. |
| limited-line wholesaler a
middleman that stocks only a few product lines
but carries numerous product items within each
line |
| Limited-Pay Life. Premiums
on a life insurance policy that are payable
for a stated period or until the insured reaches
a certain age. |
| limited-service wholesaler a
middleman that assumes responsibility for a
few wholesale services only |
| LINAGE – Total lines of advertising;
for example, a three column by ninety line advertisement
has a total linage of 270 lines. A client’s
linage in a specific publication may run to
tens of thousands per month. By anticipating
its clients’ linage requirements, Michael J.
Motto Advertising can negotiate more advantageous
rates with the media. |
| line management position a
position that is part of the chain of command
and that includes direct responsibility for
achieving the goals of the organization |
| line of credit — Financial
institutions offer this to some customers. It
allows the customer to borrow up to a certain
amount of money without applying for another
loan. |
| LINE OF CREDIT is an agreement
whereby a financial institution promises to
lend up to a certain amount without the need
to file another loan application. The borrower
is required to reduce the debt whenever the
limit of the full amount of credit has been
reached. |
| line of credit a loan that
is approved before the money is actually needed |
| Line of Credit. A revolving
form of credit where a bank loans a business
up to a specified amount as needed by the firm. |
| Line of Credit: A predetermined
amount of credit immediately accessible to use
as you need, and pay for only as you use. |
| LINE REROUTING: A service offered
by many regional telephone companies allowing
the computer center to quickly reroute the network
of dedicated lines to a backup site. |
| LINE VOLTAGE REGULATORS: Also
known as surge protectors. These protectors/regulators
distribute electricity evenly. |
| Line-of-credit - A lender agrees
to allow a borrower to draw a pre-specified
amount from an account on an as needed basis. |
| Liquidate to settle a debt
or to convert to cash. This literally means
to do away with. |
| Liquidated Damages. A specific
sum of money, set as part of a contract, to
be paid by one party to the other if the first
should default on the contract. |
| LIQUIDATING DIVIDENDS are dividends
paid by a corporation that is in the process
of liquidation/bankruptcy. Liquidating Dividends
are paid from the capital of the corporation
as opposed to earnings. Recipients of Liquidating
Dividends are typically shareholders, bond holders
and/or creditors. In the U.S. such dividends
are generally nontaxable under the Internal
Revenue Code. |
| Liquidation - The disposal,
at maximum prices, of the collateral securing
a loan, and the voluntary and enforced collection
of the remaining loan balance from the obligators
and/or guarantors. |
| LIQUIDATION Sale of the assets
of a business to pay off debts. |
| Liquidation Value - The net
value realizable in the sale (ordinarily a forced
sale) of a business or a particular asset. |
| LIQUIDATION VALUE is a type
of valuation similar to an adjusted book value
analysis. Liquidation value is different than
book value in that it uses the value of the
assets at liquidation, which is often less than
market and sometimes book. Liabilities are deducted
from the liquidation value of the assets to
determine the liquidation value of the business.
