| MADISON AVENUE – New York City thoroughfare
that has historically been the location of many large
ad agencies. Today the term often refers to the American
advertising industry collectively. |
| MAGALOG – A mail-order catalog that
carries editorial matter and advertisements for multiple
companies. |
| MAIL ORDER – Retail sales conducted
by mail. |
| MAILER – A mailed advertisement. |
| MAILING LIST – A list of prospective
customers organized by defined factors such as location,
income, or other consumer profile aspect. |
| MAINFRAME COMPUTER: A high-end computer
processor, with related peripheral devices, capable
of supporting large volumes of batch processing, high
performance on-line transaction processing systems,
and extensive data storage and retrieval. SIMILAR
TERMS: Host Computer. |
| maintenance shop a workplace in
which an employee who joins the union must remain
a union member as long as he or she is employed by
the firm |
| major equipment large tools and
machines used for production purposes |
| MAKER - The one who subscribes to
and thereby makes himself liable for a legal obligation-such
as the maker of a promissory note. |
| MANAGEMENT - Those policy makers,
planners, and administrators responsible for running
a business. |
| management by objectives (MBO) a
motivation technique in which managers and subordinates
collaborate in setting goals |
| management controls are controls
performed by one or more managers. |
| management development the process
of preparing managers and other professionals to assume
increased responsibility in both present and future
positions |
| management information system (MIS) a
system that provides managers with the information
they need to perform their jobs as effectively as
possible |
| management representation letter
A letter addressed to the auditor, signed by the client's
chief executive office and chief financial officer.
During an audit, management makes many representations
to the auditor. Written representations from management
in the letter confirm oral representations given to
the auditor, document the continuing appropriateness
of such representations, and reduce the possibility
of misunderstanding. |
| Management the role of conducting
and supervising a business. |
| management the process of coordinating
people and other resources to achieve the goals of
the organization |
| Manager An LLC may be operated by
a group of managers who act much like a board of directors.
If an LLC is to controlled by mangers this fact must
be stated in the articles of organization. |
| managerial hierarchy the arrangement
that provides increasing authority at higher levels
of management |
| manual controls are controls performed
manually, not by computer. |
| MANUAL TAG SYSTEM is a inventory
tracking system used in inventory management that
tracks inventory using tags removed at the point of
purchase. |
| manufacturer (or producer) brand a
brand that is owned by a manufacturer |
| Manufacturer. Business that produces
goods for individuals and/or businesses. |
| manufacturer’s sales branch essentially
a merchant wholesaler that is owned by a manufacturer |
| manufacturer’s sales office essentially
a sales agent that is owned by a manufacturer |
| Manufacturer's Output Policy. An
insurance policy that covers the loss of property
owned by a manufacturer but located off the premises. |
| Manufacturer's Representative. Middleman
agent who markets related, but non-competing products
for several manufacturers or vendors. |
| MANUFACTURING ACCOUNT is an accounting
statement that is an integral part of the final accounts
of a manufacturing organization. For any particular
period, it indicates, among other things, prime cost
of manufacturing, manufacturing overhead, the total
manufacturing cost, and the manufacturing costs of
finished goods. |
| MANUFACTURING STATEMENT see MANUFACTURING
ACCOUNT. |
| margin — The amount a customer deposits
in a special account kept by a stockbroker. The customer
uses the money in this margin account, combined with
money borrowed from the broker, to purchase stock
(called buying on margin). |
| MARGIN (Stocks) allows investors
to buy securities/assets by borrowing money from a
broker/banker. The margin is the difference between
the market value of a stock/asset and the loan a broker/banker
makes. |
| MARGIN ACCOUNT - An account wherein
one can buy securities by initially paying only a
portion of their purchase price and the balance at
a later date. |
| MARGIN ACCOUNT (Stocks) is a leverageable
account in which stocks can be purchased for a combination
of cash and a loan. The loan in the margin account
is collateralized by the stock and, if the value of
the stock drops sufficiently, the owner will be asked
to either put in more cash, or sell a portion of the
stock. Margin rules are federally regulated, but margin
requirements and interest may vary among broker/dealers. |
| MARGIN CALL (Stocks) is a demand
for additional funds because of adverse price movement
is a stock. |
| margin requirement the portion of
the price of a stock that cannot be borrowed |
| Margin the difference between the
selling price and the purchase price of an item usually
expressed as a percentage of the selling price. Compare
mark-up. |
| MARGINAL COST Additional cost associated
with producing one more unit of output. |
| MARGINAL COST is a calculation showing
the change in total cost as a result of a change in
volume, e.g. if one more item of output increases
the total cost by $25, the marginal cost is $25. It
is usually useful to determine marginal cost because
it can aid in determining if the rate of production
should be altered. |
| MARINE INSURANCE is insurance coverage
protecting against loss or damage of goods transported
by sea. |
| Marine insurance: Insurance that
compensaes the owner of goods transported at sea in
the event of loss that cannot be legally recovered
from the carrier. |
| market — The group of people who
can and want to buy a product now or later. As in,
is there a market for this $3,000 bicycle? |
| MARKET - The number of people and
their spending for your product line within your geographic
boundaries. |
| MARKET – The prospective customers
for a given product or service. |
| Market A place where products and
services and their competitive substitutes are brought
and sold, an opportunity to sell, or the demand for
goods and services. |
| Market Access: The extent to which
a domestic industry can penetrate a related market
in a foreign country. Access can be limited by tariffs
or other non trade barriers. |
| market allocation an agreement to
divide a market among potential competitors |
| MARKET CAPITALIZATION is the total
dollar value of all outstanding shares. It is calculated
by multiplying the number of shares times the current
market price. The term is commonly referred to as
“market cap”. |
| market economy an economic system
in which individuals and businesses decide what to
produce and buy, and the market determines prices
and quantities sold |
| Market Life Cycle - the period of
time that a substantial segment of the buying public
is interested in purchasing a given product or service
form. |
| market order a request that a stock
be purchased or sold at the current market price |
| Market Penetration Pricing Strategy
- if near term income is not critical and rapid market
penetration for eventual market control is desired,
then you set your prices very low. |
| Market Potential. The maximum achievable
combined sales volume for all sellers of a specific
product during a specific time period, in a specific
market. |
| market price the price at which
the quantity demanded is exactly equal to the quantity
supplied |
| MARKET PROFILE – The characteristics
of a group or area targeted for a campaign. |
| MARKET RESEARCH – A study of consumer
groups and business competition used to define a projected
market. |
| market segment a group of individuals
or organizations within a market that share one or
more common characteristics |
| market segmentation the division
of a market into segments. Each segment consists of
a group of consumers with similar requirements, which
can be distinguished from the requirements of other
consumers in the market. There will be distinct differences
between the goods and services needed to meet the
requirements of each segment. |
| market segmentation the process
of dividing a market into segments and directing a
marketing mix at a particular segment or segments
rather than at the total market |
| Market Segmentation. The process
of dividing a heterogeneous market into several homogeneous
sub-markets. |
| market share — A company’s or product’s
portion of the total market for that good. |
| Market Share - the percentage of
the total sales (from all sources) of a service or
product represented by the sales made by your enterprise.
i.e. your sales divided by total sales |
| market value the price of one share
of a stock at a particular time |
| MARKET VALUE, in general, is the
price at which buyers and sellers trade similar items
in an open marketplace. In the absence of a market
price, it is the estimated highest price a buyer would
be warranted in paying and a seller justified in accepting,
provided both parties were fully informed and acted
intelligently and voluntarily. See also OPEN MARKET
VALUE (OMV). |
| market a group of individuals or
organizations, or both, that need products in a given
category and have the ability, willingness, and authority
to purchase such products |
| Market. A specific group of people
who have needs to satisfy and the ability to pay (purchasing
power). |
| marketable securities — Securities,
like government bonds, that can be sold easily. On
balance sheets, they are listed as current assets
because they’re expected to be converted to cash in
the near future, usually one year. |
| Market-basis balance sheet A balance
sheet in which assets are valued at their respective
market prices assuming a reasonable time period for
their sale. |
| MARKETING – The techniques used to
attract and persuade consumers. As a direct response
agency, MJM keeps marketing goals uppermost in mind
in the design of every advertisement. |
| marketing channel (or channel of
distribution) a sequence of marketing organizations
that directs a product from the producer to the ultimate
user |
| marketing concept the business philosophy
that involves the entire organization in the process
of satisfying customers’ needs while achieving the
organization’s goals |
| Marketing finding out what customers
want, then setting out to meet their needs, provided
it can be done at a profit. Marketing includes market
research, deciding on products and prices, advertising
promoting distributing and selling. |
| Marketing Group of related business
activities aimed at satisfying the demand for goods
and services. |
| marketing information system a system
for managing marketing information that is gathered
continually from internal and external sources |
| marketing intermediary (or middleman) a
marketing organization that links a producer and user
within a marketing channel |
| marketing manager a manager who
is responsible for facilitating the exchange of products
between the organization and its customers or clients |
| marketing mix a combination of product,
price, distribution, and promotion developed to satisfy
a particular target market |
| Marketing Mix. The four sets of tools
the entrepreneur may combine to shape market demand
and facilitate transactions: Product, Price, Promotion,
Distribution. |
| marketing plan details of specific
tasks worked out by and for a business concerning
how market research, product choice and pricing, advertising,
promotion and distribution will be done. |
| marketing plan a written document
that specifies an organization’s resources, objectives,
strategy, and implementation and control efforts to
be used in marketing a specific product or product
group |
| marketing research the process of
systematically gathering, recording, and analyzing
data concerning a particular marketing problem |
| Marketing Research. The process of
systematically gathering, analyzing and interpreting
data pertaining to the company's market, customers
and competitors, with the goal of improving marketing
decisions. |
| marketing strategy a business’ approach
to marketing its products/ services expresses in broad
terms, which forms the basis for developing a marketing
plan. |
| marketing strategy a plan that will
enable an organization to make the best use of its
resources and advantages to meet its objectives |
| marketing the process of planning
and executing the conception, pricing, promotion,
and distribution of ideas, goods, and services to
create exchanges that satisfy individual and organizational
objectives |
| Market-Value Clause. A clause in
an insurance policy that allows for the settlement
of a claim based on the market value rather than the
actual cash value. |
| Markup - Markup is the difference
between invoice cost and selling price. It may be
expressed either as a percentage of the selling price
or the cost price and is supposed to cover all the
costs of doing business plus a profit. Whether markup
is based on the selli |
| MARKUP is the amount added to the
cost of goods in order to produce the desired profit. |
| mark-up the price increase between
buying at wholesale and selling at retail often expressed
as a percentage of the wholesale or cost price. Compare
margin. |
| markup the amount a seller adds
to the cost of a product to determine its basic selling
price |
| MARQUEE – An onsite billboard, often
advertising a theater performance. |
| Maslow’s hierarchy of needs a sequence
of human needs in order of their importance |
| MASSACHUSETTS TRUST - An unincorporated
organization created for profit under a written instrument
or declaration of trust, by the terms of which the
property held in trust is managed by compensated trustees
for the benefit of persons whose legal interests are
represented by transferable certificates of participation
or shares; also called business trust. |
| Master Lease: A contract where the
lessee leases currently needed assets and is able
to acquire other assets under the same basic terms
and conditions without negotiating a new contract. |
| master limited partnership (MLP) a
business partnership that is owned and managed like
a corporation but taxed like a partnership |
| MATCHING CONCEPT is the accounting
principle that requires the recognition of all costs
that are directly associated with the realization
of the revenue reported within the income statement. |
| material (materiality) Information
important enough to change an investor's decision.
Insignificant information has no effect on decisions,
so there is no need to report it. Materiality includes
the absolute value and relationship of an amount to
other information. |
| Material Goods - normally raw or
processed materials such as coal or steel that will
become part of the purchaser's end product. |
| Material Participation. Regular,
substantial, and continuous involvement in a business
on the part of either the taxpayer and/or spouse.
Allows losses from trades or businesses to be deducted
without limitation under the passive loss rules. Applies
to S corporations and partnerships. |
| material weakness A condition in
which internal controls do not reduce to a relatively
low level the risk that material errors or fraud may
occur and not be detected in a timely period by employees
in the normal course of their duties. |
| MATERIALITY is the importance of
information or an event that influences a company's
price of stock. |
| MATERIALS are physical goods (and
their cost) used in the manufacture of a product,
often separated into DIRECT MATERIAL (that which goes
directly into the product such as cream into ice cream,
or steel into cars) and INDIRECT MATERIAL (that which
is used in maintaining the manufacturing environment
such as cleaning fluids or oil for lubrication of
manufacturing equipment). Indirect materials are usually
part of the overhead component of cost. The term material,
when used without the direct or indirect qualifier,
usually refers to direct materials. |
| materials handling the actual physical
handling of goods, in warehousing as well as during
transportation |
| materials requirements planning (MRP) a
computerized system that integrates production planning
and inventory control |
| MATRIX ORGANIZATION is where a company
superimposes a group or interdisciplinary team of
project specialists on a functional organizational
design. In a matrix organization the members have
dual allegiances, i.e., to that particular assignment
or project as well as their normal organizational
department. |
| matrix structure an organizational
structure that combines vertical and horizontal lines
of authority usually by superimposing product departmentalization
on a functionally departmentalized organization |
| Maturity - As applied to securities
and commercial paper, the period end date when payment
of principal is due. |
| maturity date the date on which
the corporation is to repay the borrowed money |
| Maturity Date. The date on which
a loan, mortgage, bond, etc. is due and any outstanding
principal must be paid. |
| Maturity date: Date at which payment
is due under a term bill of exchange. |
| Maturity Extensions - Extensions
of payment beyond the original period established
for repayment of a loan. |
| MD&A is an acronym for Management
Discussion and Analysis. MD&A usually refers to that
section of a corporate annual or quarterly report
that provides managerial comment on corporate performance
for the time period in question. |
| measure of value a single standard
or "yardstick" used to assign values to, and compare
the values of, products, services, and resources |
| Mechanic's Lien. A claim in favor
of mechanics, contractors, laborers or material suppliers
against a building or other structure. The lien can
only be filed by persons who worked on the building
or supplied materials. |
| MEDIA - Forms of mass communication.
Newspapers, magazines, direct mail, billboards, bus
signs, radio, television and internet are some important
media that carry advertising. |
| MEDIA PACK - A folder of information
issued by a particular publication concerning the
publication and the process of placing ads in the
publication. Regular elements of the standard media
pack include contract rates, column sizes, deadlines,
editorial calendars, special features, media circulation,
geographic coverage, audience demographics, etc. |
| MEDIA PLAN, in advertising, is the
plan that details the usage of media in an advertising
campaign including costs, running dates, markets,
reach, frequency, rationales, and strategies. |
| MEDIA PLANNER – An employee of an
advertiser or agency who coordinates media aspects
of a campaign and selects the most effective media
to use. Important factors in media planning include:
the campaign; the budget, size and character of the
market profile; and the positioning opportunities
in the media. |
| MEDIA RESEARCH – A study of radio,
television and print media for the purpose of reaching
the optimal consumer audience. |
| MEDIA TRANSPORTATION COVERAGE: An
insurance policy designed to cover transportation
of items to and from an EDP center, the cost of reconstruction
and the tracing of lost items. Coverage is usually
extended to transportation and dishonesty or collusion
by delivery employees. |
| median the value at the exact middle
of a set of data when the data are arranged in order |
| mediation — Using a neutral third
party to settle a dispute by fostering compromise
among battling groups. Can be used in labor-management
disputes. |
| mediation the use of a neutral third
party to assist management and the union during their
negotiations |
| Medical Spending Accounts (MSAs).
An investment fund similar to an IRA that can be used
to pay more routine medical expenses, when used in
conjunction with "high-deductible" health insurance,
which pays the big bills. Only 750,000 of these MSAs
are available nationwide under a pilot program that
runs through the year 2000. To qualify, you have to
be self-employed or employed by a small employer that
offers the program. |
| medium of exchange anything accepted
as payment for products, services, and resources |
| Member A member is a person or entity
who is an owner of some or all of a Limited Liability
Company. The business decisions of an LLC are made
by the members unless the articles of organization
provide that the LLC will controlled by a manager
or managers. |
| Membership Interest A member's ownership
of an LLC is represented by "interests" just as a
partner has an interest in a partnership and shareholders
own stock in a corporation. |
| memorandum of association a legal
document that lays down the objects of a registered
company and details of the regulation of the company’s
business dealings. It is one of the two fundamental
documents upon which registration of any company is
based. See articles of association. |
| memos Written records supporting
journal entries. Credit memos support credits, while
debit memos support debit entries. |
| MENTION – A brief item in the press
or broadcast media referring to a person, product,
or service. |
| Mentor - A business, usually large,
or other organization that has created a specialized
program to advance strategic relationships with small
businesses. |
| MER (Management Expense Ratio) is
the percentage of the assets that were spent to run
a mutual fund. It includes things like management
and advisory fees, travel costs and 12b-1 fees. The
expense ratio does not include brokerage costs for
trading the portfolio. Also referred to as the Expense
Ratio. |
| Merchandise goods that may be sold
or traded. |
| Merchandising trading in a range
of goods. Promoting the whole range of goods that
are sold in a business. |
| merchant middleman a middleman that
actually takes title to products by buying them |
| merchant wholesaler a middleman
that purchases goods in large quantities and then
sells them to other wholesalers or retailers and to
institutional, farm, government, professional, or
industrial users |
| Merger - A combination of two or
more corporations wherein the dominant unit absorbs
the passive ones, the former continuing operation
usually under the same name. In a consolidation two
units combine and are succeeded by a new corporation,
usually with a new titl |
| Merger A merger occurs when two corporations
join together into one, with one corporation surviving
and the other corporation disappearing. The assets
and liabilities of the disappearing entity are absorbed
into the surviving entity. |
| merger the purchase of one corporation
by another |
| MERGER, generally, is any combination
of two companies. Specifically, it is an acquisition
where all assets and liabilities are acquired and
absorbed by the purchaser. |
| MESSAGE – The underlying theme or
idea in advertisement. |
| MICR EQUIPMENT (Magnetic Ink Character
Reader): Equipment used to imprint machine readable
code. Generally, financial institutions use this equipment
to prepare paper data for processing, encoding (imprinting)
items such as routing and transit numbers, account
numbers and dollar amounts. |
| Micro-Loan: Can be defined in terms
of the size of the business loan amount requested;
usually micro-loans are considered loans in the range
of $1,000-$5,000. |
| MID-CAP is a stock with a capitalization,
total equity value, between $500 million and $5 billion. |
| MIDDLE AMERICA – The moderate, middle-class
segment of the U.S. population that comprises the
largest consumer group. |
| middle manager a manager who implements
the strategy and major policies developed by top management |
| MIDDLE MARKET COMPANY: see Mid-Cap. |
| Middle Market: A market segment generally
represented by financing under $2 million. In leasing
this sector is dominated by single investor leases. |
| middleman (or marketing intermediary) a
marketing organization that links a producer and user
within a marketing channel |
| MILLAGE is a rate (as of taxation)
expressed in mills per dollar. |
| MINIMUM WAGE is the lowest compensation
you are allowed to pay an employee for hourly work.
It is defined by Federal, state, and sometimes local
laws. State or local laws may be more restrictive
than Federal law, and certainly may differ. |
| Minimum Wage: The lowest compensation
you are allowed to pay an employee for hourly work.
It is defined by Federal and state laws. State laws
may be more restrictive than Federal law, and certainly
may differ. |
| MINORITY BUSINESSES The Small Business
Administration defines minorities as those who are
"socially and economically disadvantaged." The U.S.
Code of Federal Regulations (CFR) contains the specific
requirements. |
| MINORITY INTEREST is the interest
or percentage ownership of a group of stockholders
who, in total, own less than 50% of the shares in
the corporation. |
| minority a racial, religious, political,
national, or other group regarded as different from
the larger group of which it is a part, and that is
often singled out for unfavorable treatment |
| Minutes A written record which details
the events of the corporation. These records should
be kept in the corporation's or LLC's record book. |
| Minutes: A written record of the
activities of a meeting. |
| misappropriate To embezzle or appropriate
dishonestly for one's own use. |
| Miscellaneous cash flows Cash flows
incidental to the operations or life cycle of the
firm that cannot appropriately be placed in any of
the other three categories. Examples include: gifts
or inheritances received by the firm, gifts given
by the firm, mysterious disappearances of cash held
by the firm, etc. |
| MISCELLANEOUS INCOME is that income
realized that is not directly related to the sale
of standard products and services. |
| mission a statement of the basic
purpose that makes an organization different from
others |
| missionary salesperson a salesperson—generally
employed by a manufacturer—who visits retailers to
persuade them to buy the manufacturer’s products |
| misstatement Stated wrongly or falsely.
Untrue financial statement information. |
| mitigating Reducing in force or intensity. |
| mixed economy an economy that exhibits
elements of both capitalism and socialism |
| MOBILE HOT SITE: A large trailer
containing backup equipment and peripheral devices
delivered to the scene of the disaster. It is then
hooked up to existing communication lines. |
| MOCKUP – A scale-dimensional display
model used in planning. |
| mode the value that appears most
frequently in a set of data |
| MODEM (Modulator Demodulator Unit):
Device that converts data from analog to digital and
back again. |
| Modem: A device used to connect your
computer to other computers by using telephone lines.
Modems are rated at their transfer rate (rated in
Kilobytes per second (KBPS)). Current designs are
28.8 KBPS, 33.6 KBPS, and 56 KBPS. While faster may
seem better, the higher speed is only available when
a very good connection is made between your computer
and the one you are calling. Most modems sold today
are 56 KBPS, and automatically slow down for poor
phone connections. |
| MODIFIED ACCELERATED COST RECOVERY
SYSTEM (MACRS) is a system used in accounting to define
the rate and method under which a fixed asset will
be depreciated for tax purposes. |
| Modified Accelerated Cost Recovery
System (MACRS). The system for computing depreciation
for most business assets. |
| MODIFIED ACCRUAL BASIS accounting
is a mixture of the cash and accrual |
| Modified Accrual: An accounting
method that is a combination of cash and accrual basis.
Recognition is given to revenue when it is available
and measurable. Expenditures are usually reflected
in the accounting period in which the liability is
incurred. |
| Modified Adjusted Gross Income. Your
AGI (adjusted gross income) computed without considering
any passive activity loss, IRA or SEP plans, taxable
social security or the deduction for one-half of the
self-employment tax. |
| MONETARY is anything pertaining to
or having to do with money, money creation, money
supply, and the government management of money. |
| monetary policies Federal Reserve’s
decisions that determine the size of the supply of
money in the nation and the level of interest rates |
| money market deposit accounts — A
bank account that pays a variable rate of interest
based loosely on market rates. Often used by people
who need to keep money readily available, but want
to try for a higher return than on regular bank accounts.
Added bonus: they’re federally insured. |
| money market funds — Funds that put
their money in short-term investments. Considered
pretty safe because the funds invest in such things
as U.S. government securities and bank certificates
of deposit. |
| MONEY MEASUREMENT CONCEPT stipulates
that all business transactions must be expressed in
money terms, i.e., if something cannot be measured
in money; it will not be included in accounting books. |
| money anything a society uses to
purchase products, services, or resources |
| monopolistic competition a market
situation in which there are many buyers along with
a relatively large number of sellers who differentiate
their products from the products of competitors |
| monopoly — What you tried for in
the game with the same name: complete domination of
a market. When you have a monopoly, you have no competitors
for what you’re selling. |
| monopoly a market (or industry)
with only one seller |
| morale a person’s attitude about
his or her job, superiors, and about the firm itself |
| MORTALITY RATE - Number of persons
out of a large group (usually 100,000) who, experience
shows, will live to reach each age up to the death
of the last survivor; inferentially establishing the
expectancy of life of the average person of each age. |
| Mortgage - An instrument giving legal
title to secure the repayment of a loan made by the
mortgagee (lender). In legal contemplation there are
two types: (1) title theory - operates as a transfer
of the legal title of the property to the mortgagee,
and (2) lien theo |
| Mortgage A deed, usually to real
estate, given to secure the repayment of a loan made
by the mortgagee (lender). |
| mortgage bond a corporate bond that
is secured by various assets of the issuing firm |
| Mortgage the transfer of right of
ownership of a property from a debtor to a creditor
as security for a debt, with the proviso that once
the debt is paid ownership is transferred back. |
| Mortgage: A written pledge of real
property to assure payment of a debt, allowing for
sale of the real property to satisfy the debt, in
event of default. Also known as “deed of trust.” |
| Mortgagee the organisation or person
to whom the property is mortgaged. In the case of
a bank loan, the organisation is usually the bank. |
| Mortgagee. A lender who loans money
to a mortgagor. The loan is usually secured by real
estate or other property. |
| Mortgagor a person who mortgages
a property. |
| Most Favored Nation Treatment (MFN):
When one country accords another most-favored nation
status, it agrees to extend to that country the same
trade concession it grants to other MFN recipients.
GATT members have agreed to accord each other MFN
status. Preferential treatment accorded developing
countries, customs unions and free trade areas all
represent allowable exceptions to the MFN concept.
This is sometimes now called "Normal Trading Relations." |
| motivating the process of providing
reasons for people to work in the best interests of
the organization |
| motivation factors job factors that
increase motivation, but whose absence does not necessarily
result in dissatisfaction according to the motivation-hygiene
theory |
| motivation the individual, internal
process that energizes, directs, and sustains behavior;
the personal "force" that causes us to behave in a
particular way |
| motivation-hygiene theory the idea
that satisfaction and dissatisfaction are distinct
and separate dimensions |
| Mouse: A small pod-shaped device
used to move the "pointer" or cursor on your screen.