Liquidation value can be used to determine the
bare bottom benchmark value of a business, since
this should be the funds the business may bring
upon valuation. |
| Liquidation: The process of
dissolving a business by selling the assets,
paying the debts, and distributing the remaining
equity to the owners. |
| Liquidator a qualified person
appointed by a court to close down a business
that is a proprietary company and realise and
distribute its assets in payment of its liabilities. |
| LIQUIDITY - The degree to which
the assets of the firm can be converted into
cash to meet obligations. An insolvent company
is said to be illiquid. |
| Liquidity - the percentage
of an enterprise's assets that can be quickly
converted into cash. |
| LIQUIDITY is a company's ability
to meet current obligations with cash or other
assets that can be quickly converted to cash. |
| Liquidity Premium. The part
of an interest rate or other return that is
intended to cover the fact that the investment
is illiquid. |
| liquidity ratio a comparison
of two accounts in a Balance Sheet, current
assets divided by current liabilities. |
| Liquidity Risk. The risk that
a party will not be able to have enough cash
to meet its obligations as they come due. |
| liquidity The availability
of cash or ability to obtain it quickly. Debt
paying ability. |
| liquidity the ease with which
an asset can be converted into cash |
| liquidity the ease with which
an asset can be converted into cash |
| Liquidity. Ability of a business
to meet its short-term financial obligations. |
| Liquidity: The availability
of cash or ability to obtain it quickly. Also
used to determine debt repayment ability |
| LISTED COMPANY is a public
company listed or quoted on a stock exchange. |
| LISTED INVESTMENTS are those
investments which are listed or quoted on a
stock exchange. |
| Listed property. Property listed
in the tax code or by the IRS that must comply
with special rules before depreciation may be
claimed. Cars and personal computers are examples
of listed property. The special rules are designed
to prevent deductions where the property is
used for personal rather than business purposes. |
| LISTING is a written contract
between an agent and a principal giving authorization
to the agent to perform services for the principal
involving the principal’s property; or, a record
of a property for sale by a broker who has been
authorized by the owner of the property to be
sold. |
| Litigation - The practice of
taking legal action through the judicial process. |
| LIVE TAG – The voice-over at
the end of a prerecorded commercial that provides
current or local information, dealer addresses,
etc. |
| LIVING WILL - A document which
allows a person to state in advance his or her
wishes regarding the use or removal of life-sustaining
or death-delaying procedures in the event of
a terminal illness or injury. |
| load fund — A mutual fund that
charges a commission for the stockbroker or
financial planner who’s marketing it. |
| Loan Agreement - Agreement
to be executed by borrower, containing pertinent
terms, conditions, covenants and restrictions. |
| Loan amortization The schedule
of payments to be made in repaying a debt. With
level-payment amortization, the payment amount
is constant throughout the repayment period.
With constant-principal payment amortization,
the amount of principal repaid in each payment
is constant but the interest amount and the
total payment amount decline as the principal
balance of the loan is reduced. |
| Loan Commitment. A agreement
by a lender to make a loan in the future if
all the conditions in the agreement are satisfied. |
| LOAN COVENANT is a legally
enforceable promise or restriction in a mortgage.
For example, the borrower may covenant to keep
the property in good repair and adequately insured
against fire and other casualties. A breach
of covenant in a mortgage usually creates a
default, defined by the mortgage, and can be
the basis for foreclosure. |
| Loan money lent at interest.
A lender makes a "loan" with the idea that it
will be paid back as agreed and that interest
will be paid for the use of the money. |
| Loan Payoff Amount - The total
amount of money needed to meet a borrower's
obligation on a loan. It is arrived at by accruing
gross interest for one day and multiplying this
figure by the number of days that exist between
the date of the last repayment and the date
on which t |
| Loan Terms: Details and conditions
of a loan contract, including finance charges,
payment schedule, due date, annual percentage
rate, etc. |
| Loan-to-Value Ratio. The percentage
a lending institution will loan to the appraised
value of a property. For example, if the property
is appraised for $100,000 and a bank will loan
only $70,000, the loan-to-value ratio is 70%. |
| Loan-to-Value Ratio: The relationship
between the amount of the mortgage and the appraised
value of the property, expressed as a percentage
of the appraised value. |
| Local Content: The percentage
of a good that is made locally. |
| lockbox Also called a bank
lockbox. A system used to speed the availability
of funds from cash collections by reducing the
time from the customer mailing the check until
the funds are available to spend. Remittances
are sent to a bank near the customer and the
bank deposits funds speedily to the payee's
account. |
| lockout — When union-management
disagreements get ugly. Management prevents
union employees from entering the workplace
and doing their jobs. |
| lockout a firm’s refusal to
allow employees to enter the workplace |
| LOGO – A recognizable graphic
design element, representing an organization
or product. |
| LOGOTYPE – The stylized lettering
often employed in a logo. |
| LONDON INTERBANK OFFERED RATE
(LIBOR) is the rate that the most creditworthy
international banks that deal in Eurodollars
charge each other for large loans. It is equivalent
to the federal funds rate in the U.S. |
| Long Bond. A bond that matures
in more than 10 years. |
| Long Term Assets - (sometimes
called fixed assets) these are usually non-liquid
assets that are integral to the enterprise's
day to day business operations such as plants,
equipment, furniture and real estate. |
| LONG TERM DEBT is all senior
debt, including bonds, debentures, bank debt,
mortgages, deferred portions of long term debt,
and capital lease obligations. |
| Long Term Liabilities - all
debts that are not current liabilities, that
is, debts that are not due until at least one
calendar year in the future. |
| LONG-LIVED ASSETS are usually
those assets that are not consumed during the
normal course of business, e.g. land, buildings
and equipment, etc. |
| LONG-TERM DEBT TO EQUITY expresses
the relationship between long-term capital contributions
of creditors as related to that contributed
by owners (investors). As opposed to DEBT TO
EQUITY, Long-Term Debt to Equity expresses the
degree of protection provided by the owners
for the long-term creditors. A company with
a high long-term debt to equity is considered
to be highly leveraged. But, generally, companies
are considered to carry comfortable amounts
of debt at ratios of 0.35 to 0.50, or $0.35
to $0.50 of debt to every $1.00 of book value
(shareholders equity). These could be considered
to be well-managed companies with a low debt
exposure. It is best to compare the ratio with
industry averages. |
| long-term financing money
that will be used for longer than one year |
| Long-Term Financing. Loans
not to be repaid within one year. |
| LONG-TERM LIABILITIES are liabilities
of a business that are due in more than one
year. An example of a long-term liability would
be a mortgage payable. |
| Long-term liabilities Depending
on the nature of the business and the proprietor's
intent, may be debt with an extended repayment
period such as a many-year mortgage on land
and buildings; or debt that's intended to be
permanent such as bonds issued to investors.
(Also called long-term debt, or fixed debt.) |
| long-term liabilities debts
that need not be repaid for at least one year |
| Long-term Liabilities: These
a liabilities in your business that are due
in more than one year. For example mortgage
payable. |
| loss of profits insurance insurance
to cover loss of profits incurred by the policyholder
in the event of some calamity overtaking the
policyholder’s business, so that trading has
to cease. |
| Loss Rate - A rate developed
by comparing the ratio of total loans charged
off to the total loans disbursed from inception
of the program to the present date. |
| LOSS REDUCTION: The technique
of instituting mechanisms to lessen the exposure
to a particular risk. Loss reduction is intended
to react to an event and limit its effect. Examples
of Loss Reduction include sprinkler systems,
insurance policies, and evacuation procedures. |
| Loss Reserve Adjustment Rate
- A reserve rate based upon the ratio of the
aggregate net chargeoffs (chargeoffs less recoveries)
for the most recent five years to the total
average loans outstanding for the comparable
5-year period. |
| LOSS, in finance, is when expenses
exceed sales or revenues, i.e. goods or services
are sold for less than their cost. |
| LOSS: The unrecoverable business
resources that are redirected or removed as
a result of a disaster. Such losses may be loss
of life, revenue, market share, competitive
stature, public image, facilities, or operational
capability. |
| Losses Decreases in equity
(net worth) of a business due to expenses greater
than revenues. |
| Lost Instrument Bond. A bond
that guarantees that the owner of a lost stock,
bond, etc. certificate or other financial instrument
will hold the firm harmless against loss if
it will issue a replacement certificate. |
| Lower Cost or Market: LCM.
A method of valuing assets at the lower of its
original cost or current market value. |
| Lowest Responsible Bidder.
The bidder who is awarded a contract because
his bid is lower than any of the other bidders
whose reputation, past performance, and business
and financial capabilities are acceptable. |
| LUMP SUM DISTRIBUTION - With
respect to retirement plans, the distribution
of an individual-s benefits in the form of one
payment rather than in equal installments over
a specified period of time or the individual-s
lifetime. The Internal Revenue Code imposes
certain requirements in order for the distribution
to qualify for special tax treatment. |
| Lump Sum. A price for a group
of goods or services where there is no breakdown
of price for the various items. |
| lump-sum salary increase an
entire pay raise taken in one lump sum |
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