A variation of this device is a "rollerball", which
has a small ball inset on the top of the device; the
user moves the cursor by moving the ball around, usually
with one's thumb. |
| multilateral development bank (MDB) an
internationally supported bank that provides loans
to developing countries to help them grow |
| multinational enterprise a firm
that operates on a worldwide scale, without ties to
any specific nation or region |
| Multiple Line Insurance. An insurance
policy that combines both liability and property damage
coverage and insures against a range of perils. |
| MULTIPLE same as Price/Earnings Ratio |
| multiple-unit pricing the strategy
of setting a single price for two or more units |
| municipal bond — These bonds are
issued by state or local government entities, such
as cities and counties. Interest earned is generally
tax-free. |
| municipal bond a debt security issued
by a state or local government |
| Mutual Agency: The right of all
partners in a partnership to act as agents for the
normal business operations of the partnership, with
the authority to bind it to business agreements. |
| mutual fund a professionally managed
investment vehicle that combines and invests the funds
of many individual investors |
| mutual funds — These funds pool money
from many investors, and fund managers invest the
money in specific types of securities. Money market
funds are a type of mutual fund. |
| mutual insurance company an insurance
company that is collectively owned by its policyholders
and is thus a cooperative |
| mutual savings bank financial institutions
that are owned by their depositors and offer many
of the same services offered by savings and loan associations |
| Name Reservation The name of a corporation
or LLC must be distinguishable on the records of the
state government. If the name is not unique, the state
will reject the articles of incorporation or articles
of organization (for LLCs). A name can be reserved,
usually for 120 days, by applying with the proper
state authorities and paying a fee. |
| narrative A written description of
an internal control system. |
| NASDAQ (The National Association
of Securities Dealers Automated Quotations System)
— A computerized system that lists price quotes for
many over-the-counter stocks, as well as some other
stocks. |
| NASDAQ a computerized electronic
exchange through which most over-the-counter securities
are traded |
| NATIONAL – A commercial running throughout
the country. |
| National Alliance of Business (NAB) a
joint business-government program to train the hard-core
unemployed |
| National Association of Securities
Dealers (NASD) the organization responsible for the
self-regulation of the over-the-counter securities
market |
| national bank a commercial bank
chartered by the U.S. Comptroller of the Currency |
| national debt the total of all federal
deficits |
| National Labor Relations Act — Federal
law that created the National Labor Relations Board
to supervise union elections and that banned certain
unfair labor practices by employers. The NLRB can
rule on whether labor practices are unfair, although
the decisions are appealable to the courts. |
| National Labor Relations Board (NLRB) the
federal agency that enforces the provisions of the
Wagner Act |
| National Treatment: The concept that
countries must afford foreign companies the same access
and other benefits they do local domestic firms. |
| NATURAL CLASSIFICATION of costs focuses
on the nature of the cost item. In this classification
structure, the total operating costs of an activity
can be classified into manufacturing costs and commercial
costs. Manufacturing costs include all direct materials
and direct labor, as well as, factory overhead. Such
factory overhead costs include indirect materials
(such as factory supplies & lubricants), indirect
labor (such as supervision and inspection) and other
indirect costs (such as rent, insurance, and utilities).
Commercial expenses include marketing expenses (such
as advertising, printing, and sales salaries) and
administrative (general and administrative (G&A))
expenses (such as administrative office salaries,
rent, and legal expenses). |
| natural monopoly an industry requiring
huge investments in capital and within which duplication
of facilities would be wasteful and thus not in the
public interest |
| NATURAL THREATS: Events caused by
nature causing disruptions to an organization. |
| near-immediate execution. |
| need a personal requirement |
| negative assurance A statement of
what the CPA does not know as opposed to a statement
as to what the CPA believes (positive assurance).
A statement that the CPA was "not aware of material
modifications that should be made to financial statements
for them to conform with U.S. generally accepted accounting
principles" is negative assurance used in review reports. |
| negative confirmation request The
negative form of accounts receivable confirmation
asks the client's customer to respond only if the
customer disagrees with the balance determined by
the client. The positive form asks the customer to
respond whether the customer agrees or disagrees with
the client's receivable balance. The negative form
is used when controls over receivables are strong
and accounts receivable consists of many accounts
with small balances. The positive form is used when
controls are weak or there are fewer, but larger,
accounts. |
| negative gearing is when an investment
is purchased with the assistance of borrowed funds
and where the income from that investment (after the
deduction of expenses) is less than the interest commitment
in the course of a year |
| negligence a failure to exercise
reasonable care, resulting in injury to another |
| NEGOTIABLE INSTRUMENT is an unconditional
order or promise to pay an amount of money; it is
easily transferable from one person to another, e.g.
a check, promissory note, bearer bond, and draft (bill
of exchange). |
| negotiable instrument a written
document that (1) is a promise to pay a stated sum
of money and (2) can be transferred from one person
or firm to another |
| Negotiated Grievance Procedure -
The sole and exclusive procedure available to all
employees in a bargaining unit and the employer for
processing grievances and disputes. |
| negotiated pricing occurs when the
final price is established through bargaining between
the seller and the customer |
| Negotiating bank: Bank nominated
on a letter of credit to negotiate the bill of exchange,
i.e. check the documents, pay the seller and seek
reimbursement from the Issuing bank. |
| Negotiation - The "face to face"
process used by local unions and the employer to exchange
their views on those matters involving personnel policies
and practices, or other matters affecting the working
conditions of employees in the unit and reduced to
a written bindi |
| Negotiation Dispute - That point
in negotiations where labor and management cannot
come to an agreement on some or all of the issues
on the bargaining table and the services of the FMCS
have not been utilized. |
| Negotiation: discussion and give
and take leading to an agreement. In respect to Letters
of credit is means “buying” of a bill of exchange
drawn on another party. In situations where letters
of credit are settled by negotiation, a negotiating
bank may be nominated to check the documents, pay
the seller and seek reimbursement from the Issuing
bank. Alternatively the credit may be freely negotiable
at any bank. |
| neighborhood shopping center a planned
shopping center consisting of several small convenience
and specialty stores |
| net asset value (NAV) current market
value of a mutual fund’s portfolio minus the mutual
fund’s liabilities, divided by the number of outstanding
shares |
| Net Assets: Owners Equity. The ownership
interest in the assets of an entity. Total assets
minus Total liabilities. |
| NET CHANGE IN CASH is calculated
by adding cash from operating, investing, and financing
activities and foreign exchange effects from the Statement
of Cash Flows. |
| NET CONTRIBUTION is the amount remaining
after all relevant deductions have been made to the
gross amount, e.g., Net Contribution to Margin. |
| net income — The bottom line, after
everything is paid up, including taxes. What’s left
after all expenses are deducted from total revenue.
Dividends are paid from net income. |
| NET INCOME (LOSS) - Gross profit
minus business expenses, minus interest expensesm
minus taxes. A loss results when expenses exceed revenues. |
| NET INCOME is the difference between
a businesses total revenue and its total expenses.
This caption and amount is usually found at the bottom
of a company's Profit and Loss statement. Same as
Net Profit. |
| net income the profit earned (or
the loss suffered) by a firm during an accounting
period after all expenses have been deducted from
revenues |
| Net Income: The difference between
your business' total revenues and its total expenses.
This caption and amount is usually found at the bottom
of a company Income Statement (also known as "The
Bottom Line"). |
| Net Lease: A lease wherein payments
to the lessor do not include insurance and maintenance,
which are paid separately by the lessee. |
| NET LEASES, typically, there are
three net leases: net lease, double-net lease, and
triple-net lease. A net lease is a base rent plus
an additional charge for taxes. A double-net lease
is a base rent plus an additional charge for taxes
and insurance. A triple-net lease is base rent plus
an additional charge for taxes, insurance, and common
area expenses. |
| NET OPERATING INCOME (NOI) is income
after deducting for operating expenses but before
deducting for income taxes and interest. |
| NET OPERATING LOSS (NOL) is experienced
by a business when business deductions exceed business
income for the fiscal year. For income tax purposes,
a net operating loss can be used to offset income
in a prior year, or a taxpayer can elect to forego
the carry back and carry the net operating loss forward. |
| Net operating loss. The excess of
business expenses over income. A business may apply
a net operating loss to get a refund of past taxes
(or a reduction of future taxes) by carrying it back
to profitable years as an additional deduction (or
by carrying it forward as a deduction to future years). |
| Net Operating Loss: A net operating
loss results when business expenses exceed business
income for the operating period. |
| NET PRESENT VALUE (NPV) is a method
used in evaluating investments, whereby the net present
value of all cash outflows (such as the cost of the
investment) and cash inflows (returns) is calculated
using a given discount rate, usually REQUIRED RATE
OF RETURN. An investment is acceptable if the NPV
is positive. In capital budgeting, the discount rate
used is called the HURDLE RATE and is usually equal
to the INCREMENTAL COST OF CAPITAL. |
| Net Profit - result obtained when
expenses are subtracted from revenues. |
| Net Profit - total revenues less
total expenses. |
| NET PROFIT is the company's total
earnings, reflecting revenues adjusted for costs of
doing business, depreciation, interest, taxes and
other expenses. Same as Net Income. |
| NET PROFIT MARGIN (NPM After Tax)
measures profitability as a percentage of revenues
after consideration of all revenue and expense, including
interest expenses, non-operating items, and income
taxes. For a business to be viable in the long term
profits must be generated; making the net profit margin
ratio one of the key performance indicators for any
business. It is important to analyze the ratio over
time. A variation in the ratio from year-to-year may
be due to abnormal conditions or expenses which need
to be addressed. A decline in the ratio over time
may indicate a margin squeeze suggesting that productivity
improvements may need to be initiated. In some cases,
the costs of such improvements may lead to a further
drop in the ratio or even losses before increased
profitability is achieved. |
| NET PROFIT MARGIN (NPM Pre-Tax) incorporates
all of the expenses associated with ordinary business
(excluding taxes) thus is a measure of the overall
operating efficiency of the firm prior to any tax
considerations which may mask performance. For a business
to be viable in the long term profits must be generated;
making the net profit margin ratio one of the key
performance indicators for any business. It is important
to analyze the ratio over time. A variation in the
ratio from year-to-year may be due to abnormal conditions
or expenses which need to be addressed. A decline
in the ratio over time may indicate a margin squeeze
suggesting that productivity improvements may need
to be initiated. In some cases, the costs of such
improvements may lead to a further drop in the ratio
or even losses before increased profitability is achieved. |
| net profit the remainder after all
expenses of an accounting period are deducted from
all revenue of the same period. |
| NET PURCHASES are those items purchased
less returns, discounts and allowances on those purchases. |
| NET RECEIVABLES are a company's accounts
receivable (money owed to the company) minus any provisions
for bad debts. |
| NET SALES is gross sales less discounts,
allowances, returns, freight out, etc. |
| NET SALES TO GROSS SALES shows the
percent of all transactions that may be considered
as "good" net transactions. Differences may arise
from returns, bad product, or other sales concessions. |
| net sales the actual dollar amounts
received by a firm for the goods and services it has
sold, after adjustment for returns, allowances, and
discounts |
| Net Sales. Dollar sales amount remaining
when reduced by sales tax and any returns or allowances. |
| net what is left after deducting
all charges (see gross). |
| Net Working Capital. The difference
between current assets and current liabilities. |
| Net Worth - assets minus liabilities. |
| net worth — Equity. Fair market value
of total assets minus total liabilities. |
| NET WORTH - Excess of assets over
liabilities. |
| Net Worth - Property owned (assets),
minus debts and obligations owed (liabilities), is
the owner's equity (net worth). |
| NET WORTH is the difference between
Total Liabilities and Total Assets. Minority interest
is included here. |
| Net Worth Property owned (assets)
minus debts and obligations (liabilities). |
| net worth the owner/s’ interest in
a business, calculated by subtracting all liabilities
from the assets of the business. |
| NET, in general, is the figure remaining
after all relevant deductions have been made from
the starting, or gross, amount. |
| NETWORK ARCHITECTURE: The basic layout
of a computer and its attached systems, such as terminals
and the paths between them. |
| NETWORK OUTAGE: An interruption in
system availability as a result of a communication
failure affecting a network of computer terminals,
processors, or workstations. |
| network structure an organization
in which administration is the primary function and
most other functions are contracted out to other firms |
| news release a typed page of about
300 words provided by an organization to the media
as a form of publicity |
| Niche a small specialised segment
of a total market. |
| NODE: The name used to designate
a part of a network. This may be used to describe
one of the links in the network, or a type of link
in the network (for example, Host Node or Intercept
Node). |
| no-fault auto insurance a method
of paying for losses suffered in an automobile accident;
enacted by state law, requires that those suffering
injury or loss be reimbursed by their own insurance
companies, without regard to who was at fault in the
accident |
| no-load fund — Mutual fund that doesn’t
charge a commission. |
| NON COMPOS MENTIS (Not of sound mind)
- A term that includes all forms of mental unsoundness. |
| Non Tariff Barriers: Measures other
than tariffs that restrict imports. Import quotas,
standards, licenses, and other policies can serve
as not-tariff barriers. |
| NON-CURRENT ASSETS includes PPE (property,
plant and equipment) as opposed to current assets
which includes cash, cash equivalents (e.g. securities,
short-term notes, etc.), inventory and accounts receivable. |
| NON-DISCRETIONARY ACCRUAL is a mandatory
expense/asset that is recorded within the accounting
system that has yet to be realized. An example of
this would be payroll taxes. |
| NON-DISCRETIONARY means it is mandatory,
not up to the individual or company. |
| NONESSENTIAL FUNCTION/DATA: Business
activities or information which could be interrupted
or unavailable indefinitely without significantly
jeopardizing critical functions of an organization. |
| NONESSENTIAL RECORDS: Records or
documents which, if irretrievably lost or damaged,
will not materially impair the organization's ability
to conduct business. |
| NONLEGAL INVESTMENT - An investment
that does not conform to the requirements of statutes
governing investment by fiduciaries; a term used principally
with reference to trust investments; to be distinguished
from unauthorized investment. |
| Nonoperating revenues Inflows of
funds from all sources other than operating revenues. |
| nonprice competition competition
that is based on factors other than price |
| nonprofit corporations — Or simply
nonprofits. Organizations that don’t exist to make
a profit. Usually, the groups are dedicated to charitable
or educational efforts; they are, therefore, exempted
from income taxes. |
| Nonprofit Organization: An entity
without a profit objective, oriented toward providing
services efficiently and effectively. |
| Nonrecourse Loan: In a leveraged
lease, the lenders cannot look to the lessor for repayment.
The lender's only recourse is to the lessee and, therefore,
the lessee's credit rating is of prime importance. |
| nonsampling risk is audit risk not
due to sampling. An auditor may apply a procedure
to all transactions or balances and fail to detect
a material misstatement. Nonsampling risk includes
the possibility of selecting audit procedures that
are not appropriate to achieve a specific objective.
For example, confirming recorded receivables cannot
reveal unrecorded receivables. Nonsampling risk can
be reduced to a negligible level through adequate
planning and supervision. |
| NON-SKIP PERSON - For generation-skipping
tax purposes, any person or trust that is not a skip
person. For example, the child of a transferor is
a non-skip person. |
| nonstore retailing a type of retailing
whereby consumers purchase products without visiting
a store |
| nontariff barrier a nontax measure
imposed by a government to favor domestic over foreign
suppliers |
| Non-Vessel Operating Common Carrier:
Also known as an NVOCC, a company which consolidates
small shipments from different sources consigned to
the same destination into a single container for shipment
overseas by either ocean or air carriers. |
| No-par value: Shares of stock which
have no specific face value. The board of directors
can assign a value to the shares for sale and can
then allocate a portion of the sales price to the
paid-in-capital account. |
| No-Par-Value Stock Stock with no
minimum value. Most states allow no-par stock. If
the stock is no-par stock then the amount of stated
capital is an arbitrary amount assigned by the board
of directors. Further, the value of capital for franchise
tax purposes is determined by the state and this may
result in higher franchise taxes in comparison with
low par-value stock. |
| NOPAT (NET OPERATING PROFIT AFTER
TAX) is a company's potential cash earnings if its
capitalization was unleveraged. NOPAT is commonly
used in EVA calculations. |
| NOSTRO ACCOUNT is an account held
by a bank in a foreign country in the currency of
that country e.g., a German bank with an account in
New York will call the record in its own books of
its New York account a nostro account. |
| Nostro-vostro accounts: Accounts
held by correspondent banks in each others' currencies.
Each such account has a nostro view - our money held
with you - and a vostro view - your money held with
us. |
| not negotiable words often written
on crossed cheques, which do not prevent the cheque
from being transferred. See account payee only. |
| NOTARIAL ACKNOWLEDGMENT - (1) The
acknowledgment of the due execution of a legal instrument
before a notary public. (1) The acknowledgment of
the due execution of a legal instrument before a notary
public. (2) The statement of the notary public as
to the fact and date of the acknowledgment, with the
notary public-s signature and seal of office and date
of expiration of commission to serve as notary public. |
| NOTARIAL CERTIFICATE - The certificate,
of the notary public as to the due acknowledgment
of the instrument. |
| note receivable — What you put on
the books if you’re owed money by someone who has
signed a promissory note, which states you will be
paid a certain amount by a certain time. |
| Note: A written, signed promise to
pay that lists the details of the repayment agreement.
|
| Notes And Accounts Receivable - A
secured or unsecured receivable evidenced by a note
or open account arising from activities involving
liquidation and disposal of loan collateral. |
| notes payable obligations that have
been secured with promissory notes |
| NOTES PAYABLE-SHORT TERM are all
short term note obligations, including bank and commercial
paper. Does not include trade notes payable. |
| Not-For-Profit Corporation A corporation
organized for some charitable, civil or other social
purpose which does not entail the generation of profits
for shareholders. These corporations can apply for
tax-exempt status at both the federal and state level.
Not-for-profit corporations must file not-for-profit
articles of incorporation with the state. |
| not-for-profit corporation a corporation
that is organized to provide a social, educational,
religious, or other service, rather than to earn a
profit |
| Not-for-profit corporation: A corporation
formed under state law which exists for a socially-worthwhile
purpose. Profits are not distributed but retained
and used for corporate purposes. May be tax-exempt.
Also referred to as non-profit. |
| NOTICE TO CREDITORS - The notice
in writing by posting in public places or by notice
in newspapers to creditors of an estate to present
their claims for what the executor or administrator
owes them; it usually is also a notice to debtors
to come in and pay what they owe the estate. |
| Notify party: the party who is to
be notified when goods arrive at their destination. |
| NOVELTIES – Free items, such as calendars,
letter openers, mugs or buttons, bearing an advertiser’s
logo -- also referred to as advertising specialties.
The purpose of such novelties is to keep the advertiser’s
name in front of its audience over time. |
| NOW account an interest-bearing
checking account; NOW stands for Negotiable Order
of Withdrawal |
| NPV is an acronym for Net Present
Value. |
| NUNCUPATIVE WILL - An oral will made
by a person on his deathbed or by one who is conscious
of the possibility of meeting death in the near future-as
by a person in active military service. It is declared
in the presence of at least two witnesses and later
reduced to writing by someone other than the testator
and offered for probate in the manner prescribed by
statute. |
| objective A goal. |
| OBJECTIVE is a statement that is
written in terms of specific measurable time-based
and verifiable outcomes that challenge the organization
to be more responsive to the environment to achieve
the desired goals. 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. |
| objective a specific statement detailing
what the organization intends to accomplish over a
shorter period of time |
| objectivity The internal auditors'
objectivity depends on the organizational status of
the internal audit function, whether the internal
auditor has direct access and reports regularly to
the board, the audit committee, or owner-manager,
and who oversees internal auditor employment decisions. |
| Obligations - Technically defined
as "amount of orders placed, contracts awarded, services
received, and similar transactions during a given
period which will require payments during the same
or a future period." |
| Obligations Any kind of indebtedness;
an encubance or commitment. |
| obligations Assertions about obligations
deal with whether liabilities are obligations of the
entity at a given date. For example, management asserts
that amounts capitalized for leases in the balance
sheet represent the cost of the entity's rights to
leased property and that the corresponding lease liability
represents an obligation of the entity. |
| obligations. |
| OBLIGEE - One to whom an obligation
is owed, such as a bondholder. |
| OBLIGOR - One who has an obligation
to discharge, such as a corporation which issues bonds. |
| obliterate To do away with something
so as to leave no trace. |
| observe (observation) Watch and test
a client action (such as taking inventory). |
| Occupational Safety and Health Act
(OSHA) of 1970. Legislation that led to the government
regulatory agency charged with the responsibility
of creating, establishing, administering, and enforcing
job safety and health standards in the workplace. |
| Occupational Safety and Health Administration
(OSHA) — An arm of the U.S. Department of Labor that
attempts to keep people safe in their workplace by
setting safety standards and enforcing them. OSHA
will inspect for such problems as contaminants in
a factory’s air. |
| occurrence Assertions about occurrence
deal with whether recorded transactions have occurred
during a given period. For example, management asserts
that sales in the income statement represent the exchange
of goods or services with customers for cash or other
consideration. |
| Ocean bill of lading: A bill of
lading indicating that the exporter consigns a shipment
to an international carrier for transport to a specified
foreign destination. Unlike an inland bill of lading,
the ocean bill of lading also serves as a collection
document. |
| ocean marine insurance insurance
that protects the policyholder against loss or damage
to a ship or its cargo on the high seas |
| odd lot fewer than 100 shares of
a particular stock |
| odd-number pricing the strategy
of setting prices using odd numbers that are slightly
below whole dollar amounts |
| OFF-HOST PROCESSING: A backup mode
of operation in which processing can continue throughout
a network despite loss of communication with the mainframe
computer. |
| Officers The directors appoint officers.
They manage the daily affairs of the corporation.
A corporation's officers usually consist of a president,
vice-president, treasurer and secretary. In most states,
one person can hold all of these posts. |
| Officers: Manage the daily operations
of a corporation. Generally consists of a president,
vice-president, secretary, and treasurer. Appointed
by the board of directors. |
| official receiver a person appointed
to investigate and manage the affairs of a company
in receivership |
| OFF-LINE PROCESSING: A backup mode
of operation in which processing can continue manually
or in batch mode if the on-line systems are unavailable. |
| off-price retailer a store that
buys manufacturers’ seconds, overruns, returns, and
off-season merchandise for resale to consumers at
deep discounts |
| OFFSET ACCOUNT is an account that
is setup for elimination of a long or short position
by making an opposite transaction. |
| OFF-SITE STORAGE FACILITY: A secure
location, remote from the primary location, at which
backup hardware, software, data files, documents,
equipment, or supplies are stored. |
| often called fixed assets. |
| oligopoly — Not quite a monopoly,
but getting there. A small group of large suppliers
dominate a market, providing similar versions of a
product, like cars. |
| oligopoly a market situation (or
industry) in which there are few sellers |
| On a bill of lading: 'order' or 'to
order' transfers or assigns title to the goods to
another party. |
| On boar bill of lading: A bill aof
lading inwhich a carrier certifies that goods have
been placed on board a certain vessel. |
| One-Stop Capital Shops - OSCSs are
the SBA's contribution to the Empowerment Zones/Enterprise
Communities Program, an interagency initiative that
provides resources to economically distressed communities.
The shops provide a full range of SBA lending and
technical assistance prog |
| ONE-WRITE SYSTEM (also known as PEGBOARD
SYSTEM) is a useful system for small and home-based
businesses. It captures information at the time the
transaction takes place. These One-Write Systems are
efficient because they eliminate the need for recopying
the data and are compatible with electronic data processing
if you should decide to computerize. Many small businesses
rely totally on the One-Write System for simplicity
and versatility. With only two pieces of paper, a
check and a ledger, you get all the benefits of sound
bookkeeping: accuracy, money distribution, check control,
audit trail, running bank balance, and instant review. |
| online Access to a computer for immediate
processing without having to wait for a batch of transactions
to be processed at a later time. |
| online communities groups of individuals
or firms that want to exchange information, products,
or services over the Internet |
| online retailing presents products
on customers’ computer screens, customers place orders
through their terminals or by telephone |
| ON-LINE SYSTEMS: An interactive computer
system supporting users over a network of computer
terminals. |
| On-Site Sales Method - selling directly
to the end user using a sales force that calls on
the prospect at their home or place of business. |
| OPEN ACCOUNT is a non-guaranteed
payment arrangement, e.g. similar to department store
credit. Goods are purchased and delivered without
payment. Future payment for delivered goods is dependent
on the good faith of the purchaser. |
| Open account trading and collections:
A bill of exchange that will be drawn on and accepted
by the buyer. |
| Open account: Trading method in which
goods are dispatched to a buyer and paid for after
they have been received. |
| open corporation a corporation whose
stock is bought and sold on security exchanges and
can be purchased by any individual |
| OPEN INFLATION means that prices
are rising on consumer goods and services. |
| Open Insurance Policy: A marine insurance
policy that applies to all shipments made by an exporter
over a period of time rather than to one shipment
only. |
| OPEN TO BUY is the dollar amount
budgeted by a business for inventory purchases for
a specific time period. |
| open-end fund — Mutual fund that
doesn’t limit its number of shares. |
| Open-end Lease: A conditional sale
lease in which the lessee guarantees that the lessor
will realize a minimum value from the sale of the
asset at the end of the lease. |
| Opening bank: Another name for the
Issuing bank in a letter of credit. |
| open-market operations the buying
and selling of U.S. government securities by the Federal
Reserve System for the purpose of controlling the
supply of money |
| Operating Agreement An agreement
among the LLC's members which govern the LLC's operations
and the rights of its members. It is analogous to
corporate bylaws. |
| operating effectiveness How an internal
control was applied, the consistency with which it
was applied, and by whom. |
| OPERATING EXPENDITURES is the amount
used during a particular period directly in support
of day-to-day operations such as wages, maintenance,
office supplies, etc. |
| operating expense all the expenses
normally incurred in running a business, during an
accounting period, excluding the cost of goods sold. |
| OPERATING EXPENSE TO SALES reports
the operating expenses as a percent of Net Revenues.
This then is a measure of the total overhead employed
in the firm per Net Sales Revenue Dollar; thereby
giving an indication of the efficiency of the cost
structure of the company. It gives an indication of
the ability of a business to convert income into profit.
Generally, businesses with low ratios will generate
more profit than others. In general business operations
with larger and more stable cash flows can sustain
higher ratios than smaller and less stable operations.
Scale and income stability are important considerations
though it is up to the management of a business to
monitor costs in an appropriate manner whatever its
size. |
| Operating expenses Expenses incurred
in paying for the day-to-day activities of the business. |
| OPERATING EXPENSES is all selling
and general & administrative expenses. Includes depreciation,
but not interest expense. |
| operating expenses all business
costs other than the cost of goods sold |
| Operating Expenses. Expenses incurred
directly with the sale of merchandise (selling expenses)
and/or those expenses incurred in the general operation
of a business (general or administrative expenses). |
| operating income from continuing
operations is reported on an income statement. |
| OPERATING INCOME is revenue less
cost of goods sold and related operating expenses
that are applied to the day-to-day operating activities
of the company. It excludes financial related items
(i.e., interest income, dividend income, and interest
expense), extraordinary items, and taxes. |
| OPERATING LEASE is a short-term,
cancelable lease. |
| Operating Lease: A simple rental
agreement. |
| Operating Lease: Any lease that is
not a capital lease. These are generally used for
short term leases of equipment. The lessee can acquire
the use of equipment for just a fraction of the useful
life of the asset. Additional services such as maintenance
and insurance may be provided by the lessor. |
| Operating Leverage: The extent to
which fixed costs are part of a company's cost structure;
the higher the proportion of fixed costs, the faster
income increases or decreases with sales volumes. |
| Operating Performance Ratio: An
overall measure of the efficiency of operations during
a period computed by dividing net income by net sales. |
| Operating profit (loss) Income or
loss before taxes calculated as the difference between
total revenues and total expense disregarding the
effects of any extraordinary transactions. (Also called
net income.) |
| OPERATING PROFIT is Gross Profit
minus Operating Expenses. |
| OPERATING PROFIT TO SALES is a useful
ratio when evaluating value of a firm. It discounts
the effect of varying tax rates and benefits to give
a more accurate indication of the return associated
with the firm. |
| Operating revenues Inflows of funds
from sales of goods or services offered for sale through
the principal business activities of a business. |
| OPERATING SOFTWARE: A type of system
software supervising and directing all of the other
software components plus the computer hardware. |
| Operating System (also OS): The environment
your programs will use to accomplish their work. Currently,
there are 4 popular operating systems: Windows, Macintosh,
Unix and Linux. Unix has several variants, of which
the most popular are currently FreeBSD, and Solaris.
Your computer must have an operating system. |
| operational plan a type of plan
designed to implement tactical plans |
| operations management all activities
that managers engage in to produce goods and services |
| operations manager a manager who
manages the systems that convert resources into goods
and services |
| OPIC: Overseas Private Investment
Corporation. A US agency that assists US companies
protect their investment against risk in a particular
country besides providing other services. |
| opinion A CPA's conclusion held with
confidence but not substantiated by positive knowledge
or proof. |
| opinion paragraph The paragraph in
the audit report that expresses the auditor's conclusions.
The wording of the standard, unqualified opinion paragraph
is: "In our opinion, the financial statements referred
to above present fairly, in all material respects,
the financial position of XYZ Company at December
31, year A, and the results of its operations and
its cash flows for the year then ended in conformity
with U.S. generally accepted accounting principles." |
| OPPORTUNITY COST is widely used in
business planning in evaluating capital investment.
A company measures the projected return against the
anticipated return it would receive on a highest yielding
alternative investment that contains a similar risk
profile. |
| Opportunity Cost: A basic term from
the disciplines of economics and accounting. In these
circles the acceptable definition of the word is,
"The advantage forgone as the result of the acceptance
of an alternative." |
| OPPORTUNITY LOSS see OPPORTUNITY
COST |
| option — The right to buy or sell
stock at a given price within a certain period of
time. Options are often traded. |
| Option an agreement, often for a
consideration, which permits the purchase or sale
of something within a stipulated time, in accordance
with the terms of the agreement. For example, a right
by a tenant to take up a further lease of premises,
usually under conditions outlined in the original
lease. |
| OPTION is the formal reservation
of the right to buy or sell property / assets at a
certain price and / or within a given time in the
future. |
| order getter a salesperson who is
responsible for selling the firm’s products to new
customers and increasing sales to present customers |
| ORDER OF LIQUIDITY is when items
on a balance sheet are listed in order of liquidity.
After cash, the other current assets are listed in
order of liquidity or nearness to cash (i.e. Accounts
Receivable first, then Inventory…) |
| ORDER OF PERMANENCE is where fixed
assets are entered in the balance sheet in descending
order of permanence (i.e. land first, then buildings,
then equipment ...). |
| order processing those activities
that are involved in receiving and filling customers’
purchase orders |
| order taker a salesperson who handles
repeat sales in ways that maintain positive relationships
with customers |
| Order: a form of endorsement or
transfer. On a bill of exchange, 'order' or 'to order'
means that the drawer directs that payment be made
to another party (usually a bank). |
| Ordinary Interest - Simple interest
based on a year of 360 days, contrasting with exact
interest having a base year of 365 days. |
| organization chart a diagram that
represents the positions and relationships within
an organization |
| ORGANIZATION CHART: A diagram representative
of the hierarchy of an organization's personnel. |
| ORGANIZATION COST is amounts spent
to begin a business entity, e.g., business filing
fees, franchise acquisition, and legal fees. In the
United States, costs associated with a corporation
issuing or selling shares or other securities are
capitalized and not tax deductible. Other organization
expenses may be capitalized and amortized over a period
of sixty (60) months or more; thereby providing possible
tax relief through organization cost deductions. |
| organization a group of two or more
people working together to achieve a common set of
goals |
| Organization. The sum total of the
activities, processes, and people that define a business. |
| Organizational Chart. A graphic description
of a firm which identifies key positions, personnel
occupying those positions, and reporting relationships. |
| organizational height the number
of layers, or levels, of management in a firm |
| Organizational Meeting The initial
meeting where the formation of the corporation is
completed. At the organizational meeting a number
of initial tasks are completed such as: the articles
of incorporation are ratified, the initial shares
are issued, officers are elected, bylaws approved,
and a resolution authorizing the opening of bank accounts
is passed. If the initial directors are named in the
articles of incorporation, they can hold the organizational
meeting. If they are not named, then the organizational
meeting is held by the incorporator. |
| ORGANIZATION-WIDE: A policy or function
applicable to the entire organization and not just
one single department. |
| organizing the grouping of resources
and activities to accomplish some end result in an
efficient and effective manner |
| orientation the process of acquainting
new employees with an organization |
| Original issue discount (OID). The
purchase discount offered on some bonds (and similar
obligations) in lieu of interest. For example: zero-coupon
bonds. OID is generally treated as interest income
to the holder rather than as a capital gain. |
| ORIGINAL ISSUE DISCOUNT is when a
long-term debt instrument is issued at a price that
is lower than its stated redemption value; the difference
is called Original Issue Discount (OID). |
| Origination Fee: A charge for taking
and processing a loan. This charge is also called
a “bank fee.” |
| OSDBU (Office of Small and Disadvantaged
Business Utilization) These offices offer small business
information on procurement opportunities, guidance
on procurement procedures, and identification of both
prime and subcontracting opportunities with the United
States Government. |
| OSHA (OCCUPATIONAL SAFETY AND HEALTH
ACT) is a federal law in the United States that requires
employers to provide employees with a workplace that
is relatively free of hazardous conditions. |
| Other assets Assets that do not "fit"
in the above categories. Examples include: some prepaid
long-term expenses, deposits on long-term leases,
and intangibles not directly in use by the firm. |
| OUTAGE: See Systems Outage. |
| outdoor advertising short promotional
messages on billboards, posters, and signs |
| Outlays - Net disbursements (cash
payments in excess of cash receipts) for administrative
expenses and for loans and related costs and expenses
(e.g., gross disbursements for loans and expenses
minus loan repayments, interest and fee income collected,
and reimburse |
| OUTSOURCING: The transfer of data
processing functions to an independent third party. |
| Outstanding Indebtedness: The still
unpaid part of a loan. |
| OUTSTANDING SHARES is the number
of shares that are currently owned by all investors.
It also includes restricted shares (shares owned by
officers and insiders of the company) as well as shares
held by the public. Shares that the company has repurchased
or retired are not considered outstanding stock. |
| Outstanding Stock: Issued stock
that is still being held by investors. |
| Outward collection: How the Remitting
bank refers to a collection. Collection being sent
overseas to collecting bank(s) for presentation to
buyer. |
| Outward letter of credit: How the
Issuing bank refers to a letter of credit. |
| overall review The objective of the
overall review stage of the audit is to assist the
auditor in assessing conclusions reached and in evaluation
of the overall financial statement presentation. The
overall review includes reading the financial statements
and notes and considering the adequacy of evidence
gathered in response to unusual or unexpected balances.
Results of an overall review may indicate the need
for additional evidence. |
| Overdraft a form of loan by which
a person with a trading bank current account is given
permission to continue making drawings on the account
up to an agreed limit, after the balance has been
reduced to nil. |
| OVERHEAD Business expenses not directly
related to a particular good or service produced.
An example would be utilities. |
| Overhead expenses which are incurred
in producing a commodity or rendering a service, but
which cannot conveniently be attributed to individual
units of production or service. Examples are heating,
lighting etc. |
| OVERHEAD is the costs associated
with providing and maintaining a manufacturing or
working environment. For example: renting the building,
heating and lighting the work area, supervision costs
and maintenance of the facilities. Includes indirect
labor and indirect material. |
| over-the-counter (OTC) market a
network of dealers who buy and sell the stocks of
corporations that are not listed on securities exchange |
| over-the-counter market (OTC) — A
virtual marketplace for trading securities. Dealers
conduct transactions via computer or telephone, rather
than through an auction at a central location, like
the New York Stock Exchange |
| overtime time worked in excess of
forty hours in one week; under some union contracts,
it can be time worked in excess of eight hours in
a single day |
| OVERTRADING, in securities, is: a.
excessive buying and selling by a broker in a discretionary
account, or, b. practice of a member of an underwriting
group inducing a brokerage client to buy a portion
of a new issue by purchasing other securities from
the client at a premium. In finance, it is when a
firm expands sales beyond a level that can be financed
with normal working capital. |
| OWN WORK CAPITALIZED represents the
value of work performed for own purposes and capitalized
as part of fixed assets. |
| Owner Equity: The difference, if
any between total assets and total liabilities on
a balance sheet. If assets are more than liabilities,
the owner has that amount of equity it the business. |
| Owner#s Draw - amount of money taken
from the business by the owner. |
| OWNERS EQUITY see SHAREHOLDER'S EQUITY |
| Owners' Equity. Net Assets. The
ownership interest in the assets of an entity, equal
total assets minus total liabilities. |
| owners’ equity the difference between
a firm’s assets and its liabilities—what would be
left for the owners if assets were used to pay off
its liabilities |
| Packager: The person or organization
putting together a proposal. In leasing, the leasing
company, investment banker, or broker who arranges
a leveraged lease. |
| packaging all the activities involved
in developing and providing a container for a product |
| Packing list: Document listing the
contents of a consignment of goods. May be called
for on a letter of credit. |
| PAGE UNIT – Most magazine advertisements
are sold in page units rather than in columns and
inches. There are rates for a full page, half page,
one-third page, one-sixth page, etc. |
| Paid in Capital Requirements A few
states require corporations to have a specified amount
of paid in capital prior to starting business. These
states include CT, DC, SD and TX and require that
the company have $1,000 in paid in capital before
starting business. |
| paid, accepted or honored at maturity. |
| PAID-IN-CAPITAL is capital received
from investors for stock, equal to capital stock plus
paid-in capital, NOT that capital received from earnings
or donations.. Also called contributed capital. |
| paid-up-capital the total capital
of a company. It comprises both shares issued for
cash or for acquisition of assets and bonus shares. |
| Palmtop Computer: A computer designed
to be exceptionally small and extremely stingy with
power. Palmtops are usually very special purpose machines
designed to be "accessories" to a more standard desktop
computer. A common use for a palmtop is to be a salesman's
reference (with latest information about the company's
product line, customer information and so on) and
allow limited information entry. |
| par value an assigned (and often
arbitrary) dollar value printed on the face of a stock
certificate |
| Par value: The face value assigned
to shares of stock. Par value stock must be sold for
at least the stated value, but can be sold for more
than the par value. |
| parallel processing is the simultaneous
performance of multiple operations, usually in reference
to computer systems. |
| PARALLEL TEST: A test of recovery
procedures in which the objective is to parallel an
actual business cycle. |
| parity bit An extra bit added to
a string of bits to increase the accuracy of data
transmission. |
| PAROL EVIDENCE - Testimony or evidence
which is oral, as contrasted to written or documentary
evidence. |
| PARTICIPATION – A television program
sponsorship pattern in which a number of advertisers
are rotated through segments of the program. A "participating"
sponsor has no program content or station lineup control.
Usually, their sponsorship commitment is limited to
a relatively short period. |
| PARTITION - Division, apportionment,
and allocation of property between or among two or
more persons who are entitled to fractional interests
in the whole property; frequently used in connection
with a parcel of real property which must be sold
in order to satisfy interests of the parties owning
unallocated shares in such property. |
| Partnering - A mutually beneficial
business-to-business relationship based on trust and
commitment and that enhances the capabilities of both
parties. |
| Partnership - a legal relationship
between two or more individuals to conduct a specifically
defined business. |
| Partnership - A legal relationship
existing between two or more persons contractually
associated as joint principals in a business. |
| PARTNERSHIP - An association of two
or more persons for the conduct of an enterprise other
than in corporate form. The rights, duties, responsibilities
of the people so associated may be covered by a partnership
agreement or, if not, they are determined by law. |
| partnership — Business owned by two
or more people who share profits and losses. Owners
are personally liable for the partnership’s debt. |
| PARTNERSHIP - Two or more persons
who come together with an agreement to operate a business. |
| Partnership a legal business relationship
of two or more people who share responsibilities,
resources, profits, and liabilities. |
| Partnership A legal relationship
existing between two or more persons contractually
associated as joint principals in a business. |
| Partnership A partnership is "an
association of two or more persons to carry on as
co-owners of a business for profit." In contrast to
a corporation, a general partnership can come into
existence without the need to file any formal papers
with any state official. Thus, if Jones and Smith,
without signing any agreement between them and without
filing any documents with the state begin to jointly
operate a corner candy store, they will have a general
partnership. |
| PARTNERSHIP FREEZE - A method of
restricting (-freezing-) the growth in value for federal
estate tax purposes of a senior family member-s business
or investment interests which are not in corporate
form. The senior family member receives a limited,
but preferential interest in a partnership holding
the business or investment interests, while the future
appreciation in the assets passes to the other partners
who are usually junior family members. The transfer
tax benefits of most partnership freezes have been
restricted by Chapter 14 of the Internal Revenue Code.
See also Recapitalization. |
| PARTNERSHIP is an unincorporated
business that has more than one owner. It is different
from a sole proprietorship in that a sole proprietorship
can have only one owner. |
| partnership a voluntary association
of two or more persons to act as co-owners of a business
for profit |
| Partnership: A Partnership is an
unincorporated business that has more than one owner. |
| Parts/Sub Assembly Goods - products
that will normally become a part of the purchaser's
end product. Examples are screws, bolts, transistors,
printed circuits, electric motors, forgings, castings,
etc. |
| part-time work permanent employment
in which individuals work less than a standard workweek |
| Par-Value The stated minimum value
of a share stock. Stock must be sold for at least
this value or the owner of the stock can face liability.
With low par value stock or no par value stock this
liability is minimized. |
| PASS This is the Procurement Automated
Source System managed by the Small Business Administration.
Registering with this central referral system of small
businesses interested in selling to the government
can bring you business with almost no effort. Registration
is free. |
| PASSIVE ACTIVITY is defined in the
US Tax Code as one or more trades, business or rental
activity, that the taxpayer does not materially participate
in managing or running. All income and losses from
passive activities are grouped together on an income
tax return and, generally, loss deductions are limited
or suspended until the passive activity that generated
them is disposed of in its entirety. |
| Passive activity loss (PAL). Loss
on an investment that is deductible only up to the
limit of gains from similar investments. The limit
mainly affects tax shelters and does not apply to
stocks, bonds or investments in businesses in which
the investor materially participates. Special rules
apply to investments in real estate. |
| PASSIVE INCOME - Income from limited
partnerships or any other business in which a taxpayer
does not materially participate. Under the 1986 Tax
Reform Act, a taxpayer may not deduct losses from
such passive activities to the extent such passive
losses exceed passive income. Special rules apply
to rental activity. The deduction for excess passive
losses was phased out in 1991. |
| PASSIVE INCOME GENERATOR - An investment
in a limited partnership or other business in which
a taxpayer does not materially participate and, therefore,
which produces passive income. A passive income generator
is commonly referred to as a -PIG.- |
| PASSIVE LOSSES - Losses from limited
partnerships or any other business in which the taxpayer
does not materially participate. Under the 1986 Tax
Reform Act, passive losses may not be deducted to
the extent such losses exceed passive income. Special
rules apply to rental activity. The deduction for
excess passive losses was completely phased out in
1991. |
| PASSIVE TRUST - A trust regarding
which the trustee has no active duties to perform;
the same as bare, dry, or naked trust; opposed to
an active trust. |
| Pass-Through Taxation The income
to the entity is not taxed at the entity level; however,
the entity does complete a tax return. The income
or loss as shown on this return is "passed through"
the business entity to the individual shareholders
or interest holders, and is reported on their individual
tax returns. S corporations and LLCs are both pass-through
tax entities. |
| password A sequence of characters
required to gain access to a computer system. Passwords
are used to restrict computer system access to only
authorized persons. |
| PASTE-UP – The formation of a graphic
design or layout by pasting elements on a stiff board.
Increasingly, artists bypass physical paste-up and
create layouts on the computer. |
| Patent - A patent secures to an inventory
the exclusive right to make, use and sell an invention
for 17 years. Inventors should contact the U.S. Department
of Commerce Patent Office. |
| PATENT is a legal form of protection
that provides a person or legal entity with exclusive
rights to exclude others from making, using, or selling
a concept or invention for the duration of the patent.
There are three types of patents available: design,
plant, and utility. |
| Patent the granting by a government
of monopoly rights to the owner of an invention to
manufacture and sell it for a certain number of years,
conditional on the owner being willing to immediately
reveal the ideas incorporated in the invention, so
that they can be published for the advancement of
knowledge of the general public. |
| patent the exclusive right to make,
use, or sell, or license others to make or sell a
newly invented product or process |
| Patent: An exclusive right granted
for 17 years by the federal government to manufacture
and sell an invention. Patents can cover all sorts
of inventions, from physical devices to chemical processes,
and even software algorithms. The only restrictions
are that the invention be novel and not obvious to
current practitioners of the art. Perpetual motion
machines are specifically disallowed from getting
a patent. |
| Patent:A license that secures the
holder the exclusive right to make, use or sell and
invention. |
| Pay As You Go (PAYG) instalments
are the amounts you pay directly to the Commissioner
of Taxation to meet your income tax and other liabilities
and are usually paid each quarter. |
| Payable ready to be paid. |
| PAYBACK PERIOD, in capital budgeting,
is the length of time needed to recoup the cost of
CAPITAL INVESTMENT. The payback period is the ratio
of the initial investment (cash outlay, regardless
of the source of the cash) to the annual cash inflows
for the recovery period. The major shortcoming for
the payback period method is that it does not take
into account cash flows after the payback period and
is therefore not a measure of the profitability of
an investment project. For this reason, analysts generally
prefer the DISCOUNTED CASH FLOW methods of capital
budgeting; primarily, the INTERNAL RATE OF RETURN
and the NET PRESENT VALUE methods. |
| Payee person to whom money is paid |
| Payee: Party to whom payment is
due. |
| Paying bank: In a letter of credit,
bank that is nominated to make payment to the beneficiary
upon presentation of complying documents. |
| PAYMENT is the satisfaction of a
debt or claim; primarily money paid to fulfill an
obligation. |
| Payment Obligation: An amount of
money one is legally bound to pay. |
| payment. The beneficiary of the
credit is the assignor: part of the proceeds of the |
| PAYOFF – The results of an advertising
campaign. Motto Advertising guarantees that its clients
will enjoy a strong payoff, or the agency will pay
for the ads. |
| PAYROLL BURDEN, in the U.S., includes
the cost of your payroll administration, FICA, FUTA,
SUTA, workers’ compensation, etc., based on each $100.00
of payroll. For example: $100.00 of payroll earned
+ 37.56 payroll burden = $137.56 total payroll. |
| payroll Department that determines
amounts of wage or salary due to each employee. |
| peer review A practice monitoring
program in which the working papers of one CPA firm
are periodically reviewed by independent partners
of other firms to determine that the working papers
conform to the standards of the profession. |
| PEG – A strong, memorable element
of a press release or campaign; the hook. |
| PEGBOARD SYSTEM see ONE-WRITE SYSTEM |
| pending Legal proceedings not yet
decided. |
| PENDING usually refers to either:
1. Not yet decided; or, 2. Being in continuance. |
| penetration pricing the strategy
of setting a low price for a new product |
| PENNSYLVANIA RULE - A rule that requires
credit of extraordinary dividends received in trust
on the basis of the source of such dividends; to income
if declared from earnings of the corporation during
the life of the trust, and to principal if from earnings
accumulated before commencement of the trust. |
| per diem An allowance for daily expenses.
Often used to reimburse employees for estimated expenses
as opposed to accounting for each small component
of the expenses. |
| PERCENTAGE LEASE is a type of lease
where the landlord charges a base rent plus an additional
percentage of any profits realized by the business
tenant. |
| performance appraisal the evaluation
of employees’ current and potential levels of performance
to allow managers to make objective human resource
decisions |
| PERFORMANCE INDICATORS are those
empirical data points that indicate how well, or poorly,
an entity is performing against preset goals and objectives.
Normally, in business or strategic planning, a company
will set targets over a specified period that the
business believes are attainable and track performance
over time to those targets or objectives. |
| performance the fulfillment of all
obligations by all parties to the contract |
| Perils of the Sea: An insurance term
used to designate heavy weather grounding, stranding,
collision, water damage or lightning. |
| periodic discounting the temporary
reduction of prices on a patterned or systematic basis |
| PERIODICITY CONCEPT is the concept
that each accounting period has an economic activity
associated with it, and that the activity can be measured,
accounted for, and reported upon. |
| PERIPHERAL EQUIPMENT: Devices connected
to a computer processor which perform such auxiliary
functions as communications, data storage, printing,
etc. |
| PERMANENCE is the quality or state
of being permanent; primarily judged by durability
and useful life. See ORDER OF PERMANENCE. |
| permanent audit working paper files
include working papers related to matters of continuing
accounting significance, such as the analysis of balance
sheet accounts, and contingencies. Such information
from a prior year is used by the auditor in the current
audit and is updated each year. Sometimes referred
to as the continuing file. |
| perpetrate Carry out an action such
as a crime. |
| perpetual An inventory accounting
system updated for each addition to inventory and
each issuance from inventory so the records indicate
the exact quantity on hand at any moment. The alternative
is a periodic inventory system where actual inventory
on hand is determined only once a year. |
| PERPETUAL SUCCESSION is one of the
legal distinctions between a business and a company.
A company has perpetual succession meaning that a
change in the membership does not affect the existence
of the company whereas a business does not enjoy this
perpetual succession. For example, in the case of
a partnership, which is one form of business registration,
a change in the membership affects the partnership. |
| personal assets the money you have
in the bank, whatever is owed to you, any securities
(shares) that you own, the property you own, whatever
part of your home that you own, your furniture and
appliances and all the miscellaneous things that you
personally own. |
| personal financial statements of
individuals present assets and liabilities at estimated
current value on an individual's balance sheet (statement
of financial condition). A statement of changes in
net worth presents major changes in net worth during
a period. The accrual basis is used for assets and
liabilities which are presented in order of liquidity
and maturity, without classification as to current
and noncurrent. The cash value of life insurance less
the amount of loans against it is an asset. Deferred
income tax on the difference between the income tax
basis and estimated current values is presented between
liabilities and equity. |
| personal income the income an individual
receives from all sources less the Social Security
taxes that the individual must pay |
| personal investment the use of your
personal funds to earn a financial return |
| PERSONAL LOAN is a short-term loan
that is extended based on the personal integrity of
the borrower. |
| personal property all property other
than real property |
| personal selling personal communication
aimed at informing customers and persuading them to
buy a firm’s products |
| Personal Service at Customer's Site
- this service can be a one-to-one or one-to-many
relationship between the servicer and customer, sometimes
dealing with factors that the customer deems confidential.
The service is traditionally provided at the customer's
enterprise. Examples of this type of service would
be: tutoring, consulting, etc. |
| Personal Service at Servicer's Site
- this service is usually a one-on-one relationship
between the customer and servicer, often dealing with
factors the customer deems confidential. The service
is traditionally provided at the servicer's enterprise.
Examples of this type of service would be: doctor,
lawyer, accountant, educational institution, etc. |
| Personal Service, Volume - some services
deal with very high volumes but still require the
"personal touch". Examples are airline services or
a parcel delivery service like Federal Express. |
| Personnel persons collectively in
the employ of a business. |
| personnel The department that maintains
records of each individual's employment. |
| persuasive Having the power to influence.
Most audit evidence is persuasive, but not conclusive. |
| PERT (Program Evaluation and Review
Technique) a scheduling technique that identifies
the major activities necessary to complete a project
and sequences them based on the time required to perform
each one |
| pervasive Having the ability to permeate.
An error is pervasive if it is material to more than
one of the primary financial statements. |
| petty cash a small amount of money
kept for minor purchases for the business, which do
not warrant writing a cheque. |
| Petty Cash Fund - fixed fund used
to make small payments without having to write a check
or use credit. The total of the unspent petty cash
and the amount in receipts should equal the fixed
amount of the fund. |
| Petty Cash Fund: A small amount
of cash kept on hand used for making miscellaneous
payments. |
| PETTY CASH, normally, is an account
and location where tangible cash is stored for usage
in purchasing or the reimbursing of inexpensive out-of-pocket
expenditures. |
| PHOTO OPPORTUNITY – An event, sometimes
staged, having visual appeal or interest for photographers
and used as an opportunity to generate publicity.
Political strategists spend long hours devising and
arranging "photo ops" for their candidates. |
| physical distribution all those
activities concerned with the efficient movement of
products from the producer to the ultimate user |
| PHYSICAL SAFEGUARDS: Physical measures
taken to prevent a disaster, such as fire suppression
systems, alarm systems, power backup and conditioning
systems, access control systems, etc. |
| physiological needs the things we
require for survival |
| picketing marching back and forth
in front of the place of employment with signs informing
the public that a strike is in progress |
| piecemeal opinion Expression of an
opinion on an item in financial statements is not
permitted as part of a disclaimer or an adverse opinion
on the financial statements as a whole because piecemeal
opinions tend to overshadow or contradict a disclaimer
of opinion or an adverse opinion. |
| piece-rate system a compensation
system under which employees are paid a certain amount
for each unit of output they produce |
| Piercing the Corporate Veil If corporate
formalities are not followed, it is possible that
the corporate entity will not protect shareholders
from corporate debt. Keeping proper records and holding
regular meetings help solve this possible problem. |
| Piercing the corporate veil: A legal
decision that allows a court to ignore the corporate
entity and reach the assets of the shareholders, directors,
or officers. |
| PITCH – The presentation of an advertising
message to a prospective or existing client. |
| place utility utility that is created
by making a product available at a location where
customers wish to purchase it |
| plan Audit planning is developing
an overall strategy for conduct and scope of the audit.
The nature, extent, and timing of planning vary with
size and complexity of the entity, experience with
the entity, and knowledge of the business. In planning
the audit, the auditor considers the entity's business
and its industry, its accounting policies and procedures,
methods used to process accounting information, the
planned assessed level of control risk, and the auditor's
preliminary judgment about audit materiality levels. |
| plan an outline of the actions by
which an organization intends to accomplish its goals
and objectives |
| planning horizon the period during
which a plan will be in effect |
| planning establishing organizational
goals and deciding how to accomplish them |
| plant layout the arrangement of
machinery, equipment, and personnel within a production
facility |
| PLATFORM: A hardware or software
architecture of a particular model or family of computers
(i.e., IBM, Tandem, HP, etc.) |
| pledge Something given as security
to guarantee payment of a debt. |
| PLUG – A favorable mention or a picture
of a product in the non-advertising portion of a media
presentation. Examples of plugs are a Cheerio’s box
visible on a breakfast table in a film, a character
in a TV movie drinking a Coca-Cola, or James Bond
driving a BMW. |
| POINT-OF-PURCHASE ADVERTISING (P-O-P)
– Signs, displays, and other techniques of attracting
attention and promoting products at their location
of sale. Motto Advertising specializes in creating
innovative P-O-P advertising. |
| point-of-purchase display promotional
material that is placed within a retail store |
| POINTS are additional fee paid to
a lender. Points are generally stated as a percent
of the total amount borrowed and are in essence prepaid
interest. Points paid can be deducted over the life
of the loan. |
| poison pill — Companies resort to
poison pills when someone is trying to take them over.
To discourage the suitor, the takeover prospect takes
on a heap of new debt or does something else to make
the stock less attractive. |
| Political risk: Risk that political
instability in the buyer's country will interfere
with a buyer's ability to meet payment obligations. |
| pollution the contamination of water,
air, or land through the actions of people in an industrialized
society |
| POOLING-OF-INTERESTS, in the US,
is the method of accounting used in a business combination
in which the acquiring company has issued voting common
stock in exchange for voting common stock of the acquired
company. The features of the method are that the acquired
company's net assets are brought forward at book value,
retained earnings and paid-in capital are brought
forward, the net income is recognized for the full
financial year regardless of the date of acquisition,
and the expenses of pooling are immediately charged
against earnings. In order to use the method there
are a number of criteria to be met concerning the
prior independence of the companies and the nature
and timing of the acquisition. |
| population size The number of items
in the population from which a sample is drawn. |
| PORTABLE SHELL: An environmentally
protected and readied structure that can be transported
to a disaster site so equipment can be obtained and
installed near the original location. |
| PORTFOLIO – A large, bound volume
containing samples of past work and used by an agency
or an artist to promote business. |
| positioning the development of a
product image in buyers’ minds relative to the images
they have of competing products |
| positive assurance A statement as
what the CPA believes is positive assurance. An example
is an opinion that the financial statements are presented
fairly in conformity with U.S. GAAP. The opposite
is negative assurance, which is a statement about
what the CPA does not know. A statement that the CPA
was "not aware of material modifications that should
be made to financial statements for them to conform
with U.S. generally accepted accounting principles"
is negative assurance used in review reports. |
| positive confirmation (positive request)
The positive form of receivables confirmation asks
the customer to respond whether the customer agrees
or disagrees with the client's reported receivable
balance. The negative form of accounts receivable
confirmation asks the client's customer to respond
only if the customer disagrees with the balance determined
by the client. The negative form is used when controls
over receivables are strong and accounts receivable
consists of many accounts with small balances. The
positive form is used when controls are weak or there
are fewer, but larger, accounts. |
| possession utility utility that
is created by transferring title (or ownership) of
a product to the buyer |
| POSTER – A graphic advertisement
attached to a flat surface or standing up with a clip
backing. |
| Posting making entries in an account
system or book from original documents such as invoices
and receipts. |
| posting the process of transferring
journal entries to the general ledger |
| POWER OF ALIENATION - The power to
assign, transfer, or otherwise dispose of property. |
| POWER OF APPOINTMENT - A right given
to a person to dispose of property which he does not
fully own. A power of appointment may be general or
special. Under a general power the donee may exercise
the right as he sees fit. A special power limits the
donee as to those in favor of whom he may exercise
the power of appointment. A wife who is given the
power to appoint among her children has a special
power of appointment. |
| POWER OF ATTORNEY An agreement authorizing
someone (generally an attorney) to act as your agent.
This agreement may be general (complete authority)
or special (limited authority). |
| power of attorney power to act on
behalf of another person for specified purposes. |
| power of attorney a legal document
that serves as evidence that an agent has been appointed
to act on behalf of a principal |
| PR is an acronym for, among others,
'payroll' and 'purchase request'. |
| PRECATORY WORDS - Expressions in
a will praying or requesting (but not directing) that
a thing be done or not done. |
| predecessor auditor The auditor of
a client for a prior year who no longer audits that
client. |
| PREDICTOR RATIOS: Most ratios are
descriptive in nature; that is, they describe the
firm as it is now. As you might expect, Predictor
Ratios provide suggestions about likely future conditions
for the firm. VentureLine provides two industry standard
Predictor Ratios: |
| Preemptive Rights Rights delineated
in the articles of incorporation granting shareholders
the first opportunity to buy a new issue of stock
in proportion to their current equity percentage.
The shareholder has the right to buy the new issue
of stock, but is not required to make the purchase.
If the shareholder elects not to exercise this right,
the shares can be sold on the open market. |
| Preemptive rights: A shareholder
right that allows shareholders the opportunity to
maintain their percentage of ownership of the corporation
in the event that additional shares are offered for
sale. |
| PREFERRED LENDERS Banks which have
a special written agreement with the SBA which allows
them to make a guaranteed SBA loan without prior SBA
approval. |
| preferred provider organizations
(PPOs) offer the services of doctors and hospitals
at discount rates or give breaks in copayments and
deductibles |
| preferred stock — If you own this
higher class of stock, you get your dividends before
common stockholders. If the company folds, you also
get assets before common stockholders do. The one
thing you usually don't have is voting rights. |
| Preferred Stock Stock which generally
provides the shareholder with preferential payment
of dividends but does not carry voting rights. If
a corporation is to have preferred stock, this fact
must be stated in the articles of incorporation. |
| preferred stock stock owned by individuals
or firms who usually do not have voting rights, but
whose claims on dividends are paid before those of
common stock owners |
| preferred stock stock owned by individuals
or firms who usually do not have voting rights, but
whose claims on dividends are paid before those of
common stock owners |
| PREFERRED STOCK, usually, non-voting
capital stock that pays dividends at a specified rate
and has preference over common stock in the payment
of dividends and the liquidation of assets. |
| Preferred stock: Generally, stock
which provides the shareholder with a preferential
payment of dividends, but does not carry voting rights. |
| PREMIUM – Something offered for "free"
or at a reduced price as an inducement to buy something
else. Examples: "Buy a timeshare condo and receive
a free television"… "Open a checking account and get
a new toaster." |
| Premium consideration paid for an
insurance policy. |
| premium pricing occurs when the
highest-quality product or the most versatile version
of similar products in a product line is given the
highest price |
| premium (promotion) a gift that
a producer offers the customer in return for buying
its product |
| premium the fee charged by an insurance
company |
| PREPAID EXPENSES are amounts that
are paid in advance to a vender or creditor for goods
and services. Typically, insurance premiums are paid
in advance of the coverage contained in the policy.
Prepaid Expenses is a Current Asset for your business.
This is because you have paid for something and someone
owes you the service or the goods for which you prepaid. |
| prepaid expenses assets that have
been paid for in advance but have not yet been used |
| Prepaid Expenses: Amounts paid in
advance to a creditor or vendor for goods or services.
Insurance premiums are a good example. Prepaid Expenses
are a current asset because you paid for goods or
services you have not yet received. |
| Prepayment: Repaying part or all
of a loan in advance of the due date, with or without
penalty. Penalties for prepayment in full are often
prohibited on consumer loans. |
| Present Value of $1: The value today
of $1 to be received or paid at some future date given
a specified interest rate. |
| Present Value: The current equivalent
of payments or a stream of payments to be received
at various times in the future. The present value
will vary with the discount interest factor applied
to future payments. |
| PRESENTATION – A pitch or a description
of a proposed advertising campaign. |
| presentation Assertions about presentation
deal with whether particular financial statement components
are properly classified and described. For example,
management asserts that long-term liabilities in the
balance sheet will not mature in one year. Similarly,
management asserts that extraordinary items in the
income statement are properly classified and described. |
| Presentation period: On a letter
of credit, number of days allowed between shipment
of goods and presentation of documents to a bank. |
| Presentation: In a collection, presentation
of documents by a bank to a buyer for payment or acceptance.
In a letter of credit, presentation of documents by
a seller to a bank for payment, acceptance or negotiation. |
| Presenting bank: In a collection,
bank that presents documents to a buyer for payment
or acceptance. |
| PRESS AGENT – A publicist – also
known as a press officer. |
| press conference a meeting at which
invited media personnel hear important news announcements
and receive supplementary textual materials and photographs |
| PRESS KIT – A collection of editorial
and promotional materials distributed to the media
about a person, product, or company. Journalists use
these materials to learn about the subject. Michael
J. Motto Public Relations has found that a concise,
well-written press kit is an invaluable aid in generating
print media publicity. Increasingly, audio and videotaped
press kits are used to solicit radio and TV journalists’
attention. |
| PRESUMPTION OF DEATH - A common law
presumption, later incorporated in many state statutes,
to the effect that a presumption of death arises from
a person-s continuous and unexplained absence from
home or place of residence without any intelligence
from him or concerning him for a period of years-usually
seven years. |
| PRETERMITTED CHILD - A child to whom
the parent-s will leaves no share of his or her estate
without affirmative provision in the will showing
an intention to omit. It frequently is an afterborn
child, a posthumous child, or a child erroneously
believed to be dead or one unintentionally omitted |
| PRETERMITTED HEIR - An heir not included
in the descent or devolution of the parent-s estate. |
| preventative control A control designed
to avoid an unintended event. |
| price competition an emphasis on
setting a price equal to or lower than competitors’
prices to gain sales or market share |
| price discrimination the practice
in which producers and wholesalers charge larger firms
a lower price for goods than they charge smaller firms |
| PRICE EARNINGS MULTIPLE: The price-earnings
ratio (P/E) is simply the price of a company's share
of common stock in the public market divided by its
earnings per share. Multiply this multiple by the
net income and you will have a value for the business.
If the business has no income, there is no valuation.
If the common stock in not publicly traded, valuation
of the stock is purely subjective. This may not be
the best method, but can provide a benchmark valuation. |
| PRICE ELASTICITY is the degree to
which customers respond to price changes (calculation:
% change in quantity divided by % change in price).
A value greater than 1 = customers exhibit a good
sensitivity to price. A value less than 1 = customers
are insensitive to price. Price Elasticity is if a
small change in price is accompanied by a large change
in quantity demanded, the product is said to be elastic
(or responsive to price changes). A product is inelastic
if a large change in price is accompanied by a small
amount of change in demand. |
| price fixing an agreement between
two businesses about the prices to be charged for
goods |
| price leaders when a firm prices
a few products below the usual markup, near cost,
or below cost in hopes that sales of regularly priced
products will more than offset the reduced revenues
from the lower-priced products |
| price lining the strategy of selling
goods only at certain predetermined prices that reflect
definite price breaks |
| price skimming the strategy of charging
the highest-possible price for a product during the
introduction stage of its life cycle |
| PRICE TO BOOK is a financial ratio
that is derived by dividing a stock’s capitalization
by its book value. Also called Market-to-Book. |
| PRICE TO EARNINGS RATIO (P/E) is
a performance benchmark that can be used as a comparison
against other companies or within the stock's own
historical performance. For instance, if a stock has
historically run at a P/E of 35 and the current P/E
is 12, you may want to explore the reasons for the
drastic change. If you believe that the ratio is too
low, you may want to buy the stock. You will generally
find a P/E ratio based on either the prior reporting
year's earnings, or the earnings of the prior four
quarters added together (LTM or Latest Twelve Months). |
| PRICE TO REVENUE is a financial ratio
derived by dividing current stock price by revenue
per share (adjusted for stock splits). |
| price the amount of money a seller
is willing to accept in exchange for a product, at
a given time and under given circumstances |
| Price: The amount of money that a
business charges for its product or service. The price
must be enough to cover all costs and give the owner
a desired return on his or her investment in the business. |
| price-earnings ratio — One measure
of how much faith investors have in a particular stock,
it shows how much they’re willing to pay for each
share of a corporation’s earnings. You calculate it
by dividing the current price per share by the earnings
per share for the last year. |
| PRIMARY DEALER is a designation given
by the Federal Reserve System to commercial banks
or broker/dealers who meet specific criteria, including
capital requirements and participation in Treasury
auctions. A primary dealer is entitled and obligated
to purchase and sell government securities with the
Federal Reserve directly. They serve as the conduits
for Federal Reserve open market activities. There
are approximately 30-40 such dealers. |
| primary market — Market where new
issues of securities, like stocks, are sold and the
proceeds go to the issuer. A secondary market is where
people trade securities after they’ve been bought
from the issuing company. |
| PRIMARY MARKET is the first sale
of a newly issued security. Those securities are purchased
in the primary market. All subsequent trading of those
securities is done in the secondary market. |
| primary market a market in which
an investor purchases financial securities (via an
investment bank) directly from the issuer of those
securities |
| primary-demand advertising advertising
whose purpose is to increase the demand for all brands
of a product within a specific industry |
| PRIME BROKERS are providers of back-office
administration and stock lending for hedge funds. |
| Prime Contract - A contract awarded
directly by the Federal government. |
| prime interest rate the lowest rate
charged by a bank for a short-term loan |
| Prime letter of credit: In a back-to-back
letter of credit transaction, the original letter
of credit that is offered as security for another
letter of credit (second letter of credit). |
| prime rate — Interest rate banks
charge their most credit-worthy commercial customers
for loans. Often given to large corporations. |
| Prime Rate - Interest rate which
is charged business borrowers having the highest credit
ratings, for short term borrowing. |
| Prime Rate: An interest rate formally
announced by a bank, the lowest available at a particular
time to its most creditworthy customers. The U.S.
Small Business Administration uses the prime rate
published in The Wall Street Journal. |
| PRINCIPAL – A performer in a commercial
who can be recognized or identified, including but
not limited to those performing speaking parts. |
| Principal - amount owed on a loan
not including interest. |
| principal auditor The auditor responsible
for the greater portion of financial statements. The
principal auditor may assume responsibility for the
work of the other auditor or divide responsibility
with the other auditor. |
| Principal in the case of a loan,
refers to the actual amount borrowed and on which
interest is paid. |
| Principal: The amount of money you
borrow, or the amount of credit you receive exclusive
of interest. |
| Principal: Main Party to a transaction. |
| principle of indemnity in the event
of a loss, an insured firm or individual cannot collect
from the insurer an amount greater than the actual
dollar amount of the loss |
| PRINT ADVERTISING – Advertising in
newspapers, magazines, catalogs, or mailers. Usually,
print ads use some combination of photographs, illustrations,
and copy. |
| private (or store) brand a brand
that is owned by an individual wholesaler or retailer |
| private accountant an accountant
employed by a specific organization |
| PRIVATE CORPORATION is a corporation
that ownership is held by the private sector, i.e.
individuals or companies. |
| private law the body of law that
governs the relationships between two or more individuals
or businesses |
| PRO FORMA - A projection or an estimate
of future results caused by specific actions in the
present. A pro forma financial statement predicts
how business will go if certain assumptions come about. |
| Pro forma - financial forms (invoices,
P&L statements, balance sheets, etc.) based on future
expectations. |
| Pro Forma - financial planning statement
that projects future performance. |
| pro forma income statement — A statement
of revenue and expenses that includes some hypothetical
values. It shows what could be expected to happen
if a corporation decided to go through with a takeover,
for example. |
| Pro forma Invoice: An invoice provided
by a supplier prior to the shipment of merchandise,
informing the buyer of the kinds and quantities of
goods to be sent, their value, and important specifications. |
| pro forma The objective of pro forma
financial information is to show effects on historical
financial information if a proposed event had occurred
earlier. |
| pro rata in proportion. |
| probability proportional to size
(pps) sampling A sampling plan that bases the likelihood
of selecting a particular account on the relative
size of that account, so larger accounts have a greater
probability of being selected for the sample than
smaller accounts. |
| probable A contingent loss is probable
if it is uncertain but likely to happen. |
| problem the discrepancy between
an actual condition and a desired condition |
| PROCEDURAL SAFEGUARDS: Procedural
measures taken to prevent a disaster, such as safety
inspections, fire drills, security awareness programs,
records retention programs, etc. |
| procedure An action, such as a step
performed as part of an audit program or as part of
the client's internal controls. |
| PROCESS COSTING is a method of cost
accounting applied to production carried out by a
series of chemical or operational stages or processes.
Its characteristics are that costs are accumulated
for the whole production process and that average
unit costs of production are computed at each stage. |
| process material a material that
is used directly in the production of another product
but is not readily identifiable in the finished product |
| processing control is an internal
control included in computer software designed to
assure that all transactions are handled as authorized
and none omitted or added. |
| producer (or manufacturer) brand a
brand that is owned by a manufacturer |
| Product Benefits Advertising - a
"product benefits" ad is designed to acquaint the
prospect with the strengths of the product or service
and the benefits resulting from those strengths. |
| Product Comparison Advertising -
a "product comparison" ad compares the features of
your product or service with those of one or more
competitive products or services with the intent of
showing yours to be more feature rich than the competition. |
| product deletion the elimination
of one or more products from a product line |
| product design the process of creating
a set of specifications from which a product can be
produced |
| product differentiation the process
of developing and promoting differences between one’s
product and all similar products |
| product differentiation the process
of developing and promoting differences between one’s
product and all similar products |
| Product Family Advertising - a "product
family" ad is designed to convince the prospect that
they have a wide range of functionality to choose
from today and after they buy they will not be locked
into a single product or service environment in the
future. |
| Product Liability - Type of tort
or civil liability that applies to product manufacturers
and sellers. |
| product liability insurance insurance
that protects the policyholder from financial losses
due to injuries suffered by others as a result of
using the policyholder’s products |
| product life cycle a series of stages
in which a product’s sales revenue and profit increase,
reach a peak, and then decline |
| product line a group of similar
products that differ only in relatively minor characteristics |
| product mix all the products that
a firm offers for sale |
| product modification the process
of changing one or more of a product’s characteristics |
| product everything one receives
in an exchange, including all tangible and intangible
attributes and expected benefits; it may be a good,
service, or idea |
| Production Capacity - the volume
of products or services that can be produced by an
enterprise using current resources. |
| production cycle The portion of an
entity that acquires resources and converts them to
the product or service for customers. |
| PRODUCTION MANAGER – The person responsible
for overseeing details in the creation of a television
or print advertisement. |
| production order A document that
initiates the manufacturing process. |
| production the process of converting
resources into goods, services, or ideas |
| Production. The continuous process
of converting raw materials into finished goods. |
| productivity — What plummeted nationwide
during the President Clinton-Monica Lewinsky controversy.
Productivity measures how much work you get done in
a given period of time. |
| PRODUCTIVITY is a measured relationship
of the quantity and quality of units produced and
the labor required per unit of time. |
| productivity the average level of
output per worker per hour |
| productivity the average level of
output per worker per hour |
| Professional And Trade Associations
- Non-profit, cooperative and voluntary organizations
that are designed to help their members in dealing
with problems of mutual interest. In many instances
professional and trade associations enter into an
agreement with SBA to provide volunteer counseling |
| Professional Corporation A corporation
which is organized for the purpose of engaging in
a learned profession such as law, medicine or architecture.
Professional Corporations must file articles of incorporation
with the state which meet the state's requirements
for professional corporations. |
| proficiency Attainment of proficiency
as an auditor begins with the auditor's formal education
and extends to subsequent experience. The independent
auditor must undergo training adequate in technical
scope, including commensurate general education. The
junior assistant, entering an auditing career, must
obtain professional experience with proper supervision
and review of his or her work by a more experienced
superior. |
| profit — Same as income, the difference
between revenue and expenses, before taxes. |
| PROFIT AND LOSS STATEMENT (P&L) is
also known as an income statement. It shows your business
revenue and expenses for a specific period of time.
The difference between the total revenue and the total
expense is your business net income. A key element
of this statement, and one that distinguishes it from
a balance sheet, is that the amounts shown on the
statement represent transactions over a period of
time while the items represented on the balance sheet
show information as of a specific date (or point in
time). |
| profit and loss statement statement
of revenue and expenses showing the profit or loss
for a certain period of time. |
| Profit and Loss Statement: Also
known as an Income Statement, or P & L. This statement
shows your revenues and expenses for a specific period
of time. |
| PROFIT BEFORE TAXES is operating
profit minus all other expenses (net). |
| PROFIT CENTER is a section of an
organization that is responsible for producing profit,
e.g., a division of a corporation that is not a stand-alone
entity but is required to produce profits within the
corporation. |
| profit margin — A good measure of
a company’s efficiency, this essentially tells you
how much the company makes off sales after expenses
are paid. Generally, the higher the profit margin,
the more efficient the company. Net profit margin
is net income divided by net sales. Gross profit margin
is gross profit divided by net sales. |
| Profit Margin - total revenues less
total expenses |
| profit margin the amount that the
price of a product or service is raised above its
cost in order to provide a gross profit. |
| PROFIT MULTIPLE: Profit and sales
multiples are the most widely used valuation benchmarks
used in valuing a business. The information needed
are pretax profits and a market multiplier, which
may be 1, 2, 3, or 4 and usually a ceiling of 5. The
market multiplier can be found in various financial
publications, as well as analyzing the sale of comparable
businesses. This method is easy to understand and
use. The profit multiple is often used as the valuation
ceiling benchmark. |
| profit sharing the distribution
of a percentage of the firm’s profit among its employees |
| Profit total revenue less total expenses
for a period of time calculated in accordance with
generally accepted accounting principles. |
| profit what remains after all business
expenses have been deducted from sales revenue |
| Profit: The amount of money that
remains after all expenses (total costs) are paid. |
| PROFITABILITY is company's ability
to generate revenues in excess of the costs incurred
in producing those revenues. |
| PROFITABILITY RATIOS are measures
of performance showing how much the firm is earning
compared to its sales, assets or equity. |
| Profitability: A company's ability
to generate revenues in excess of the costs incurred
in producing those revenues. |
| Profit-Sharing Plan - An employee
benefit plan established and maintained by an employer
whereby the employees receive a share of the profits
of the business. The money may be paid directly to
the employee, deferred until retirement, or a combination
of both approaches. |
| profit-sharing plan — If your company’s
doing well, this is one great perk. The company gives
employees bonuses tied to the amount of profit it
makes. |
| pro-forma invoice a document giving
all the details of a proposed transaction, but not
committing either the sender or recipient until the
recipient pays the sender the amount shown. Commonly
used by wholesalers for the first transaction with
new customers. |
| PRO-FORMA INVOICE is a price quote.
It is written as an invoice, and, in effect, says:
'This is the purchase price and terms we are offering.' |
| PRO-FORMA is to provide in advance
to a prescribed form or to describe items
. |
| program An audit program is a listing
of audit procedures to be performed in completing
the audit. A computer program (software) is a listing
of steps to be performed in processing the data. |
| program trading a computer-driven
program to buy or sell a group of stocks |
| programmed controls are built into
computer software and include reasonableness tests,
control totals, and sequence checks. |
| PROGRESSIVE TAX is an income tax
system to where the more income that is made the higher
the tax percentage that must be paid. |
| progressive tax a tax that requires
the payment of an increasing proportion of income
as the individual’s income increases |
| Projected cash flow statement A projection
for a specified future period of expected cash amounts
moving through each account and each of the principal
categories of revenues and expenses. This projection
usually is prepared as a way of predicting the timing
and amount of needed borrowing and to demonstrate
debt repayment capacity. |
| Projection a forecast of future trends
in the operation of a business. |
| projection Financial projections
are prospective financial statements that present,
to the best of the responsible party's knowledge,
given one or more hypothetical assumptions, an entity's
expected financial position, results of operations,
and changes in financial position. A financial projection
is prepared to present hypothetical actions for evaluation. |
| promissory note a written pledge
by a borrower to pay a certain sum of money to a creditor
at a specified future date |
| Promissory note: Financial document
in which the buyer agrees to make payment to the seller
at a specified time. |
| PROMOTION – A method of increasing
sales of merchandise through advertising; any activity
designed to enhance sales. |
| Promotion a means of increasing the
public’s or industry’s awareness of a business and
its services or goods. |
| promotion mix the particular combination
of promotion methods that a firm uses to reach a target
market |
| promotion communication about an
organization and its product that is intended to inform,
persuade, or remind target market members |
| promotional campaign a plan for
combining and using the four promotional methods—advertising,
personal selling, sales promotion, and publicity—in
a particular promotion mix to achieve one or more
marketing goals |
| PROMPT PAYMENT ACT A federal law
that requires federal agencies to pay interest to
companies on bills not paid within 30 days of invoice
or completion of work. |
| Pro-Net - An Internet-based database
of information of small, disadvantaged, 8(a) and women-owned
businesses seeking procurement contracts. |
| pronouncements of the FASB and GASB
are rules that determine the principles for external
financial reporting and disclosure. |
| PROPAGANDA – The promotion of specific
ideas or views, often political in nature. |
| property anything that can be owned |
| proportional tax a tax whose percentage
rate remains constant as the tax base increases |
| PROPRIETARY ASSET, usually, is any
asset that is considered in the realm of intellectual
property that should not be disclosed, e.g., all information
having to do with clients/customers, including but
not limited to names, addresses, telephone numbers
and other contact information, as well as any other
personal or business related information, as it may
exist from time to time is a valuable, and unique
proprietary asset to a company. Proprietary assets
would also include trade secrets and undisclosed inventions. |
| proprietary company a business which
is owned by not less than two persons and not more
than 50 persons and which restricts the right of the
shareholders to transfer shares. Such a business is
a separate legal entity and must use the words Proprietary
Limited (Pty Ltd) after it name. |
| Proprietary Technology - technology
that is unique and legally owned by an enterprise.
The technology may be integral to the product or service
being offered or it may be used in the production
of the product or service. |
| Proprietorship - The most common
legal form of business ownership; about 85 percent
of all small businesses are proprietorships. The liability
of the owner is unlimited in this form of ownership. |
| Proprietorship (See: Sole proprietorship) |
| Proprietorship the value of the proprietor’s
assets in a business less any external liabilities. |
| Proprietorship: A business owned
by one person. |
| Prospecting. First step in the selling
process, developing a list of potential customers
who have a need for the product, resources to acquire
the product, and the authority to purchase. |
| prospective financial statements
are either financial forecasts or financial projections.
Although prospective financial statements may cover
a period that has partially expired, statements for
periods that have completely expired are not prospective
financial statements. |
| prospectus A registration statement
filed with the SEC includes audited financial statements
(balance sheet, income statement, and statement of
cash flows) for the previous three years. A prospectus
contains the same information and must be supplied
to all parties to whom offers are made. There is a
twenty day waiting period between the filing of the
registration statement and the first sale of securities.
During this period, preliminary ads and a "red herring"
prospectus can be provided to offerees but must be
clearly marked as preliminary. |
| prospectus a detailed written description
of a new security, the issuing corporation, and the
corporation’s top management |
| Prospectus: A prospectus is prepared
by an entity that wishes to issue securities to investors.
Included in the prospectus are financial statements,
disclosures (e.g. lawsuit), business plans, overview
of corporate operations, and information regarding
officers. A "red herring" is a preliminary prospectus
that has not been finalized. |
| Protest - A statement in writing
by any bidder or offeror on a particular procurement
alleging that another bidder or offeror on such procurement
is not a small business concern. |
| Protest: Legal procedure that may
be administered by a notary public, evidencing non-payment
or non-acceptance of a bill of exchange. Useful in
support of a subsequent civil action against the defaulter.
In a collection, the presenting bank may be instructed
to arrange for this. |
| ProtTgT - A firm in a developmental
stage that aspires to increasing its capabilities
through a mutually beneficial business-to-business
relationship. |
| PROVISION is to prepare in advance
for an event that is projected to place in the future. |
| proxy — A shareholder’s written statement
designating someone else to vote for him or her at
a corporate meeting. |
| proxy A power of attorney granting
a third party the right to a stockholder's vote. When
management or others solicit proxies from stockholders,
a copy of the proxy statement must be filed with the
SEC ten days before mailing the solicitation. The
proxy statement must include all information relevant
to the matter voted on. |
| proxy fight a technique used to
gather enough stockholder votes to control the targeted
company |
| Proxy If a shareholder can not attend
a meeting, the shareholder is allowed to vote by proxy.
A proxy grants another individual the power to vote
on their behalf. |
| proxy a legal form that lists issues
to be decided at a stockholders’ meeting; enables
stockholders to transfer their voting rights to some
other individual or individuals |
| Proxy: A written shareholder authorization
to vote shares on behalf of another. Directors may
never vote by proxy (except in some close corporations). |
| PRUDENCE is having foresight and
caution along with discretion, and to not act recklessly. |
| public accountant an accountant
who provides services to clients on a fee basis |
| Public Companies: Corporations whose
stock is publicly traded. |
| PUBLIC CORPORATION is a corporation
formed by federal, state or local governments for
specific public purposes. |
| public law the body of law that
deals with the relationships between individuals or
businesses and society |
| public liability insurance insurance
that protects the policyholder from financial losses
due to injuries suffered by others as a result of
negligence on the part of a business owner or employee |
| PUBLIC OWNERSHIP is either: a. Government
ownership and operation of a productive facility for
the purposes of providing some goods or services to
citizens; or, b. In investments, portion of a corporations
stock that is publicly traded and owned in the open
market. |
| PUBLIC RELATIONS (P.R.) – The business
of generating goodwill toward an individual, cause,
company, or product. |
| public relations communication activities
used to create and maintain favorable relations between
an organization and various public groups, both internal
and external |
| PUBLIC SERVICE ANNOUNCEMENT (P.S.A.)
– Announcement on television or radio serving the
public interest and run by the media at no charge.
For example, a utility company might do a series of
PSA’s on the subject of saving energy in the home.
Each one would feature the company’s name. |
| PUBLICIST – A person hired to promote
a cause, individual, or product by generating free
advertising; a press agent. |
| PUBLICITY – The dissemination of
promotional material to draw interest or generate
sales. |
| publicity communication in news-story
form about an organization, its products, or both |
| Pull Promotional Strategy - a process
that requires direct interface with the end user of
the product or service. Use of channels of distribution
is minimized during the first stages of promotion
and a major commitment to advertising is required.
The objective is to "pull" the prospects into the
various channel outlets creating a demand the channels
cannot ignore. |
| PURCHASE MONEY INTEREST is that interest
associated with the purchase money mortgage. |
| PURCHASE MONEY MORTGAGE (PMM) is
seller financing as a part of the purchase price. |
| Purchase Option: A provision in a
document that gives the party receiving the benefit
the right to purchase the property at a future date.
In leasing, a provision by which a lessee has the
right to purchase the equipment at the end of the
lease. The purchase option may be stated at a specified
amount or at fair market value. |
| purchase order A document sent by
a buyer to a seller placing an order and providing
quantities and specifications. |
| PURCHASE ORDER is a written authorization
for a vendor to supply goods or services at a specified
price over a specified time period. Acceptance of
the purchase order constitutes a purchase contract
and is legally binding on all parties. |
| Purchases - items bought and resold
to customers. This includes the cost of all raw materials
or parts purchased for manufacture into finished products. |
| purchasing all the activities involved
in obtaining required materials, supplies, and parts
from other firms |
| Purchasing. The business activity
of securing goods or merchandise from an outside source. |
| pure competition the market situation
in which there are many buyers and sellers of a product,
and no single buyer or seller is powerful enough to
affect the price of that product |
| pure risk a risk that involves only
the possibility of loss, with no potential for gain |
| purport Intending to present. |
| Push Promotional Strategy - a process
of maximizing the use of all available channels of
distribution to "push" the product or service into
the marketplace. This usually requires generous discounts
to achieve the objective of giving the channels incentive
to promote the product or service, thus minimizing
your need for advertising. |
| put — An option to sell a certain
amount of stock at a specific price during a specific
time. |
| Put Option: The requirement to purchase
an asset at a particular time and at a predetermined
price. This term is used in stock, commodities and
leasing. In a lease transaction, this is a lessor's
right to force the lessee (or some third party) to
purchase the equipment at the end of the lease term.
IRS guidelines prohibit put options in tax oriented
leases. |
| qualified (qualify) An audit opinion
that the financial statements as a whole are presented
in conformity with U.S. GAAP, with the exceptions
noted. |
| QUALIFIED DISCLAIMER - A disclaimer
made under Section 2518 of the Internal Revenue Code.
If a qualified disclaimer is made, the property subject
to the disclaimer is treated as never having been
transferred to the disclaimant for federal estate
tax purposes, and prevents a gift from being made
by the disclaimant. Basically, to be a qualified disclaimer,
the disclaimer must be in writing and made within
nine months of the creation of the interest, the disclaimant
cannot have accepted any benefit from the property,
and the property must then pass without direction
of the disclaimant to either the spouse of the decedent
whose property is being disclaimed or to someone other
than the disclaimant. |
| QUALIFIED DOMESTIC RELATIONS ORDER
(-QDRO-) - An order, issued by court in a divorce,
legal separation, or separate maintenance proceeding,
which relates to child support, alimony or the division
of marital property. In general, a qualified domestic
relations order is required for the assignment of
an employee-s benefits under either a qualified or
non-qualified retirement plan in a divorce to be valid. |
| QUALIFIED DOMESTIC RELATIONS ORDER
(QDRO) is when a state court allocates an interest
in a qualified retirement plan to a former spouse
through a qualified domestic relations order. Payments
made to a former spouse as the result of a QDRO will
not result in the taxpayer being assessed a penalty
for early withdrawal from the plan; the former spouse
will be taxed on the benefits when received, or the
benefits can be rolled over tax free into an IRS or
another qualified retirement plan. |
| QUALIFIED DOMESTIC TRUST (-QDOT-)
- A trust created upon the death of an individual
and qualifying for the federal estate tax marital
deduction where the decedent-s surviving spouse is
not a United States citizen. A qualified domestic
trust is the only form of transfer that will qualify
for the marital deduction for a decedent who leaves
an alien spouse. In addition to satisfying the normal
marital deduction rules, the trust instrument must
require that at least one trustee be an individual
who is a citizen of the United States or a domestic
corporation, and that no trust distributions may be
made without the consent of that trustee. An appropriate
election on the estate tax return is also required. |
| QUALIFIED OPINION is the auditor’s
opinion accompanying a financial statement that calls
attention to limitations in the audit or exceptions
the auditor has taken with the audit of the statements. |
| Qualified Opinion: An opinion issued
when an auditor determines his audit has been limited
in scope or the entity has not followed GAAP. (Has
nothing to do with the qualifications of the auditor.) |
| Qualified plan. A retirement or profit-sharing
plan that meets requirements about who must be covered,
the amount of benefits that are paid, information
that must be given to plan participants, etc. Qualified
plans are entitled to tax benefits unavailable to
nonqualified plans. |
| QUALITATIVE INFORMATION is information
that is descriptive in nature, relating to, or involving
quality or kind. |
| qualitative Relating to the quality
of a trait, as opposed to quantitative, which means
expressed as a number. |
| qualitative research a process that
involves the descriptive or subjective reporting of
information discovered by a researcher |
| quality circle a group of employees
who meet on company time to solve problems of product
quality |
| quality control systems provide a
CPA firm with reasonable assurance that personnel
comply with applicable professional standards and
the firm's standards of quality, independence, integrity,
and objectivity. It covers personnel management, acceptance
and continuance of clients and engagements, engagement
performance, and monitoring. |
| quality control the process of ensuring
that goods and services are produced in accordance
with design specifications |
| Quality Control. Ensuring and effectively
regulating the production of the number and type of
goods manufactured to quality specifications. |
| QUANTATIVE INFORMATION is information
relating to, or expressible in, terms of quantity. |
| quantitative (quantitatively) Expressed
as a number, as opposed to qualitative measurement. |
| quantitative research a process
that involves the collection of numerical data for
analysis through a survey, experiment, or content
analysis |
| quasi-government corporation a business
owned partly by the government and partly by private
citizens or firms |
| questionnaire An internal control
questionnaire is a list of questions about the internal
control system to be answered (with answers such as
yes, no, or not applicable) during audit field work.
The questionnaire is part of the audit working papers
used to document the auditor's understanding of the
client's internal controls. |
| QUICK RATIO (or Acid Test Ratio)
is a more rigorous test than the Current Ratio of
short-run solvency, the current ability of a firm
to pay its current debts as they come due. This ratio
considers ONLY cash, marketable securities (cash equivalents)
and accounts receivable because they are considered
to be the most liquid forms of current assets. A Quick
Ratio less than 1.0 implies "dependency" on inventory
and other current assets to liquidate short-term debt. |
| Quick ratio A liquidity ratio measuring
the ability of the firm to pay its current obligations
without liquidating inventory. The quick ratio is
calculated by dividing total current assets minus
inventory by total current liabilities. (Also called
the acid-test ratio.) |
| quick ratio Quick assets divided
by current liabilities. Quick assets are current assets
less inventories and prepaid expenses. |
| Quorum The minimum attendance required
to conduct business at a meeting. Usually, a quorum
is achieved if a majority of directors are present
(for directors meetings) or outstanding shares are
represented (for shareholder meetings). The percentage
needed for a quorum may be modified in the bylaws. |
| Quorum: The required number of persons
necessary to officially conduct business at a meeting.
Generally, a majority of the shareholders or directors
constitutes a quorum. |
| Quota:The quantity of goods of a
specific type that may be imported without restriction
or the imposition of additional duties. |
| RABBI TRUST is a nonqualified deferred
compensation plan whereby an employer and employee
agree to defer payment for the employee's services
until a specified future date. The rabbi trust features
an irrevocable grantor trust that is set up by the
employer to hold the contributions set aside for the
employee. While this provides the employee some degree
of safety that the money will be available when desired,
the terms of the trust must be such that exposes the
trust assets to the claims of the employer's creditors. |
| RAM: (Random Access Memory) The "conscious
memory" of the computer. This is the memory the computer
uses while it is running any program. This is specified
in Megabytes (millions of characters), and 32 Megabytes
should be considered a minimum for any computer. High-end
computers intended for serious engineering problems
(mechanical design, custom integrated circuit design)
or large database handlers may need thousands of megabytes
(Gigabytes) to meet performance goals. RAM is also
measured in speed, usually either in Megahertz or
Nanoseconds; let your consultant choose the appropriate
speed of RAM for your computer. |
| random discounting temporarily reducing
prices on an unsystematic basis |
| random sample (random-number sampling)
Identical probability of each population item being
selected for a sample. Also refers to the use of a
table of random numbers to select a random sample
from a population. |
| range the difference between the
highest value and the lowest value in a set of data |
| RATE – A cost-per-space-unit of print
advertising or cost-per-time-unit in radio and TV
advertising. Newspapers usually publish rates per
column inch or line. The electronic media sell 15-,
30-, or 60-second time units. |
| RATE OF RETURN is the gain or loss
for a security in a particular period, consisting
of income plus capital gains relative to investment,
usually quoted as a percentage. The real rate of return
is the annual return realized on that investment,
adjusted for changes in the price due to inflation. |
| rate of stock turnover (stock turn)
the ratio of cost of goods sold over average stock
(at cost). This indicates how many times, on average,
the entire inventory (stock) was sold and replaced
during the year. |
| RATEHOLDER – A small classified ad
run in every issue of a print publication for the
duration of an advertising contract. The total linage
entitles the advertiser to the lowest possible rate
on all classified ads, both display and in-column. |
| ratification approval of a labor
contract by a vote of the union membership |
| RATING – A measure of audience for
a television or radio program, used to establish advertising
rates. |
| Ratio - Denotes relationships of
items within and between financial statements, e.g.,
current ratio, quick ratio, inventory turnover ratio
and debt/net worth ratios. |
| RATIO ANALYSIS involves conversion
of financial numbers for a firm into ratios. Ratios
allow comparison of one firm to another. Since ratios
look at relationships inside the firm, a firm of one
size can be directly compared to a second firm (or
a collection of firms) which may be larger or smaller
or even in a different business. Financial Ratios
are a method of comparison not dependent on the size
of either firm. Financial Ratios provide a broader
basis for comparison than do raw numbers. In the VentureLine
database the comparison is conducted against the industry
(SIC Code) in which each particular listing is associated. |
| Ratio Denotes the relationship of
items within and between comparisons of balance sheet
items with profit-and-loss items; operating ratios
are those derived from comparisons of items of income
and expense. |
| ratio estimation In audit sampling
a ratio of the proportion of errors in the sample
applied to the population value to estimate total
error. |
| RATIO is the relative size, expressed
as the number of times one quantity is contained in
another (for example, the ratio of assets to liabilities
of a company having total assets of $200,000 and liabilities
of $150,000 would be $200,000 divided by $150,000
= 1.33). |
| ratio The relation between two quantities
expressed as the quotient of one divided by the other.
The ratio of 8 to 2 is written 8/2 and equals four.
Financial statement ratios are used in analytical
procedures in audits. |
| Ratio the relationship of one thing
to another |
| raw material a basic material that
actually becomes part of a physical product; usually
comes from mines, forests, oceans, or recycled solid
wastes |
| raw materials — Raw as in unfinished.
The stuff finished products are made of. |
| REACH, in advertising, is the total
number of people within a target market that will
be reached through an advertising campaign. |
| Real Audio/Video: software that creates
and plays audio, video files over the Internet. |
| Real estate investment trust (REIT).
A kind of "mutual fund" that invests in real estate
rather than stocks and bonds. |
| Real estate mortgage investment conduit
(REMIC). A kind of "mutual fund" that invests in real
estate mortgages rather than stocks and bonds. |
| real property land and anything
that is permanently attached to it |
| Real time processing: submit a credit
card/check/debit card sale to the processor, card
is processed, amount is charged, buyer and seller
notified, proceeds added to your account with no manual
intervention. |
| REALIZED INCOME is the return or
profit that is actually earned or collected over a
given time period. |
| reasonable assurance (in audit report)
An auditor works within economic limits. The audit
opinion, to be economically useful, must be formed
in a reasonable time and at reasonable cost. The auditor
must decide, exercising professional judgment, whether
evidence available within limits of time and cost
is sufficient to justify an opinion. |
| reasonable assurance (in internal
control) An internal control, no matter how well designed
and operated, can not guarantee that an entity’s objectives
will be met because of inherent limitations in all
internal controls systems. |
| REASONABLE CERTAINTY is the degree
of certainty that would be found to be in existence
by a reasonable person. |
| REASONABLE PERSON is a phrase to
denote a hypothetical person who exercises qualities
of attention, knowledge, intelligence, and judgment
that society requires of its members for the protection
of their interest and the interest of others. |
| reaudit When an auditor is asked
to audit and report on financial statements that have
been previously audited and reported on. |
| rebate a return of part of the purchase
price of a product |
| recalculate Perform procedures again
and compare to original results. |
| RECAPITALIZATION: It is dependent
upon how you use the term. The term recapitalization
in itself is, dependent upon the scenario, simply
an adjustment of the relationships between the debt
and equity that funds a firms assets. However, it
can become quite complex dependent upon under what
conditions or reasons the firm is being recapitalized.
This is specially true if recapitalization is being
pursued to ward off a hostile takeover. |
| Recapture. The undoing of a tax benefit
if certain requirements are not met in future years.
For example: (1) The low-income housing credit may
be recaptured or added back to tax if the credit property
ceases to be used as low-income housing for a minimum
number of years. (2) The alimony deduction may be
retroactively lost or recaptured if payments do not
continue at the requisite level for a minimum number
of years. |
| receipt documentary evidence provided
by a person/s or business that goods/money have been
received by them. |
| Receivership the legal condition
a company is placed in when an official receiver is
appointed to investigate and manage its affairs. |
| receiving report A document completed
in the receiving department which identifies the purchase
order that initiated the purchase, and the date, quantity,
and condition of goods received. |
| recession — A time when business
is slow, people lose jobs and sitting presidents worry
about their re-election prospects as people tend to
blame them for economic woes. Technically speaking,
six months or more of a decline in the gross domestic
product. |
| recession two consecutive three-month
periods of decline in a country’s gross domestic product |
| RECIPROCAL AGREEMENT: An agreement
between two organizations with compatible computer
configurations allowing either organization to utilize
the other's excess processing capacity in the event
of a disaster. |
| RECIPROCAL STATUTES - Similar statutes
in two or more states providing mutual provisions
or reciprocal treatment within the states affected
concerning the subjects treated in such statutes;
e.g., similar provisions with regard to corporations
or inheritance taxes, a trust institution, bank, or
business in another state. |
| RECIPROCAL TRUST - A trust created
by one person in consideration of the creation by
the beneficiary of a similar trust for him. |
| recomputation Perform procedures
again and compare to original results. |
| reconcile (reconciliation) A schedule
establishing agreement between separate sources of
information, such as accounting records reconciled
with the financial statements. |
| RECONCILE is the process of balancing
records. An example is when an individual balances
a checking account record with the monthly bank statement.
Once the records accurately agree, the checking account
has been reconciled. |
| Reconciliation: A determination
of the items necessary to bring the balances of two
or more related accounts or statements into agreement. |
| RECORD RETENTION: Storing historical
documentation for a set period of time, usually mandated
by state and federal law or the Internal Revenue Service. |
| RECORDATION - In connection with
a mortgage, the recording of the fact that a lien
has been created against certain property, described
in the mortgage, such entry usually being made in
the appropriate public record of the county or other
jurisdiction in which the particular property is located. |
| RECOURSE, in finance, is the right
to demand payment from the maker or endorser of a
negotiable instrument (as a check). |
| Recourse: The right to demand return
of money paid. In negotiation of a letter of credit,
payment by the negotiating bank will normally be with
recourse (i.e. if the Issuing bank subsequently does
not pay). |
| RECOVERY ACTION PLAN: The comprehensive
set of documented tasks to be carried out during recovery
operations. |
| RECOVERY ALTERNATIVE: The method
selected to recover the critical business functions
following a disaster. In data processing, some possible
alternatives would be manual processing, use of service
bureaus, or a backup site (hot or cold-site). A recovery
alternative is usually selected following either a
Risk Analysis, Business Impact Analysis, or both.
SIMILAR TERMS: Backup site, backup alternative. |
| RECOVERY CAPABILITY: This defines
all of the components necessary to perform recovery.
These components can include a plan, an alternate
site, change control process, network rerouting and
others. |
| RECOVERY MANAGEMENT TEAM: A group
of individuals responsible for directing the development
and on-going maintenance of a disaster recovery plan.
Also responsible for declaring a disaster and providing
direction during the recovery process. |
| Recovery Period The time period designated
by Congress for depreciating business assets. Can
also be thought of as the "life" of an asset (but
is usually shorter). |
| RECOVERY PLANNING TEAM: A group of
individuals appointed to oversee the development and
implementation of a disaster recovery plan. |
| RECOVERY POINT OBJECTIVE (RPO): The
point in time to which data must be restored in order
to resume processing transactions. RPO is the basis
on which a data protection strategy is developed. |
| RECOVERY TEAM: SEE Business Recovery
Team. |
| RECOVERY TIME: The period from the
disaster declaration to the recovery of the critical
functions. |
| recruiting the process of attracting
qualified job applicants |
| Red clause: A letter of credit instructing
an advance payment to be made to the beneficiary upon
advice of the credit but before shipment of the goods. |
| RED HERRING is a preliminary registration
statement describing the issue (the IPO) and prospects
of the company that must be filed with the SEC or
provincial securities commission. There is no price
or issue size stated in the red herring. Red Herring's
are sometimes updated several times before it is called
the final prospectus. It is known as a red herring
because it contains a statement typed in red that
the company is not attempting to sell their shares
before the registration is approved by the SEC. |
| REFEREE - A person appointed in court
proceedings for the judicial settlement of a trustee-s
accounts to conduct hearings with the interested parties
and report his findings to the court. |
| reference pricing pricing a product
at a moderate level and positioning it next to a more
expensive model or brand in the hope that the customer
will use the higher price as a reference price (i.e.,
a comparison price) |
| Refinance: Revision of a loan by
making a new loan with new terms. |
| REFUSAL – The right of the first
actor or model cast in an advertisement to refuse
or accept the assignment. |
| regional exchanges — National securities
exchanges not in New York City. These exchanges are
registered with the U.S. Securities and Exchange Commission.
Chicago has one. |
| regional shopping center a planned
shopping center containing large department stores,
numerous specialty stores, restaurants, movie theaters,
and sometimes even hotels |
| Registered Agent The agent named
in the articles of incorporation. The agent will receive
service of process on the corporation and other important
documents. The agent must be named in the articles
of incorporation, and must be located in the state
of incorporation or organization. |
| Registered agent: The person designated
in the Articles of Incorporation who will be available
to receive service of process (summons, subpoena,
etc.) on behalf of the corporation. A corporation
must always have a registered agent. |
| REGISTERED AS TO PRINCIPAL - A term
applied to a coupon bond, the name of the owner of
which is registered on the bond and on the books of
the company. Such bonds are not negotiable and cannot
be sold without an assignment. |
| registered bond a bond that is registered
in the owner’s name by the issuing company |
| REGISTERED INVESTMENT ADVISOR (RIA)
is an investment advisor registered with the SEC.
No certification is required. |
| Registered Office The office named
in the articles of incorporation. The registered office
must be where the registered agent is located, and
need not be the principal office or place of business
of the corporation. |
| Registered office: The actual physical
location of the registered agent. Need not be the
actual principal place of business of the corporation. |
| registration statement A statement
submitted to officially provide the SEC with information
about an offering of securities. A registration statement
includes audited financial statements (balance sheet,
income statement, and statement of cash flows) for
the previous three years. |
| regression analysis A statistical
method for finding the relationship between two or
more variables. Also called least squares or linear
regression. |
| REGRESSIVE TAX is a tax system to
where the more income that is realized the lower the
tax rate becomes. |
| regressive tax a tax that takes
a greater percentage of a lower income than of a higher
income |
| regulate imports. |
| Regulated investment company (RIC).
A mutual fund. |
| regulation s-x is a regulation of
the SEC that explains the format of information to
be submitted to the SEC. It is entitled "Form and
Content of and Requirements for Financial Statements,
Securities Act of 1933, Securities Exchange Act of
1934, Public Utility Holding Company Act of 1935,
Investment Company Act of 1940, and Energy Policy
and Conservation Act of 1975." |
| REIMBURSEMENT is to pay back to someone,
e.g. to pay an employee for travel expenses that was
paid by the employee out of that employees own personal
funds. |
| Reimbursing bank: Bank specified
as a source of funds in a letter of credit transaction.
Bank is not a party to the letter of credit. |
| reinforcement theory a theory of
motivation based on the premise that behavior that
is rewarded is likely to be repeated, whereas behavior
that is punished is less likely to recur |
| related parties are those with whom
the client has a relationship which might destroy
the self-interest of one of the parties (accounting
is based on measurement of arm's length transactions).
Related parties include affiliates of the client,
principle owners, management (decision makers who
control business policy) and members of their immediate
families. |
| RELATED PARTY TRANSACTION is an interaction
between two parties, one of whom can exercise control
or significant influence over the operating policies
of the other. A special relationship may exist, e.g.
a corporation and a major shareholder. |
| relationship marketing developing
mutually beneficial, long-term partnerships with customers
to enhance customer satisfaction and to stimulate
long-term customer loyalty |
| RELEASE - An action by a person having
or claiming to have some right, title, or interest
in real or personal property, or some claim, right,
or cause of action against another person or persons
by which all such rights or claim of rights are forgiven,
barred, and extinguished. A release may be oral, but
usually is evidenced by a written instrument signed
by the party releasing such rights. |
| RELEASE – The signed permission given
by a person to use his or her photo, voice, name,
or testimonial statement commercially. |
| Release note: Document given by a
bank to a buyer to enable buyer to claim the goods
from the carrier. Used when goods are consigned to
the bank as a means of retaining constructive control. |
| reliable (reliability) Different
audit evidence provides different degrees of assurance
to the auditor. When evidence can be obtained from
independent sources outside an entity, it provides
greater assurance of reliability for an independent
audit than that secured solely in the entity. More
effective internal controls provide more assurance
about reliability of the accounting data and financial
statements. The independent auditor's direct personal
knowledge, obtained through physical examination,
observation, computation, and inspection, is more
persuasive than information obtained indirectly. |
| RELOCATABLE SHELL: SEE Portable Shell |
| remittance Sending money to someone
at a distance. A remittance advice is a paper record
of the amount sent, purpose of the payment, and associated
account identification. |
| Remitter: The party making a payment. |
| REMITTING BANK is a bank that sends
a draft to the overseas bank for collection. |
| Remitting bank: In a collection,
bank who remits the documents overseas and in due
course receives payment. |
| REMNANT SPACE – Print advertising
space that is left over and sold at a discount at
the last minute. |
| remote A contingency with only a
slight chance of occurring. In computer processing
of information, a distant computer. |
| RENOUNCE - (1) An act by which an
individual or trust institution named under a will
as executor or trustee declines to accept such appointment.
(2) The act of a surviving husband or wife under the
decedent-s state law declining to take the provision
made for him or her under the other-s will and taking
his or her share of the estate had the other died
without a will. (3) Any action by which the beneficiary
of any interest in real or personal property therewith
refuses to accept such interest. |
| RENUNCIATION - An act, in accordance
with prescribed procedure, by which an individual
or a trust institution named in a fiduciary capacity
declines to accept the appointment. |
| reperformance The repeating by the
auditor of a computation made by the client to check
its accuracy. |
| replacement chart a list of key
personnel and their possible replacements within the
firm |
| REPLACEMENT VALUE is a valuation
similar to an adjusted book value analysis. Replacement
value is different than liquidation value in that
is uses the value of the replacement value of assets,
which is usually higher than book value. Liabilities
are deducted from the replacement value of the assets
to determine the replacement value of the business. |
| reportable condition Matters coming
to the auditor's attention that are communicated to
the audit committee because they are significant deficiencies
in internal control which could adversely affect the
organization's ability to record, process, summarize,
and report financial data. |
| REPORTING ENTITY is the legal entity
for which financial reports are prepared and made
available. |
| REPORTING PERIOD see ACCOUNTING PERIOD. |
| representation A letter from management
to the auditor representing that the financial statements
are fairly presented. The letter is addressed to the
independent auditor, and dated at the date of the
auditor's report. It is signed by members of management
whom the auditor believes are responsible for, and
knowledgeable about, matters covered (chief executive
officer and chief financial officer). |
| Request For Proposals - A document
outlining a government agency's requirements and the
criteria for the evaluation of offers. |
| REQUIRED RATE OF RETURN see HURDLE
RATE. |
| requisition A formal written request
for something needed. A purchase by a company is often
initiated internally by a requisition, which results
in the issuance of a purchase order to the outside
supplier. |
| research and development (R&D) a
set of activities intended to identify new ideas that
have the potential to result in new goods and services |
| RESERVE ACCOUNTS, generally, are
those accounts where retained earnings are set aside
to satisfy dividends, improvements, contingencies,
retirement of preferred stock, etc. |
| RESERVE is an accounting entry that
properly reflects contingent liabilities. |
| reserve requirement the percentage
of its deposits a bank must retain, either in its
own vault or on deposit with its Federal Reserve District
Bank |
| reserve requirements — Set by the
Federal Reserve, these rules require member banks
to keep a certain amount of cash and other liquid
assets on hand or at a nearby Federal Reserve bank.
The amount is stated as a percentage of deposits.
The rules help the Fed control lending and the nation’s
money supply. |
| RESIDUAL – A payment made to a model,
actor, or singer each time an advertisement is played,
shown or run. |
| RESIDUAL CLAIM is a claim to a share
of earnings after debt obligations have been satisfied. |
| Residual the pre-agreed estimated
value at the end of a leasing period of an item subject
to a leasing agreement. |
| RESIDUAL VALUE is: a) Realizable
value of a fixed asset after deducting costs associated
with its sale; b) Scrap value or the value to a junk
dealer; or c) The amount remaining after all depreciation
has been deducted from the original cost of a depreciable
asset. |
| Residual Value: The value of an asset
at the conclusion of a lease. |
| Resolution A resolution is a formal
decision of the corporation which has been adopted
by either the shareholders or the board of directors. |
| Resolutions: A formal decision which
has been adopted by either the shareholders or the
board of directors of a corporation. |
| responsibility the duty to do a
job or perform a task |
| RESTRICTED ASSETS are assets / resources
which are restricted by legal or contractual requirements
for use under specific circumstances or purposes. |
| Restrictive endorsement: Endorsement
transferring title or right to a named party. See
also: blank endorsement. |
| Retail to sell directly to the consumer,
usually in small quantities in comparison with the
total level of sales. |
| retailer a middleman that buys from
producers or other middlemen and sells to consumers |
| Retained Earnings - profits retained
by the enterprise rather than disbursing to the shareholders.
Retained earnings are used to improve the value of
the enterprise through development and /or promotional
programs. |
| retained earnings — What’s left of
earnings after dividends are paid. These are cumulative;
they’re additions to capital earned since a company’s
birth. |
| RETAINED EARNINGS are profits of
the business that have not been paid out to the owners
as of the balance sheet date. The earnings have been
"retained" for use in the business. Retained Earnings
is an account in the equity section of the balance
sheet. |
| retained earnings the portion of
a business’s profits not distributed to stockholders |
| retained earnings the portion of
a business’s profits not distributed to stockholders |
| Retained Earnings: Profits of the
business that have not been paid out to the owners
as of the balance sheet date. The earnings have been
"retained" for use in the business. Retained Earnings
is an account in the equity section of the balance
sheet. |
| Retired successful business persons
who volunteer to render assistance in counseling and
guiding struggling independent businesses. This program
is sponsored by the SBA. |
| RETURN ON ASSETS (ROA) shows the
after tax earnings of assets. Return on assets is
an indicator of how profitable a company is. Use this
ratio annually to compare a business' performance
to the industry norms: The higher the ratio the greater
the return on assets. However this has to be balanced
against such factors as risk, sustainability and reinvestment
in the business through development costs. |
| RETURN ON CAPITAL EMPLOYED (ROCE)
is a measure of how effectively the company is using
its capital. The formula to measures the return on
all the assets the company is using: Profit before
interest and tax (PBIT) / (total assets - current
liabilities) |
| RETURN ON CAPITAL is the distribution
of cash from depreciation tax savings, the sale of
an capital asset or securities, or, any other transaction
not related to retained earnings. |
| Return On Equity - A measure of a
corporation's profitability, specifically its return
on assets, calculated by dividing aftertax income
by tangible assets. |
| RETURN ON EQUITY (ROE) measures the
overall efficiency of the firm in managing its total
investments in assets and in generating a return to
stockholders. It is the primary measure of how well
management is running the company. ROE allows you
to quickly gauge whether a company is a value creator
or a cash consumer. By relating the earnings generated
to the shareholders' equity, you can see how much
cash is created from the existing assets. Clearly,
all things being equal, the higher a company's ROE,
the better the company. |
| Return On Investment - The amount
of profit (return) based on the amount of resources
(funds) used to produce it. Also, the ability of a
given investment to earn a return for its use. |
| RETURN ON INVESTMENT (ROI) is a profitability
measure that evaluates the performance of a business.
ROI can be calculated in various ways. The most common
method is Net Income as a percentage of Net Book Value
(total assets minus intangible assets and liabilities). |
| return on investment (ROI) the ratio
of net profit after income tax, over owner’s equity.
Usually expressed as a percentage. |
| Return On Investment: An amount of
money that is included in the price of a product or
service. It can be considered an expense since the
business is expected to make enough money to pay this
amount to the original investors. Return on investment
is normally shown as a percent. For example, let’s
say you put up $1,000 to start up a small business
and you wanted a 10 percent return after one year
for that investment. You are expecting the business
to be able to pay all expenses, still have your original
$1,000 plus an additional 10 % or $100 for a total
of $1,100. A 10% return on an investment of $1,000
is $100. |
| Return on Investment: ROI. A measure
of operating performance and efficiency in using assets
computed by dividing net income by average total assets. |
| Return on Investments (ROI) In general,
a concept used in business planning to determine the
profit earned in relation to the value of the capital
required to prduce the profit. |
| return on owner’s equity a financial
ratio calculated by dividing net income after taxes
by owners’ equity |
| return on owners’ equity — A measure
of profitability. Net income is divided by common
stock equity. |
| return on sales a financial ratio
that is calculated by dividing net income after taxes
by net sales |
| Return: A key consideration in the
investment decision. It is the reward for investing.
The investor must compare the expected return for
a given investment with the risk involved. |
| revenue bond a bond repaid from
the income generated by the government-sponsored project
it is designed to finance |
| REVENUE CONTRACT is a binding agreement
between a governmental body and another party that
defines the terms under which revenue will be received.
A contract can be distinguished from a customer purchase
order by the fact that a contract will contain the
signatures of both parties, while a purchase order
will contain only the signature of the customer. |
| revenue cycle The portion of a company
that fills customer orders, accounts for receivables,
and collects those receivables. |
| REVENUE EXPENDITURE is an outlay
than only benefits the current business year. It is
treated as an expense that is matched against revenues. |
| REVENUE is the monetary amount of
annual sales, including returned merchandise and discounts,
i.e., it is the top monetary figure from which costs
are subtracted to determine net income. |
| REVENUE RECOGNITION is the process
of recording revenue, under one of the various acceptable
methods, in the accounting period. In each period
of revenue recognition, all related expenses should
be matched to revenue. The most common method of recognizing
revenue is at the time of sale or provisioning of
service. |
| REVENUE RESERVE is a fund that is
not a CAPITAL RESERVE, i.e. the funds are distributable. |
| revenue stream a source of revenue
flowing into a firm |
| revenues the dollar amounts earned
by a firm |
| Revenues: Increases in a company's
resources from the sale of goods or services. |
| REVERSING ENTRY is a debit or credit
bookkeeping entry made to reverse a prior bookkeeping
entry. |
| REVIEW is an accounting service providing
some assurance to the Board of Directors and interested
parties as to the reliability of financial data without
the CPA conducting an examination in accordance with
generally accepted accounting standards. The AICPA
auditing standards board formulates review standards
for public companies while the AICPA Accounting and
Review Services Committee provides review standards
for non-public businesses. |
| review To examine again. The overall
review of audit working papers is completed after
field work. A peer review is a practice monitoring
program in which the working papers of one CPA firm
are periodically reviewed by independent partners
of other firms to determine that the working papers
conform to professional standards. An analytical review
is a type of substantive audit procedure. A review
of the financial statements of a nonpublic company
is an engagement that results in the expression of
less assurance than an audit, but more than in a compilation.
A review of the interim financial statements of a
public company consists of analytical procedures and
inquiries. |
| Revocable letter of credit: Letter
of credit which may be amended or cancelled unilaterally.
Offers no security to seller and so very rare. |
| REVOLVING COLLATERAL are accounts
receivable or inventory which change from day to day. |
| revolving credit agreement — You
have one of these for your charge cards. The lender
lets you borrow up to a certain amount again and again;
once you pay off part of the loan you can reborrow
that part. In other words, once you pay off one shopping
spree, you can start on another. |
| revolving credit agreement a guaranteed
line of credit |
| revolving credit agreement a guaranteed
line of credit |
| Revolving Credit: A credit source
such as a credit card agreement, which may be used
to make additional purchases before repaying the existing
debt in full. It is a type of line of credit in that
interest is only charged on the monthly-unpaid balance,
and only a portion of the unpaid balance need be repaid
each month. |
| REVOLVING FINANCING is financing
secured by collateral. |
| REVOLVING FUND is money that is renewed
as it is used. |
| Revolving letter of credit:A Letter
of credit designed to cover a series of similar consignments
over a period of time. |
| REVOLVING LINE OF CREDIT in commercial
banking is a contractual agreement between a bank
and, usually, a company where the bank agrees to provide
loans up to a specified maximum over a specified period,
usually a year or more. In consumer banking, it is
a loan account requiring monthly payments less than
the full amount of the loan, and the balance is carried
forward with a finance charge on that balance. |
| REVOLVING LOAN is a loan that is
automatically renewed upon maturity. |
| RFP - See Request For Proposals |
| right of assignment in relation to
business premises, a right given in the lease agreement
for a tenant to assign the lease to another tenant
when the business is sold. |
| rights Assertions about rights deal
with whether the entity has rights to the asset at
a given date. For example, management asserts that
amounts capitalized for leases in the balance sheet
represent the cost of the entity's rights to leased
property. |
| RISK ADJUSTED RETURN is when we subtract
from the rate of return on an asset a rate of return
from another asset that has similar risk. This gives
an abnormal rate of return that shows how the asset
performed over and above a benchmark asset with the
same risk. We can also use the beta against the benchmark
to calculate an alpha which is also risk adjusted
performance. |
| risk analysis An analysis of the
possibility of suffering loss. |
| RISK ASSESSMENT/ANALYSIS: The process
of identifying and minimizing the exposures to certain
threats which a organization may experience. SIMILAR
TERMS: Risk assessment; impact assessment; corporate
loss analysis; risk identification; exposure analysis;
exposure assessment. |
| RISK is the measurable possibility
of losing or not gaining value. Risk is different
from uncertainty. Uncertainty is not measurable. |
| risk management the process of evaluating
the risks faced by a firm or an individual and then
minimizing the costs involved with those risks |
| RISK MANAGEMENT: The discipline which
ensures that an organization does not assume an unacceptable
level of risk. |
| risk the possibility that a loss
or injury will occur |
| Road consignment note: Transport
document used for goods sent by road. This is not
a document of title. |
| robotics the use of programmable
machines to perform a variety of tasks by manipulating
materials and tools |
| ROG, in business, is an acronym meaning
“Receipt Of Goods”. |
| ROI - (Return on Investment) Net
Profit divided by Net Worth. A financial ratio indicating
the degree of profitability. |
| ROI - See Return on Investment |
| ROI (Return on Investment) can be
calculated in various ways. The most common method
is Net Income as a percentage of Net Book Value (total
assets minus intangible assets and liabilities). |
| ROLLOUT (informal) – Geographic expansion
of a campaign from a single test market outward, as
to a regional or national market. |
| Rollover. The tax-free termination
of one investment and reinvestment of the proceeds.
For example: An individual may roll over a lump-sum
distribution from an employer's retirement plan into
an IRA. |
| round lot a unit of 100 shares of
a particular stock |
| ROYALTY is the share of the product,
or of the proceeds realized from the product, reserved
by an owner for permitting another entity to exploit
and use that entity’s property, i.e. it is the rental
paid to the original owner of property based upon
a percentage of sales, profit or production. Royalty
can involve literary works, inventions, and other
intellectual property, as well as mining leases and
conveyances. |
| Rules of Origin: Rules used to determine
in what country a good will be considered as actually
made for tariff and other trade purposes. |
| RUN RATE, in finance, is how the
financial performance of a company would look if you
were to extrapolate current results out over a certain
period of time. In accounting, it is the average annual
dilution from stock option grants at a company over
the most recent three year period reported in the
annual report. |
| RUNNING RATE is a sustained constant
rate, often the only important single rate except
for zero observed under a given schedule (as in some
ratio performances); also known as stream rate. |
| S Corporation A corporation which
elects subchapter S tax treatment. This tax treatment
allows the corporation to avoid entity level taxation. |
| S corporation. A corporation with
no more than 35 shareholders that is not taxed, but
treated similarly to a partnership, if other requirements
are met. |
| Safeguards:Temporary measures to
protect an industry when it experiences increased
competition by foreign suppliers. Safeguards can
take the form of tariffs or quantitative restrictions. |
| SAFEKEEPING ACCOUNT - An agency account
concerning which the duties of the agent are to receipt
for, safekeep, and deliver the property in the account
on demand of the principal or on his order; to be
distinguished from a custody account -and a managing
agency account. |
| safety needs the things we require
for physical and emotional security |
| salary a specific amount of money
paid for an employee’s work during a set calendar
period, regardless of the actual number of hours worked |
| Sale-leaseback: An arrangement whereby
equipment is purchased by a lessor from the company
owning and using it. The lessor then becomes the owner
and leases it back to the original owner, who continues
to use the equipment. |
| SALES / RECEIVABLES (Receivables
Turnover) is a ratio that measures the number of times
trade Receivables turn over during the year. Generally,
the higher the turnover of receivables, the shorter
the time between sale and cash collection. It indicates
how fast the company is getting paid for goods and
services. Receivables turnover is best compared to
the industry in order to determine if the company
should improve their collection rate. The faster the
receivables turnover, the better cash flow will look.
Slow or below par turnover can be an indication of
systemic problems within the company. It is best to
compare receivables turnover with that of industry
averages. |
| sales agreement a type of contract
by which ownership is transferred from a seller to
a buyer |
| sales forecast an estimate of the
amount of a product that an organization expects to
sell during a certain period of time, based on a specified
level of marketing effort |
| Sales Forecast. Projection of estimation
of sales, in dollars or physical units, for a given
time period. |
| SALES INVOICE is a document that
records the sale of goods or services from a vendor
to a customer. |
| SALES MULTIPLE is the most widely
used valuation benchmark used in valuing a business.
The information needed are annual sales and an industry
multiplier, which is usually a range of .25 to 1 or
higher. The industry multiplier can be found in various
financial publications, as well as analyzing sales
of comparable businesses. This method is easy to understand
and use. The sales multiple is often used as the valuation
benchmark. |
| sales promotion the use of activities
or materials as direct inducements to customers or
salespersons |
| sales support personnel employees
who aid in selling but are more involved in locating
prospects, educating customers, building goodwill
for the firm, and providing follow-up service |
| Sales The dollar value of goods and
services sold during a specified period of time after
making adjustments for returns, credits, and discounts. |
| Sales the total value of goods sold
or revenue from services rendered. |
| Sales, Volume Sales, Revenue: Terms
that are used to represent the amount of money that
is produced when a business sells products or services. |
| Sales-type Lease: A lease by a lessor
who is the manufacturer or dealer, in which the lease
meets the definitional criteria of a capital lease
or direct financing lease. |
| SALVAGE & RESTORATION: The process
of reclaiming or refurbishing computer hardware, vital
records, office facilities, etc. following a disaster. |
| Salvage or Residual Value: Estimated
value (or actual price) of an asset at the end of
its useful life after disposal costs. |
| SALVAGE PROCEDURES: Specified procedures
to be activated if equipment or a facility should
suffer any destruction. |
| SALVAGE VALUE is: a) Realizable value
of a fixed asset after deducting costs associated
with its sale; b) Scrap value or the value to a junk
dealer; or c) The amount remaining after all depreciation
has been deducted from the original cost of a depreciable
asset. |
| SAME STORE SALES is used when analyzing
the retail industry. It compares sales in stores which
have been open for a year or more. |
| SAMPLE PLAN: A generic disaster recovery
plan that can be tailored to fit a particular organization. |
| sample size The number of population
items selected when a sample is drawn from a population. |
| sample a free package or container
of a product |
| sampling error Unless the auditor
examines 100% of the population, there is always some
chance the sample results will mislead the auditor.
This risk is sampling error. The larger the sample,
the less chance of sampling error and the greater
the reliability of the results. |
| sampling risk The possibility that
conclusions drawn from the sample may not represent
correct conclusions for the entire population. |
| SANDWICH BOARD – Two hinged boards,
adorned with advertising messages, that are placed
at an advantageous location or hung over someone’s
shoulders. |
| SAP is an integrated enterprise resource
planning (ERP) system that seamlessly integrates most
activities of a company. |
| sas "Statements on Auditing Standards"
are interpretations of U.S. generally accepted auditing
standards. |
| SATELLITE COMMUNICATION: Data communications
via satellite. For geographically dispersed organizations,
may be viable alternative to ground-based communications
in the event of a disaster. |
| savings and loan association (S&L) a
financial institution that offers checking and savings
accounts and certificates of deposit and provides
home-mortgage loans and other consumer loans |
| Savings Incentive Match Plan for
Employees (SIMPLE plans). A simplified retirement
arrangement for small businesses that comes in two
varieties: one similar to a 401(k) plan and one that
funds IRAs for employees. |
| SBA Guaranteed Loan Guaranteed loans
are made by private lenders and then guaranteed by
the SBA. The SBA's share may not exceed $750,000. |
| SBC (Small Business Centers) These
12 GSA centers located throughout the United States
can help you tap the multi-billion-dollar GSA "market"
for goods and services. Contact a center nearest you. |
| SBDC Small Business Development Centers
are are located throughout the United States and are
administered by the SBA. They provide management assistance
to |
| SBIC (See: Investment Company) |
| SBIC (Small Business Investment Corporation)
SBICs are licensed by the SBA as federally funded
private venture capital firms. Money is available
to small businesses under a variety of agreements. |
| SCATTER PACKAGE – An arrangement
to air television commercials at various times or
intervals. |
| Schedule B: Short form of Schedule
B, Statistical Classification of Domestic and Foreign
Commodities Exported from the United States. All
commodities exported from the US must be assigned
a seven-digit Schedule B number. |
| scheduling the process of ensuring
that materials and other resources are at the right
place at the right time |
| scientific management the application
of scientific principles to management of work and
workers |
| scope paragraph The paragraph in
the audit report that explains the scope of the engagement.
The wording of the standard scope paragraph is: "We
conducted our audit in accordance with U.S. generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion." |
| scope The type of engagement. The
scope of an engagement might be a review, an audit,
or a compilation. A scope limitation is a restriction
on the evidence the auditor can gather. |
| SCOPE: Predefined areas of operation
for which a disaster recovery plan is developed. |
| SCORE The Service Corps of Retired
Executives is a volunteer management assistance program
of the SBA. SCORE volunteers provide one-on-one counseling
and workshops and seminars for small businesses. There
are hundreds of SCORE offices throughout the United
States. |
| S-corporation a corporation that
is taxed as though it were a partnership |
| S-Corporations: Formerly known as
Subchapter S Corporations. A corporation recognized
as a regular corporation under state law but is granted
special status for federal income tax purposes. |
| Search Engine Directories: same as
above, except the review process is done by a person.
A reviewer visits each site and decides whether or
not it should be admitted to the Directory. (example:
Yahoo, About.com, Open Directory) |
| Search Engines: computers programmed
with software to categorize websites and provide links. Some
patrol the web looking for new sites (example: WebCrawler).
Others register only what is submitted to them (ex:
AltaVista, Excite, Lycos). |
| SEC is the Securities Exchange Commission. |
| sec The Securities and Exchange Commission
is an agency that administers Federal securities laws.
These laws require disclosure of information about
publicly traded securities. The SEC requires that
businesses disclose facts and investigates securities
fraud. It regulates securities exchanges and brokers. |
| Second beneficiary: Where a transferable
letter of credit is used, party to whom part of the
value of this credit is transferred. |
| Second issuing bank: Bank issuing
the second letter of credit in a back-to-back letter
of credit transaction. Usually the Advising bank
to the prime letter of credit. |
| second request When an auditor confirms
receivables some customers of the client fail to respond
to the first confirmation request. Another request
sent to the same customers is the second request. |
| secondary boycott — When a union
puts the squeeze on. It organizes a boycott of companies
that do business with the company the union is battling.
The idea is to isolate the company fighting with the
union, hurting its business by cutting off supplies
or buyers. |
| Secondary Data. Information that
has already been assembled, having been collected
for some other purpose. Sources include census reports,
trade publications, and subscription services. |
| Secondary Market - Those who purchase
an interest in a loan from an original lender, such
as banks, institutional investors, insurance companies,
credit unions and pension funds. |
| secondary market — Where securities
are traded after their initial issuance. Money from
trades goes to dealers and sellers, not to the company
that originally issued the security. Secondary markets
include exchanges, as well as virtual marketplaces–the
over-the-counter markets of computer and telephone
lines. |
| secondary market a market for existing
financial securities that are currently traded between
investors |
| secondary-market pricing setting
one price for the primary target market and a different
price for another market |
| Section 1244 Stock An individual
investor in a corporation which meets the Section
1244 requirements is entitled to treat up to $50,000
(or $100,000 if filing a joint return) of losses on
the 1244 section stock as ordinary losses. |
| SECULAR TRUST - A form of employee
benefit in which an employer establishes an irrevocable
trust to provide non-qualified deferred compensation
to certain key employees. In contrast to a rabbi trust,
the trust is not subject to claims of the employer-s
creditors. Employer contributions in which the employee
is vested are immediately taxable as income to the
employee upon contribution. Any income earned prior
to distribution to the employee is taxed to the trust,
rather than the employer. |
| Secure SSL: a process of encrypting
your sensitive information so that it is scrambled
before sent over the Internet. |
| secured bonds — Bonds backed by collateral
or a lien. If the bond issuer defaults, he or she
must hand over whatever asset was pledged–such as
a house–so the creditor can recoup the loss on the
bond. |
| SECURED LIABILITY is a liability
that has a degree of protection towards satisfaction
if unpaid because the debtor has pledged personal/company
assets towards satisfaction of that liability; e.g.,
a property mortgage is a secured liability because
the mortgage holder has a guarantee through a lien
on the property. |
| secured loan — To get one, you have
to promise to hand over specific assets if you default. |
| Secured protected or guaranteed as
in the case of a loan where the lender holds the title
of some asset until the borrower has repaid the loan
in full. |
| secured transaction Right to repossess
goods as security for payment of a debt. |
| securities — Stocks, bonds and a
host of other investments, including certificates
of deposit. Investments for consumers; ways of raising
cash for the issuer, including corporations and governments. |
| Securities and Exchange Commission
(SEC) the agency that enforces federal securities
regulations |
| securities exchange a marketplace
where member brokers meet to buy and sell securities |
| SECURITIZATION is the process of
creating a pass-through, such as the mortgage pass-through
security, by which the pooled assets become standard
securities backed by those assets. Also, refers to
the replacement of non-marketable loans and/or cash
flows provided by financial intermediaries with negotiable
securities issued in the public capital markets. |
| security average (or security index) an
average of the current market prices of selected securities |
| segregation of duties means assigning
different people the responsibilities of authorizing
transactions, recording transactions, and maintaining
custody of assets. Segregation of duties reduces the
opportunities for one person to both perpetrate and
conceal errors or fraud. |
| selection the process of gathering
information about applicants for a position and then
using that information to choose the most appropriate
applicant |
| selective demand (or brand) advertising advertising
that is used to sell a particular brand of product |
| selective distribution the use of
only a portion of the available outlets for a product
in each geographic area |
| self-actualization needs the needs
to grow and develop and to become all that we are
capable of being |
| self-checking digit An extra digit
is added to a number. The extra digit is computed
from the other digits in the number. The computer
program can then check input by recomputing and comparing
the check digit. This is a useful control over the
input of account numbers. |
| Self-employment tax - the social
security and Medicare tax for individuals who work
for themselves (use Schedule SE |
| self-insurance the process of establishing
a monetary fund that can be used to cover the cost
of a loss |
| self-managed work teams groups of
employees with the authority and skills to manage
themselves |
| Self-Service Retail Sales Method
- selling from a sales outlet directly to the end
user, usually at prices lower than full retail price.
There are usually no sales personnel to explain the
purpose and value of the product or service. |
| selling short — Gamblers love this
technique that lets them bet a stock price will drop.
It works this way: you borrow stock from your broker
and sell it. If the price drops, you buy the shares
you owe the broker and return them, pocketing the
difference between what you sold them for and what
you bought them back for. You’re in trouble if the
price rises since you still owe the broker his shares. |
| selling short the process of selling
stock that an investor does not actually own but has
borrowed from a stockbroker and will repay at a later
date |
| SENIOR DEBT/NOTE are loans or debt
securities that have a claim prior to junior obligations
and equity on a corporation’s assets in the event
of a liquidation. |
| seniority the length of time an
employee has worked for the organization |
| serial bonds bonds of a single issue
that mature on different dates |
| service auditor The auditor of an
organization that provides services such as data processing
or pension trust administration to other organizations
(the users). Auditors of the users (user auditors)
rely on a report from the service auditor about controls
in the service organization that apply to the financial
statements of the user organization they are auditing. |
| SERVICE BUREAU (CENTER): A data processing
utility that provides processing capability, normally
for specialized processing, such as payroll. |
| service business a retail business
that deals in activities for the benefit of others. |
| Service Corps Of Retired Executives
(Score) - The Service Corps of Retired Executives
(SCORE) is a 12,400-member volunteer association sponsored
by the SBA. SCORE matches volunteer business-management
counselors with present prospective small business
owners in need of expert advice. |
| Service Corps of Retired Executives
(SCORE) a group of retired businesspeople who volunteer
their services to small businesses through the SBA |
| Service Corps of Retired Executives
(SCORE). Consulting service composed of retired business
executives that volunteer their management expertise
to small businesses. S.C.O.R.E. chapters work with
Small Business Institute programs in many colleges
and universities. |
| service economy an economy in which
more effort is devoted to the production of services
than to the production of goods |
| Service Goods - goods viewed by the
consumer as competitive products offering a standard
"service" and are basically similar, so they will
"shop" to get the best price. This would include such
products as lawnmowers, refrigerators, television
sets, automobiles, etc. |
| Service/Product Mix - this business,
while involving both service and product, is distinct
in that the quality of the service is often more important
than the product received. Examples of this type of
service would be: fast food, catering, telephone,
etc. |
| Services Corps of Retired Executives
(SCORE) |
| SESSION – Recording session for a
radio or TV commercial; also, a photo session. |
| SESSION FEE – The amount paid to
talent or artist for a day’s work in a single session. |
| SETOFF is the discharge of a debt
by setting against it a distinct claim in favor of
the debtor. |
| SETUP COST see FIXED CHARGE. |
| SG&A refers to the indirect overhead
costs contained within the Sales, General and Administrative
expense / cost categories. |
| SHADOW FILE PROCESSING: An approach
to data backup in which real-time duplicates of critical
files are maintained at a remote processing site.
SIMILAR TERMS: Remote Mirroring |
| Share An interest in a corporation.
The total ownership of a corporation is divided into
shares of stock. |
| SHARE CAPITAL is that portion of
a corporation's equity obtained from issuing shares
in return for cash or other considerations. |
| SHARE PREMIUM is the difference between
the higher price paid for a share of stock and the
stocks face amount when it was issued. |
| Shareholder Any holder of one or
more shares in a corporation. A shareholder usually
has evidence that they are a shareholder; this evidence
is represented by a stock certificate. |
| SHAREHOLDER'S EQUITY is total assets
minus total liabilities. It is the same as EQUITY,
NET WORTH and stockholder’s equity. |
| Shareholders or Stockholders: Individuals
or organizations that own shares of stock of a corporation. |
| Shareholders: Own issued stock of
a corporation and, therefore, own an interest in the
corporation. They elect the board of directors and
vote on major corporate issues. |
| Sharpe ratio — A formula developed
by Nobel Laureate Bill Sharpe that attempts to measure
how a fund performs relative to the risk it takes.
Take a fund’s returns in excess of a guaranteed investment
(a 90-day T-bill) and divide by the standard deviation
of those returns. The bigger the Sharpe ratio, the
better a fund performed considering its riskiness. |
| Sherman Act — First U.S. antitrust
law. Outlawed price-fixing—when competing companies
collude to set similar, high prices. |
| Shipper: The party sending the goods,
i.e. seller. |
| shipping document A document prepared
when goods are shipped. It identifies the date shipped,
the customer, the method of shipment, and the quantity
and specifications of goods shipped. |
| Ship's manifest: An instrument in
writing, signed by the ship's captain that lists the
individual shipments that make up the entire ship's
cargo. |
| SHOOT – The taping or filming of
a commercial, in a studio or on location. |
| shop steward an employee elected
by union members to serve as their representative |
| shopping product an item for which
buyers are willing to expend considerable effort on
planning and making the purchase |
| SHORT TERM ASSET is an asset expected
to be converted into cash within the normal operating
cycle (usually one year), e.g. accounts receivable
and inventory. |
| SHORT TERM LIABILITY is a liability
that will come due within one year or less. |
| short-term financing money that
will be used for one year or less and then repaid |
| Short-Term Financing. Repayment of
loans within one year. Small Business Administration
(S.B.A.). A federal agency established in 1953 to
assist prospective entrepreneurs in obtaining funds,
and to preserve competitive enterprise in the economy. |
| SIC (Standard Industrial Classification
Code) A four-digit number assigned to identify a business
based on the type of business or trade involved. The
first two digits correspond to major groups such as
construction and manufacturing, while the last two
digits correspond to subgroups such as constructing
homes versus constructing highways. A business can
determine its SIC number by looking it up in a directory
published by the Department of Commerce, or by checking
in the SIC book in the reference section of a local
library. SBA size standards are based on SIC codes. |
| SIC (STANDARD INDUSTRIAL CLASSIFICATION)
is a U.S. Government numerical coding system used
in the U.S. to group and classify basically all products
and services existing within the U.S. economy. |
| Sight bill: Bill of exchange payable
immediately upon presentation. |
| SIGNATURE LOAN is a loan secured
by the borrower with nothing more than the signature
of that borrower. |
| SIMPLE INTEREST Interest paid only
on the principal of a loan. |
| SIMPLE INTEREST is interest computed
on principal alone, as opposed to compound interest
which includes accrued interest in the calculation. |
| SIMPLE JOURNAL ENTRY is a journal
entry that involves only one debit and one credit
in the transaction. |
| simulation Representation of the
operation or features of one process or system through
the use of another. Computer simulation of waiting
lines can aid in determining the number of employees
needed to serve customers at a particular time of
day. |
| SIMULATION TEST: A test of recovery
procedures under conditions approximating a specific
disaster scenario. This may involve designated units
of the organization actually ceasing normal operations
while exercising their procedures. |
| single audit act This federal legislation
requires state and local governments that receive
federal aid of $300,000 or more in a fiscal year to
have an audit under the act. A government that receives
from $25,000 to $300,000 has the option of an audit
under the act or with specific federal laws and regulations
of programs in which the government participates.
State and local governments receiving less than $25,000
in federal aid need not have an audit. Under the Single
Audit Act, auditors report whether the audited entity
has followed laws and regulations that may have a
material effect on each major federal aid program. |
| Single Investor Lease: (See Full
Payout or Finance Lease) A tax-oriented lease whereby
the lessor achieves its desired rate of return via
a combination of the rental payments, depreciation,
and the fair market value of the equipment at the
end of the original lease term. This method is utilized
because the value of the tax benefit allows the rental
payments to be lower than for a finance lease which
can be an incentive to the company leasing the property. |
| SINKING FUND is a sum set apart periodically
from the income of a government or a business and
allowed to accumulate in order ultimately to pay off
a debt. A preferred investment for a sinking fund
is the purchase of the government's or firm's bonds
that are to be paid off. Usually the fund is administered
by a trustee. |
| sinking fund a sum of money to which
deposits are made each year for the purpose of redeeming
a bond issue |
| SIPS is an acronym for Secure Internet
Payment Service (Cybercash). |
| SIZZLE – Dazzle or excitement, as
opposed to substance. In its bid for consumers, some
advertising plays up the "sizzle" rather than the
"steak." |
| skills inventory a computerized
data bank containing information on the skills and
experience of all present employees |
| SKILLS INVENTORY: A listing of employees
which lists their skills that apply to recovery. |
| Skimming Pricing Strategy - if you
desire quick cash and have minimal desires for significant
market penetration and control, then you set your
prices very high (this is sometimes called "skimming"). |
| SKIP PERSON - With respect to a generation-skipping
transfer, a recipient or beneficiary who is at least
two generation levels below that of the transferor. |
| SKU is an acronym for Stock Keeping
Unit. It is usually used to identify an item carried
in inventory or stock. |
| SKYWRITING – Writing across the sky
by means of chemically produced smoke emitted from
an airplane. |
| SLANT – The emphasis of a campaign
or advertisement; hook; peg. |
| SLICE-OF-LIFE – Denoting any presentation
that depicts naturalistic, everyday activities. |
| SLOGAN – Short, memorable advertising
phrase: Examples include "Coke Is It," "Just Do It,"
and "Don’t Leave Home Without It." When a product
or company uses a slogan consistently, the slogan
can become an important element of identification
in the public’s perception of the product. |
| slowdown a technique whereby workers
report to their jobs but work at a slower pace than
normal |
| SLR is an acronym with several possible
meanings, e.g., Stock Level Report, Stock Level Requirement,
System Level Requirement(s). |
| Small Business - A business smaller
than a given size as measured by its employment, business
receipts, or business assets. |
| Small Business Administration (SBA)
— U.S. agency that nurtures small businesses. Provides
low-interest loans. |
| Small Business Administration (SBA) a
governmental agency that assists, counsels, and protects
the interests of small businesses in the United States |
| Small Business Development Center
(SBDC) a university-based group that provides individual
counseling and practical training to owners of small
businesses |
| Small Business Development Centers
(Sbdc) - SBDCs offer a broad spectrum of business
information and guidance as well as assistance in
preparing loan applications. |
| Small Business Innovative Research
(Sbir) Contract - A type of contract designed to foster
technological innovation by small businesses with
500 or fewer employees. The SBIR contract program
provides for a three-phased approach to research and
development projects: technological feasibility and
concept deve |
| Small Business Institute (S.B.I.).
A cooperative venture between business colleges and
the Small Business Administration that offers management
assistance to small businesses. |
| Small Business Institute (SBI) a
group of senior and graduate students in business
administration who provide management counseling to
small businesses |
| Small Business Investment Company
(SBIC) a privately owned firm that provides venture
capital to small enterprises that meet its investment
standards |
| small business one that is independently
owned and operated for profit and is not dominant
in its field |
| Small Disadvantaged Business Concern
- A small business concern that is at least 51 percent
owned by one or more individuals who are both socially
and economically disadvantaged. This can include a
publicly owned business that has at least 51 percent
of its stock unconditionally owned by one o |
| SMALL-CAP is a stock with a capitalization,
meaning a total equity value, of less than $500 million. |
| Small-ticket Leasing: Transactions
under $100,000. In leasing, this is usually accomplished
through conditional sale leases or single investor
true leases. |
| SME:Small and Medium sized business
enterprises. Generally SMEs create the most jobs
and have the highest rates of entrepreneurship. |
| SNIPING – The act of pasting up outdoor
posters over billboards or on empty structures, walls,
and traffic poles, often without permission. |
| social audit a comprehensive report
of what an organization has done, and is doing, with
regard to social issues that affect it |
| SOCIAL ENTITY is the separate existence
of an organization that is perceived to exist, by
its members and the public at large, as a 'given',
i.e. something that exists before and outside of them. |
| social needs our requirements for
love and affection and a sense of belonging |
| social responsibility the recognition
that business activities have an impact on society
and the consideration of that impact in business decision
making |
| socioeconomic model of social responsibility the
concept that business should emphasize not only profits
but also the impact of its decisions on society |
| SOES (Small Order Execution System)
trading is an electronic method of day trading the
NASD market. At present, SOES trading is at the center
of controversy between the NASD, SEC, individual traders,
and the courts. SOES is changing the way trading is
done on the NASD, and it may rewrite the rules of
the game for trading. Bandits is just a term being
used for the individuals using the SOES system for
day trading. |
| SOFT COSTS are those extraneous costs
that are not readily foreseen or budgeted for, e.g.
legal fees, loan fees and interest, etc. |
| SOFT SELL – Subtle or unpressured
advertising technique. |
| software Programs and languages that
control computer hardware. |
| SOHO - acronym for Small Office,
Home Office. |
| SOLE PROPRIETOR is an individual
that owns a business as opposed to stock in a corporation.
A sole proprietor pays no corporate income tax but
has unlimited liability for his/her business debts
and obligations. |
| Sole Proprietorship - an enterprise
that is owned by a single individual. |
| SOLE PROPRIETORSHIP - Ownership of
a business entirely by one person. |
| Sole Proprietorship A business carried
on by the owner as an individual. The owner of a sole
proprietorship is personally and fully liable for
all business debts; thus, personal property could
be taken to pay business debts. |
| Sole Proprietorship A business entity
privately owned by a single individual. |
| SOLE PROPRIETORSHIP is a form of
business organization. The distinguishing characteristics
of a sole proprietorship include: only one owner for
the business (hence, "sole") and the business is unincorporated. |
| SOLE PROPRIETORSHIP The simplest
(and most popular) form of business organization.
The individual is personally liable for all debts
of the business to the full extent of his or her property.
On the other hand, the owner has complete control
of the business. |
| sole proprietorship a business that
is owned (and usually operated) by one person |
| Sole Proprietorship. Business entity
owned and operated by one person. |
| Sole Proprietorship: A business
owned by one person. |
| sole trader a person who trades by
himself/herself without the use of a company structure
or partners and bears alone full responsibility for
the actions of the business. |
| SOLVENCY is a company's long-term
ability to meet all financial obligations. |
| Solvency: A company's long-run ability
to meet all financial obligations. |
| Solvent the condition of a business
when all debts can be paid as they come due. |
| Sovereign risk: Risk that a government
or sovereign power will default on its payment |
| SPACE – A page or section of a page
bought for advertising purposes in a newspaper, magazine,
or catalog. |
| span of management (or span of control) the
number of workers who report directly to one manager |
| SPEC – Short for "speculation." Work
done "on spec" is done for no guaranteed remuneration,
in hope of winning the job, campaign or account in
question. Pitches to prospective clients used to be
done almost exclusively on spec. |
| SPECIAL ADMINISTRATOR - An administrator
appointed by the court to take over and safeguard
an estate pending the appointment of an executor or
adminis-trator; sometimes known as a temporary administrator. |
| SPECIAL GUARDIAN - A guardian appointed
by a court for a particular purpose connected with
the affairs of a minor or an incompetent person; some-times
a guardian ad litem is known as a special guardian. |
| SPECIAL JOURNAL contains records
of original entry other than the general journal that
are designed for recording specific types of transactions
of similar nature, e.g. Sales Journal, Purchase Journal,
Cash Receipts Journal, Cash Disbursements Journal,
and Payroll Journal. |
| SPECIAL POWER OF APPOINTMENT - See
Limited Power of Appointment; Power of Appointment. |
| special-event pricing involves advertised
sales or price-cutting linked to a holiday, season,
or event |
| specialist An expert at activities
not usually done by auditors (such as an appraiser
for valuation). |
| specialization the separation of
a manufacturing process into distinct tasks and the
assignment of different tasks to different individuals |
| Specialty Goods - goods that appeal
to a large segment of the buying public and are considered
"special" enough that the consumer will specifically
ask for the product. For instance, if you invented
a cigarette that tasted good and was also proven to
be good for your health, people would probably ask
for the "healthy cigarette" (even if they didn't know
the name). The type of product is not the issue, but
rather whether the product is "special" enough that
the consumers will "seek it out." |
| specialty product an item that possesses
one or more unique characteristics for which a significant
group of buyers is willing to expend considerable
purchasing effort |
| specialty-line wholesaler a middleman
that carries a select group of products within a single
line |
| specific performance the legal requirement
that the parties to a contract fulfill their obligations
according to the contract |
| SPECIFIC RESEARCH is a method used
when gathering primary information for a market survey
where targeted customers / consumers are asked very
specific and in-depth questions geared toward resolving
problems found through prior exploratory research. |
| speculative risk a risk that accompanies
the possibility of earning a profit |
| SPOKESPERSON – A well-known person
serving as a regular advocate of specific product
or cause. Skiing star Picabo Street is firmly associated
with Chapstick; Candice Bergen, with Sprint. |
| SPONTANEOUS ASSETS are assets that
arise automatically, in the course of operating a
company day-to-day, when a company purchases assets
and they are delivered. |
| SPONTANEOUS LIABILITIES are obligations
that are realized automatically, in the course of
operating a company day-to-day, when a company buys
goods and services on credit. |
| SPOT (SPOT ANNOUNCEMENT) – 15- or
30-second radio or television commercial. |
| SPOT ADVERTISING – Any advertising
presented in selected locales rather than on a national
level. |
| SPOT COMMODITY is a commodity traded
with the expectation that it will actually be delivered
to the buyer, as contrasted with to a FUTURES CONTRACT
that will usually expire without any physical delivery
actually taking place. Spot commodities are traded
in the SPOT MARKET. |
| Spot rate: Exchange rate for foreign
exchange transactions for immediate or |
| SPREAD – Advertisement or other print
presentation that takes two facing pages in a magazine
or newspaper. A full-page "spread" fills both pages
and may take up the gutter in between as well. |
| SPREADSHEET is (1) A multicolumn
sheet of paper used for performing numeric work, especially
accounting and business related weekly or monthly
summaries. (2) A computer application program that
supports a user in numeric manipulation, especially
in column / row format. |
| spreadsheet program a software package
that allows the user to organize numerical data into
a grid of rows and columns |
| ssars Statements on Standards for
Accounting and Review Services (SSARS) are pronouncements
concerning unaudited financial information of a nonpublic
entity. They are issued by the AICPA Accounting and
Review Services Committee. |
| STABILE – Display that is suspended
or that rises from a pedestal at different levels
and planes, none of which move. |
| staff management position a position
created to provide support, advice, and expertise
within an organization |
| STAND-ALONE PROCESSING: Processing,
typically on a PC or mid-range computer, which does
not require any communication link with a mainframe
or other processor. |
| Standard & Poor's 500 (S&P 500) —
A stock-market thermometer of sorts. Helps gauges
the health of the overall market by measuring the
performance of 500 popular common stocks. |
| STANDARD ADVERTISING UNIT (S.A.U.)
– System of standard dimensions for print display
advertising based on six columns, each 2 1/16 inches
wide, with a 1/8 inch "gutter" between columns. Because
nearly all broadsheet newspapers are now in SAU in
their display pages, a single ad may be used in many
places without resizing. |
| STANDARD COST SYSTEM is an accounting
system designed to properly allocate costs of direct
labor, indirect labor, materials, overhead, and selling/
general/administrative accounts on a unit basis for
the purpose of accurately costing products and the
subsequent control of those costs in managing the
production, marketing, purchasing, and administrative
functions of the business. |
| Standard deduction. A deduction allowed
individuals instead of listing or itemizing deductible
personal expenses. (See "Itemized deductions.") The
amount depends on the individual's filing status.
Additional amounts are available for taxpayers who
are blind or are age 65 or over. Individuals may deduct
either their standard deduction or the total of their
itemized deductions, whichever is greater. |
| standard deviation A statistic used
to measure dispersion equal to the square root of
the arithmetic mean of the squares of the deviations
from the arithmetic mean. |
| Standard Industrial Classification
(Sic) Code) - A code representing a category within
the Standard Industrial Classification System administered
by the Statistical Policy Division of the U.S. Office
of Management and Budget. The system was established
to classify all industries in the U.S. economy. A
t |
| Standard Industrial Classification
(SIC): The standardized numerical SIC code used by
the US government to classify commodities, used in
international trade. |
| Standard International trade classification
(SITC): A standard numerical code system developed
by the United Nations to classify commodities transported
in international trade. |
| Standard Mileage Rate - multiplying
business miles by the standard mileage rate for the
year, to figure car and truck deduction. The standard
mileage rate is announced annually by the IRS. |
| standard of living a loose, subjective
measure of how well-off an individual or a society
is, mainly in terms of want-satisfaction through goods
and services |
| STANDARD RATE AND DATA SERVICE (SRDS),
in advertising, is a company that produces a directory
for each different type of media; normally listing:
rates, circulation, contacts, markets serviced, etc.
|
| Standby letter of credit: A letter
of credit designed to be used only when the applicant
defaults on another agreed method of payment. |
| standing committee a relatively
permanent committee charged with performing some recurring
task |
| Start-up Costs - expenses incurred
before the business opens. |
| state bank a commercial bank chartered
by the banking authorities in the state in which it
operates |
| STATE UNEMPLOYMENT TAX ACT (SUTA),
in the U.S., is the same as FUTA except from an individual
U.S. state in compliance to federal guidelines. See
also FEDERAL UNEMPLOYMENT TAX ACT. |
| STATED CAPITAL is the declared total
amount of money or other resources owned or used to
acquire future income or benefits. |
| Stated Capital The par value of shares
multiplied by the number of shares outstanding. The
amount of stated capital may effect the ability to
pay dividends. |
| STATEMENT OF CASH FLOW - A statement
detailing the cash into the business minus cash disbursements.
This statement is concerned only with cash transactions.
Non-cash items, such as depreciation, are not included
in this document. |
| Statement of cash flows A financial
statement listing cash amounts moving through each
account and principal categories of revenues and expenses
during an accounting period and/or during shorter
periods (weeks, months, quarters, etc.) within the
accounting period. A statement of cash flows generally
is intended to answer these questions: |
| statement of cash flows a statement
that illustrates how the operating, investing, and
financing activities of a company affect cash during
an accounting period |
| statement of financial position (or
balance sheet) a summary of the dollar amounts of
a firm’s assets, liabilities, and owners’ equity accounts
at the end of an accounting period |
| statistic a measure that summarizes
a particular characteristic of an entire group of
numbers |
| statistical Making inferences in
uncertain situations using applied mathematics. Measurements
from a small group, the sample, are used to infer
the behavior of a larger group, the population. Probability
theory determines how well the sample represents the
population. |
| statistical process control (SPC) an
information-gathering system that plots data on control
charts and graphs to identify and pinpoint problems
in product quality |
| statistical quality control (SQC) a
set of specific statistical techniques used to sample
both work in progress and finished products to find
problems in the production process and improve product
quality |
| statute a law that is passed by
the U.S. Congress, a state legislature, or a local
government |
| STATUTORY ACCOUNT is an involuntary
account, which is created by law rather than by business
need. An example of a statutory account would be taxes. |
| statutory law all the laws that
have been enacted by legislative bodies |
| STATUTORY LIEN is an involuntary
lien, which is created by law rather than by contract.
Statutory liens include tax liens, judgment liens,
mechanic's liens, etc. |
| STEAMSHIP CONFERENCE is an agreement
between multiple shipping companies to provide common
freight rates. Some shipping lines will state that
they are “non-conference”, i.e., they charge an independent
and likely lower rate. |
| STEP LEASE is type of lease that
outlines or stipulates the expected annual increases
in the tenant's base rent based on an approximation
of what the landlord believes what the landlord’s
expenses may be. |
| STET – From Latin for "let it stand."
Used in copyediting and proofreading to signify that
the original copy, not the revision, should be used. |
| Sticky: A website that can keep
a visitor on it by providing a lot of useful, interesting
or entertaining content. It's usually measured in
how much time the average viewer spends on the site
in a month. |
| Stock An equity or ownership interest
in a corporation, measured in shares. Ownership of
shares is demonstrated by stock certificates. |
| stock at valuation (SAV) stock valued
at wholesale or cost price. |
| stock broker an individual—sometimes
called an account executive or registered representative—who
buys and sells securities for clients |
| Stock Certificate A written instrument
that shows ownership of shares in a corporation. |
| stock control the method of determining
how much stock should be held and how much needs to
be reordered and when, with the aim of controlling
stock holding costs while maintaining efficient operation
of the business. |
| stock dividend a dividend in the
form of additional stock |
| stock insurance companies — An insurance
company owned by stockholders. |
| stock insurance company an insurance
company owned by stockholders and operated to earn
a profit |
| stock market indicators — Indexes
of stock-market performance, including the S&P 500
and the Dow Jones Industrial Average. Indicators help
investors figure out if their mutual fund or stock
is doing as well as the rest of the market. |
| stock option — Popular form of employee
compensation, most often given to executives. The
options allow executives to buy stock for a number
of years at or below the share price when the option
was granted. This is an added incentive for executives
to maximize company profit and increase share prices. |
| Stock physical items that a business
uses in its production process or has for sale in
the ordinary course of doing business. |
| stock split — Corporations do this
to make shares more affordable. They multiply the
number of shares, while keeping the aggregate value
of stock even. In a 2-for-1 split of shares worth
$50, an investor would have twice as many shares as
he had, but each would be worth $25. |
| stock split the division of each
outstanding share of a corporation’s stock into a
greater number of shares |
| Stock Transfer Book A record book
which lists the owners of shares of stock in a corporation. |
| Stock transfer book: The ledger book
(or sheets) in which the registered owners of shares
in the corporation are recorded. |
| stock turnover the ratio of cost
of goods sold over average stock (at cost). This indicates
how many times, on average, the entire inventory (stock)
was sold and replaced during the year. |
| stock the shares of ownership of
a corporation |
| stockbroker — Person in charge of
a client’s stock trades. If the stock is traded on
an exchange, the broker relays buy and sell orders
to representatives on the exchange floor. Full-service
brokers give advice on which stocks to buy; discount
brokers generally charge less, but usually don't offer
advice. |
| Stockholder See shareholder. |
| stockholder a person who owns a
corporation’s stock |
| stop-or-go sampling Taking a sample
from a population and checking after each sample item
is drawn whether the sample supports a desired conclusion.
Sampling ceases as soon as that conclusion is supported. |
| store (or private) brand a brand
that is owned by an individual wholesaler or retailer |
| store of value a means of retaining
and accumulating wealth |
| STORYBOARD – A series of panels roughly
depicting scenes, copy, and shots proposed for a television
commercial. The storyboard gives the client a good
idea of the agency’s concept for a commercial, before
extensive production charges are incurred. |
| Straight-line depreciation. A depreciation
method that allows equal deductions in each year of
an asset's "life" or recovery period. (See "Accelerated
depreciation.") |
| STRANDED PLANT is a cost that has
been incurred, but can not be reversed. Usually referred
to as a sunk cost. |
| strategic alliance partnership formed
to create competitive advantage on a worldwide basis |
| STRATEGIC PLANNING is the activity
of defining what you want to accomplish in your business
and then identifying the path that will allow you
to reach your goal in the most efficient and sensible
manner. |
| strategic planning the process of
establishing an organizations’ major goals and objectives
and allocating the resources to achieve them |
| Strategic Relationships - an agreement
between two or more enterprises to conduct specified
business processes in a joint manner. Usually related
to technology development and/or marketing and distribution
efforts. |
| strategy an organization’s broadest
set of plans, developed as a guide for major policy
setting and decision making |
| stratify To arrange a population
or a sample in distinct layers. Stratified sampling
is used in auditing to select a greater percentage
of accounts with high balances than of accounts with
low balances. |
| STRAW MAN is a weak or imaginary
opposition (as an argument or adversary) set up only
to be easily confuted. Often done to create an environment
for brainstorming from a certain starting point. |
| STREAMER – A long, narrow sign with
a message in bold type hung across open area, window,
or doorway. |
| strike a temporary work stoppage
by employees, calculated to add force to their demands |
| strikebreaker a nonunion employee
who performs the job of a striking union member |
| STRIPPED BOND is a bond that can
be subdivided into a series of zero-coupon bonds. |
| STRUCTURED WALK-THROUGH TEST: Team
members walk through the plan to identify and correct
weaknesses. |
| STYLIST – Hair and/or makeup artist
on a television shoot. |
| Subchapter "S" Corporation A private
corporation of 35 or fewer stockholders who pay personal
income rather than corporate tax on net profits. |
| SUB-CHAPTER S CORPORATION - A corporation
that pays no income taxes under IRS regulations, but
instead has shareholders pay income tax on it even
if not distributed. |
| Subchapter S Corporation. A form
of business structure that limits each shareholder's
liability (like a corporation), but profits and losses
are reported by shareholders (like a partnership).
Subchapter S corporations are limited to 25 or fewer
shareholders. |
| SUBCHAPTER S is a legal corporate
entity organized under the United States Federal Tax
Code that allows Subchapter S Corporations to distribute
all income / loss proportionately to its shareholders,
who then claim that income / loss on their personal
income taxes; thereby avoiding the payment of corporate
taxes. |
| Subcontract - A contract between
a prime contractor and a subcontractor to furnish
supplies or services for the performance of a prime
contract or subcontract. |
| subject to Years ago there was a
type of qualified audit opinion that was worded "In
our opinion, subject to....." Auditors are no longer
permitted to issue such opinions. |
| SUBLET, in real estate, refers to
the leasing of space within a leased facility by the
original lessee. |
| SUBLIMINAL ADVERTISING – Concealed
appeal to consumers’ unconscious awareness to buy
product. |
| SUBORDINATED DEBT is where there
is a pecking order determining the sequence in which
a company will pay off its debt instruments, subordinate
(or junior) issues will not be repaid until unsubordinated
(or senior) debt has been repaid in full. |
| SUBSCRIPTION: Contract commitment
providing an organization with the right to utilize
a vendor recovery facility for recovery of their mainframe
processing capability. |
| subsequent events affect the client
and occur between the balance sheet date and issuance
of the audit report. Some such events provide additional
evidence about conditions that existed at the balance
sheet date, such as the bankruptcy of a customer with
a history of financial difficulty. The financial statements
are adjusted to reflect this evidence. Evidence about
conditions that did not exist at the balance sheet
date, such as fire that destroyed the client's plant
after the balance sheet date, may be so significant
as to require disclosure. General conditions, such
as a war, do not require disclosure, even if they
have a major impact on financial statements. Such
items are public knowledge. |
| SUBSIDIARY is a company whose voting
stock is more that 50% owned by another company. |
| subsidiary ledger The detailed information
which totals to the balance in the general ledger
account. The total of all customer accounts receivable
included in the subsidiary ledger of accounts receivable
is the balance in the general ledger accounts receivable
account. |
| substantiated Supported with proof
or evidence. |
| substantive A substantive audit procedure
is a direct test of a financial statement balance. |
| SUBVENTION is the provision of assistance
or financial support such as an endowment or a subsidy
from a government or foundation. |
| SUBWAY CARD – An advertising poster
attached to the interior of a subway car. |
| SUCCESSION --The art or fact of person's
becoming entitled to property of a deceased person,
whether by operation of law upon his dying interstate
or by taking under his Will. |
| successor auditor The auditor of
a client for the current year when that client had
another auditor in prior years. The auditor who is
no longer the auditor of that client is the predecessor
auditor. |
| sufficiency (sufficient) A measure
of the quantity of audit evidence. The independent
auditor's objective is to obtain sufficient competent
evidence to provide a reasonable basis for forming
an opinion. |
| SUM-OF-THE-YEARS DIGITS (SYD) is
the accelerated depreciation method in which a constant
balance (cost minus salvage value) is multiplied by
a declining depreciation rate. |
| SUNDRY ACCOUNT is an account where
miscellaneous items are recorded. |
| SUNK COST is the cost expended that
cannot be retrieved on a product or service. |
| supermarket a large, self-service
store that sells primarily food and household products |
| superstore a large retail store
that carries not only food and nonfood products ordinarily
found in supermarkets but also additional product
lines |
| supervise Supervision is directing
efforts of assistants in the audit and determining
whether objectives were accomplished. Elements of
supervision include instructing assistants, keeping
informed of problems, reviewing work performed, and
dealing with differences of opinion among firm personnel.
The appropriate extent of supervision depends on the
complexity of subject matter and qualifications of
persons performing the work. |
| SUPPLEMENTAL AGREEMENT - An amendment
to an agreement setting forth additional terms to
the agreement. |
| suppliers provide goods or services
to an audited entity. Sometimes called vendors. |
| Supplies Goods - production support
products that will not become a part of the purchaser's
end product. Examples are drill bits, machine lubricants,
wiping rags, etching chemicals, pencils, paper, paper
clips, etc. |
| Supplies in relation to the GST,
supplies include the goods and services you sell through
your enterprise and many other transactions such as
providing advice or information, leasing out commercial
premises or providing hire equipment. |
| supply chain management long term
partnership among channel members working together
to create a distribution system that reduces inefficiencies,
costs, and redundancies while creating a competitive
advantage and satisfying customers |
| supply (economics) the quantity
of a product that producers are willing to sell at
each of various prices |
| supply (product) an item that facilitates
production and operations but does not become part
of the finished product |
| Supporting Documents - information
needed to record in one#s books, generated from business
transactions. These include sales slips, paid bills,
invoices, receipts, deposit slips, and cancelled checks. |
| SUPPRESSED INFLATION means that a
situation exists in which prices would rise -- if
government regulations did not establish artificial
limits on prices, wages, etc. |
| SURCHARGE (noun) - An amount which
the fiduciary is required by court decree to make
good because of negligence or other failure of duty.
The term is also used as a verb; as, the court surcharged
the trustee. |
| SURETY BONDS Surety bonds provide
reimbursement to an individual, company or the government
if a firm fails to complete a contract. SBA guarantees
surety bonds in a program much like SBA's guaranteed
loan program. |
| SURPLUS generally means any excess
amount, but in finance it is the remainder of a fund
appropriated for a particular purpose. In a corporation,
surplus means assets left after liabilities and debt,
including capital stock, have been subtracted. |
| SUSPENSE ACCOUNT, in accounting,
is an account that is used on a temporary basis for
receipts, disbursements, or discrepancies until such
time as the analysis is complete and they can be properly
classified. |
| SUSTAINABLE GROWTH RATE (SGR) shows
how fast a company can grow using internally generated
assets without issuing additional debt or equity.
SGR provides a useful benchmark for judging a company's
appropriate rate of growth. A company with a low sustainable
growth rate but lots of opportunities for expansion
will have to fund that growth via outside sources,
which could lower profits and perhaps strain the company's
finances. Growth can be a major dilemma because with
growth comes a spontaneously generated need for increased
working capital. VentureLine calculates a Sustainable
Growth Rate from the data entered into the Income
Statement and Balance Sheet. The Sustainable Growth
Rate is the rate at which the firm may grow the Stockholder's
Equity Account (Net Worth) using only increases in
Retained Earnings (Net Profit's contribution to retained
earnings) to fund the growth. Growth beyond this amount
will force the firm to obtain additional financing
from external sources to finance growth. |
| SUTA see STATE UNEMPLOYMENT TAX ACT. |
| Swaps, tax-free. (1) Exchanges of
like-kind property that result in no capital gains
tax (commonly used for real estate). (2) Sales and
repurchases of stock (or other securities) designed
to realize a tax loss without discontinuing the investment.
Transactions must comply with the wash sale rules
to be effective. (See "Wash sales.") |
| SWEAT EQUITY A common form of "investment."
This refers to the investment in time owners make,
with no salary, to a new business. |
| SWEEPSTAKES – A lottery in which
winners are randomly selected, often used to induce
purchase of a product as a condition of entering the
contest. |
| SWIFT: Society for Worldwide Interbank
Financial Telecommunication. An organization that
operates the major interbank electronic communication
system for financial messages (payments, letters of
credit, securities transactions etc.) |
| SWOT ANALYSIS is one of the most
used forms of business analysis. A SWOT examines and
assesses the impacts of internal strengths and weaknesses,
and external opportunities and threats, on the success
of the "subject" of analysis. An important part of
a SWOT analysis involves listing and evaluating the
firm's strengths, weaknesses, opportunities, and threats.
Each of these elements is described:1. Strengths:
Strengths are those factors that make an organization
more competitive than its marketplace peers. Strengths
are what the company has a distinctive advantage at
doing or what resources it has that is strategic to
the competition. Strengths are, in effect, resources,
capabilities and core competencies that the organization
holds that can be used effectively to achieve its
performance objectives.2. Weaknesses: A weakness is
a limitation, fault, or defect within the organization
that will keep it from achieving its objectives; it
is what an organization does poorly or where it has
inferior capabilities or resources as compared to
the competition. 3. Opportunities: Opportunities include
any favorable current prospective situation in the
organization's environment, such as a trend, market,
change or overlooked need that supports the demand
for a product or service and permits the organization
to enhance its competitive position. 4. Threats: A
threat includes any unfavorable situation, trend or
impending change in an organization's environment
that is currently or potentially damaging or threatening
to its ability to compete. It may be a barrier, constraint,
or anything that might inflict problems, damages,
harm or injury to the organization. A firm's strengths
and weaknesses (i.e., its internal environment) are
made up of factors over which it has greater relative
control. These factors include the firm's resources;
culture; systems; staffing practices; and the personal
values of the firm's managers. Meanwhile, an organization's
opportunities and threats (i.e., its external environment)
are made up of those factors over which the organization
has lesser relative control. These factors include,
among others, overall demand, the degree of market
saturation, government policies, economic condition,
social, cultural, and ethical developments; technological
developments; ecological developments, and the factors
making up Porter's Five Forces (i.e., intensity of
rivalry, threat of new entrants, threat of substitute
products, bargaining power of buyers, and bargaining
power of suppliers.) |
| syndicate a temporary association
of individuals or firms, organized to perform a specific
task that requires a large amount of capital |
| synthetic process a process in operations
management in which raw materials are combined to
create a finished product |
| SYSTEM OUTAGE: An unplanned interruption
in system availability as a result of computer hardware
or software problems, or operational problems. |
| SYSTEMS DOWNTIME: A planned interruption
in system availability for scheduled system maintenance. |
| T/T is a payment or financial transaction
designation meaning "Telegraphic Transfer" of funds. |
| tactical plan a smaller-scale plan
developed to implement a strategy |
| Taking in charge: Receipt of goods
by carrier from shipper. |
| TALENT – Actors, models, and singers
employed in advertisements. |
| TALENT AGENCY – An organization that
represents actors and models appearing in advertisements. |
| tangible asset something substantial
or real that is capable of being given an actual or
approximate value. |
| TANGIBLE BOOK VALUE is different
than book value in that it deducts from asset value
intangible assets, which are assets that are not hard
(e.g., goodwill, patents, capitalized start-up expenses
and deferred financing costs). |
| TANGIBLE normally refers to assets
that can be held or seen and that are capable of being
appraised at an actual or approximate value (e.g.
inventory, land & buildings, etc.). |
| TANGIBLE PROPERTY - Property which
can be touched or realized with the senses, such as
a chair; opposed to intangible property. |
| Tape Drive: A device to read and
write data on magnetic tape. Currently there are several
types of tape drives that can store from 10 Gigabytes
(billions of characters) to 3.2 Terabytes (trillions
of characters). Tape drives are commonly used to backup
the hard disk and for transporting data to other computers. |
| TARE WEIGHT is the weight of packing
container and packaging material without the weight
of the goods contained therein. |
| Tare weight: The weight of a container
and packing materials which excludes the weight of
the goods it contains. |
| TARGET AUDIENCE – The consumer group
most likely to buy a specific product and identified
by region, age, demographics, or economic status.
The target audience might be as wide as "adults aged
35-54," or as narrow as "female high school prom-goers
in Wabash, Indiana." Effective ads are created and
placed in media with the target audience clearly in
mind. |
| TARGET MARKET – Target audience. |
| target market a group of individuals
or organizations, or both, for which a firm develops
and maintains a marketing mix suitable for the specific
needs and preferences of that group |
| Target Market. A specific group of
customers at which a company aims its products and
services. |
| tariff — A federal tax on imports
or exports. Japan's import tariffs drive U.S. trade
negotiators nuts. The tariffs protect Japan’s domestic
industries by raising foreign producers’ expenses–and
usually the price of their goods. |
| tariff (or import duty or customs
duty) a tax that is levied on a particular foreign
product entering a country |
| TARIFF, AD VAL OREM is a tariff determined
as a percentage of the value of the goods. |
| TARIFF, usually, a country's tax
on imports. May sometimes refer to the rate of tax;
and, is used interchangeably with the term “duty”. |
| Tariff:A tax applied to goods transported
from one customs area to another, or on imported products.
Tariffs can be imposed to raise income for a country
or to limit import competition. |
| task force a committee established
to investigate a major problem or pending decision |
| tax invoice a document generally
issued by the supplier. It shows the price of a supply,
indicating whether it includes GST, and may show the
amount of GST. It must show other information, including
the ABN of the supplier. You must have a tax invoice
before you can claim an input tax credit on your activity
statement (except for small amounts). |
| Tax Lease: A lease wherein the lessor
recognizes the tax incentives provided by the tax
laws for investment and ownership of equipment. Generally,
the lease rate factor on tax leases is reduced to
reflect the lessor's recognition of this tax incentive. |
| TAX LOSS CARRY FORWARD/BACKWARD is
a tax benefit that lets a company or individual to
deduct losses in order to reduce a tax liability. |
| TAX NUMBER A number assigned to a
business that enables the business to buy wholesale
without paying sales tax on goods and products. Contact
your local court house for additional information. |
| Taxable income. What is left after
all deductions are taken. This is the amount upon
which tax is computed. |
| Taxpayer identification number (TIN).
In the case of an individual, the Social Security
number. In the case of a business (even an individual
in business), the employer identification number. |
| technical salesperson a salesperson
who assists the company’s current customers in technical
matters |
| technical skill a specific skill
needed to accomplish a specialized activity |
| TECHNICAL THREATS: A disaster causing
event that may occur regardless of any human elements. |
| Technology Transfer: Through trade
or capital flight, the movement or sharing of technology. |
| telecommunications the merger of
computer and telephone technologies |
| telecommuting working at home all
of the time or for a portion of the workweek |
| Telegraphic transfer: Payment instruction
sent from one bank to another by electronic means,
either SWIFT or telex. This is generally the method
of choice for urgent or high-value payments. |
| TELEMARKETING – Selling, or advertising,
or market research done by telephone. |
| telemarketing the performance of
marketing-related activities by telephone |
| television home shopping selling
in which products are displayed to television viewers,
who can then order them by calling a toll-free number
and paying by credit card |
| TEMPORARY OPERATING PROCEDURES: Predetermined
procedures which streamline operations while maintaining
an acceptable level of control and auditability during
a disaster situation. |
| Tender an offer in writing to carry
out work, which has been specified by another person.
The offer quotes a fixed price, which will be charged
for doing the work. |
| tender offer an offer to purchase
the stock of a firm targeted for acquisition at a
price just high enough to tempt stockholders to sell
their shares |
| Term bill: A bill of exchange on
which payment is due at a future date. |
| TERM DEBT, as in Term Bonds, is debt
that mature in one lump sum at a specified future
date. Term debt is usually carried as one type of
long-term debt. |
| term life insurance life insurance
that provides protection to beneficiaries for a stated
period of time |
| term loan a loan for a fixed period
of more than one year and repayable by regular instalments. |
| TERM LOAN is a bank loan, typically
with a floating interest rate, for a specified amount
that matures in between one and ten years and requires
a specified repayment schedule. |
| term loans — Loans that are generally
several years’ long. |
| Term: The prescribed time you have
in which to make payments under a loan contract. |
| term-loan agreement a promissory
note that requires a borrower to repay a loan in monthly,
quarterly, semiannual, or annual installments |
| Terms. The conditions or requirements
set forth in a credit contract or agreement, such
as a promissory note or installment contract. |
| test A sample from a population to
estimate characteristics of the population. |
| test count As part of inventory audit
procedures auditors normally observe the client's
employees counting physical inventory. A test count
is inventory counted by the auditors to check the
client's count. |
| test data is run through a computer
program to test the software. Test data can be used
to test compliance with controls in the software. |
| TEST MARKET – A consumer group interviewed
to determine target audience. |
| TEST MARKET SPOT – A spot used exclusively
on the test market and monitored for its effectiveness. |
| test of controls (tests of the operating
effectiveness of internal controls) Auditors evaluate
the design of controls, then determine if the controls
are in operation. In order to rely on the controls
they must also obtain evidence as to whether the controls
are operating effectively. |
| test of detail Direct tests of financial
statement balances (substantive audit procedures)
that are not analytical procedures. If tests of details
are performed as tests of controls as well as substantive
tests they are "dual-purpose" tests. |
| TEST PLAN: The recovery plans and
procedures that are used in a systems test to ensure
viability. A test plan is designed to exercise specific
action tasks and procedures that would be encountered
in a real disaster. |
| TESTIMONIAL – A statement, often
given by a celebrity, affirming the value of a product,
event or service. The authority, glamour, character
or special knowledge of a celebrity can reflect on
the advertised product. Michael Jordan, perceived
as an expert on sports footwear, speaks for Nike.
Customer testimonials are also commonly used. |
| TESTIMONY is evidence given by a
competent witness under oath. |
| TEU:A twenty-foot Equivalent Unit,
or 20-foot dry-cargo container. |
| THE CLIOS – Annual awards given for
excellence in radio and television advertising. |
| The current yield is not a true indication
of the return on your investment if the purchase price
is not the same as the face amount. In the example
above, your total return would be greater because
at maturity you'll receive $100 more in principal
than you paid for the bond. The return will be affected
not only by the face amount to be paid at maturity,
but also by the time to maturity. |
| Theory X a concept of employee motivation
generally consistent with Taylor’s scientific management;
assumes that employees dislike work and will function
only in a highly controlled work environment |
| Theory Y a concept of employee motivation
generally consistent with the ideas of the human relations
movement; assumes that employees accept responsibility
and work toward organizational goals if by so doing
they also achieve personal rewards |
| Theory Z the belief that some middle
ground between Ouchi’s Type A and Type J practices
is best for American business |
| This is sometimes called a tenor
bill. |
| THREE PERCENT (3%) RULE is a rule
used in vesting pension plan benefits. The participant's
accrued benefit must be at least equal to 3% of the
participant's normal projected retirement benefit
for each year of participation, with a maximum of
100% after 33 1/3 years of participation. |
| Through bill of lading: A single
bill of lading converting both the domestic and international
carriage of an export shipment. An air waybill is
essentially a through bill of lading used for air
shipments. On the other hand, ocean shipments usually
require two documents - an inland bill of lading for
domestic carriage and an ocean bill of lading for
international shipment. |
| THROWAWAY – A handbill or some other
printed matter distributed free to residences and
containing local advertising; a novelty item used
to entice consumers into buying an item for sale. |
| THROWBACK RULE - Under the rules
embodied in Sections 665-667 of the Code, distributions
by a trust (with some exceptions) of previously accumulated
income are taxed in theoretically the same way as
the distributions would have been taxed if made when
the income was earned by the trust, i.e., -thrown
back- to the year earned. The Taxpayer Relief Act
of 1997 repealed the throwback rules, beginning in
1998, except in the case of foreign trusts and pre-March
1, 1984 trusts that are treated as multiple trusts
under Section 643(f). |
| TI is an acronym that could mean,
among others, Total Income or Tenant Improvements. |
| tick marks in audit work papers are
footnotes represented by a symbol instead of by a
number. They indicate procedures that have been carried
out on specific items in the work papers. |
| TICKLER - Any record established
to serve as a reminder of action to be taken on a
fixed future date. It is always arranged in the order
of dates on which such action is to be taken. |
| TIE-IN – A campaign to link products,
media, or markets. |
| Time allowed a debtor in which legal
action will not be undertaken by the creditor when
payment is late. |
| time deposit an amount on deposit
in an interest-bearing savings account |
| Time draft: A draft that matures
either a certain number of days after acceptance or
a certain number of days after the date of the draft. |
| TIME SLOT – A specific time bought
for airing a commercial on radio or television. |
| time utility utility that is created
by making a product available when customers wish
to purchase it |
| TIMES INTEREST EARNED (TIE) measures
the extent to which operating income can decline before
the firm is unable to meet its annual interest costs.
The TIE ratio is used by bankers to assess a firm’s
ability to pay their liabilities. TIE determines how
many times during the year the company has earned
the annual interest costs associated with servicing
its debt. Normally, a banker will be looking for a
TIE ratio to be 2.0 or greater, showing that a business
is earning the interest charges two or more times
each year. A value of 1.0 or less suggests that the
firm is not earning sufficient amounts to cover interest
charges. |
| times interest earned Income before
interest and taxes divided by interest expense. |
| Title document: A document granting
title. It can also include a transport document in
which the bearer has title to the goods, and so can
claim them from the carrier at their destination. |
| To order: Usually means a direction
transferring ownership rights - an endorsement. On
a bill of exchange 'order' or 'to order' means that
the drawer directs payment to be made to another party
(usually a bank). On a bill of lading, 'order' or
'to order' assigns title to the goods to another party. |
| to the buyer and claims payment. |
| tolerable deviation rate is the maximum
rate of deviation from an internal control that will
allow the auditor to place the planned reliance on
that control. |
| tolerable misstatement When planning
a sample for a substantive test of details, the auditor
considers how much monetary misstatement may exist
without causing the financial statements to be materially
misstated. This maximum misstatement is called tolerable
misstatement for the sample. |
| TOP DOWN is a concept of analyzing
a subject, such as costs or revenue, starting from
the highest level working towards the bottom. |
| top manager an upper-level executive
who guides and controls the overall fortunes of the
organization |
| Top-heavy plan. An employee retirement
or profit-sharing plan that disproportionately benefits
top executives. |
| TORRENS TITLE CERTIFICATE - Under
the Torrens system of registration of land titles,
upon the entry of a decree of registration the official
registrar of titles must make and register what is
known as the original certificate of title in the
public record; such official also furnishes a duplicate
copy to the registered owner. Upon any registration
of a transfer, the official furnishes the transferee
with a new duplicate certificate of title. Under the
terms of the statutes for such a system of registration,
the certificate of title is conclusive evidence of
all matters and things contained therein. |
| tort a violation of a private law |
| TOTAL ASSET TURNOVER measures management's
efficiency in managing all of a firm’s assets - specifically
the generation of revenues from the firm's total investments
in assets. This ratio is extremely important in high
asset firms such as manufactures and telecommunications
companies. Generally, the higher this ratio as compared
to like companies or the industry: 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. |
| TOTAL ASSETS is the total of all
assets; both current and fixed. |
| total cost the sum of the fixed
costs and the variable costs attributed to a product |
| TOTAL CURRENT ASSETS is total of
cash & equivalents, trade receivables, inventory and
all other current assets. |
| TOTAL CURRENT LIABILITIES is the
total of notes payable-short term, current maturities-LTD,
trade payables, income taxes payable, and all other
current liabilities. |
| TOTAL LIABILITIES & NET WORTH is
the sum of all liability items and Net Worth. |
| total quality management (TQM) the
coordination of efforts directed at improving customer
satisfaction, increasing employee participation, strengthening
supplier partnerships, and facilitating an organizational
atmosphere of continuous quality improvement. |
| total revenue the total amount received
from sales of a product |
| TOTTEN TRUST - Trust created by deposit
of one-s own money in his own name as trustee for
another. Title is vested in the record owner (trustee),
who during his life, holds it in a revocable trust
for the named beneficiary. At the death of the depositor
a presumption arises that an absolute trust was created
as to the balance on hand at the death of the depositor. |
| Trac Lease: A tax-oriented lease
of motor vehicles or trailers that contains a terminal
rental adjustment clause and otherwise complies with
the requirements of the tax laws. |
| trace Follow a transaction through
the steps of the system. |
| TRACEABLE, in accounting, is to discover
by going backward over the transactions (evidence)
step by step establishing a "paper-trail" for a transaction.
Non-traceable is where the "paper-trail" of a transaction
is broken or non-existent. |
| trade credit an arrangement to buy
goods or services on account, that is, without making
immediate cash payment. |
| trade credit a type of short-term
financing extended by a seller who does not require
immediate payment after delivery of merchandise |
| Trade credit: Credit one firm grants
to another firm for the purchase of goods or services. |
| trade deficit — What the U.S. has
with Japan. Imports exceed exports–or we buy more
than we sell. Opposite of trade surplus. |
| trade deficit a negative balance
of trade |
| trade discount an allowance made
by a seller to a buyer at the time of purchase, for
the deduction of a percentage of the price, provided
the payment is made within agreed terms. |
| TRADE DISCOUNT is a producer discount
given to retail trade members to assist them in increasing
sales of the producer's product. |
| Trade Discount. Reductions in price
expressed as a percentage from list or catalog prices
given to a certain class of buyers such as wholesalers
or retailers. |
| TRADE EXCHANGE is a barter system
where people or companies trade goods and services
without the use of money. In the U.S., income from
barter transactions is considered taxable. |
| trade mark used to distinguish goods
as the produce of a particular manufacturer. |
| TRADE NAME – The name used by a company
to describe and distinguish its brand of a generic
product. Kleenex is a trade name for a brand of tissue;
Xerox, a single brand of copier. |
| TRADE NAME is a distinctive name
used to identify a product or company and build recognition.
Many corporations; e.g. Coca Cola, Ford, IBM, etc.;
aggressively protect their trade names within the
market. |
| trade name the complete and legal
name of an organization |
| TRADE PAYABLE, also known as an account
payable, is an amount owed to a creditor for goods
and services received. |
| TRADE RECEIVABLES (NET) are all accounts
from trade, net of allowance for doubtful accounts. |
| trade sales promotion method a sales
promotion method designed to encourage wholesalers
and retailers to stock and actively promote a manufacturer’s
product |
| trade salesperson a salesperson—generally
employed by a food producer or processor—who assists
customers in promoting products, especially in retail
stores |
| TRADE SHOW – A convention at which
advertising agencies or related companies show and
compare products and ideas. Companies frequently underwrite
elaborate displays, receptions, presentations and
giveaways for trade shows in their industry. |
| trade show an industrywide exhibit
at which many sellers display their products |
| trade surplus — Exports exceed imports–or
you sell more than you buy. Opposite of trade deficit. |
| Trademark - the name of a product
or service that has been legally registered as the
property of an enterprise. |
| trademark a brand that is registered
with the U.S. Patent and Trademark Office and is thus
legally protected from use by anyone except its owner |
| Trademark: A registration process
under which a name, logo, or characteristic can be
identified as exclusive. |
| TRADE-OUT – A barter arrangement
for the exchange of commercial time, advertising space,
products, or services. |
| trading company provides a link
between buyers and sellers in different countries |
| TRADING PROFIT is that profit earned
from the short-term trading of securities that were
held for less than one year. Such profit is usually
subject to tax at regular income tax rates. |
| traditional specialty store a store
that carries a narrow product mix with deep product
lines |
| TRANCHES are related securities that
are offered at the same time but have different risk,
reward, and/or maturity. |
| Transaction Statement: A document
that clearly outlines the terms and conditions agreed
upon between an importer and an exporter. |
| Transactions: Exchange of goods
or services between businesses or individuals. Can
also be other events having an economic impact on
a business. |
| TRANSFER PRICE is the price charged
by an individual entity in a multi-entity corporation
on transactions among the entities involved. |
| transfer pricing when one unit in
an organization sells a product to another unit |
| Transferable letter of credit : A
letter of credit part of whose value can be transferred
to another party |
| Transhipment: Transfer of goods
from one vessel to another during its journey. Some
letters of credit prohibit this. |
| Transparency: The concept of making
trade-related administrative processes easier to follow,
including opening them to public scrutiny and subject
to clear methods of challenge or amendment. |
| Transport document: Document given
by the carrier to the shipper (seller) This document
serves as receipt for the goods during shipment and
as evidence of a carriage contract. The transport
document MAY also serve as a document of title. |
| transportation the shipment of products
to customers |
| Transshipment:The practice of shipping
a good into a third country and re-exporting it to
another market as a product of the third country. |
| treasurer The officer who controls
the entity's funds. The treasurer normally signs checks
and is responsible for cash management. |
| Treasury Shares Shares of stock which
were issued, and later acquired by the corporation. |
| Treasury shares: Shares of stock
which were issued, but later re-acquired by the corporation
and not cancelled. May be issued as dividends to shareholders.
They are issued but not outstanding for terms of voting
and quorums. |
| treasury stock is stock of the corporation
that has been issued and later reacquired. It is not
an asset. It is a reduction of stockholders' equity.
Treasury stock can be recorded at either its cost
or its par value. |
| trend analysis An analysis of the
change in something over time. Analytical procedures
which compare financial statement ratios of different
years are an example of trend analysis. |
| trial balance a list of all balances
in the ledger at a given time. |
| trial balance A statement of open
debit and credit accounts in a ledger to test their
equality. |
| TRIAL BALANCE is a listing of the
accounts in your general ledger and their balances
as of a specified date. A trial balance is usually
prepared at the end of an accounting period and is
used to see if additional adjustments are required
to any of the balances. Since the basic accounting
system relies on double-entry bookkeeping, a trial
balance will have the same total debit amount as it
has total credit amounts. |
| trial balance a summary of the balances
of all general ledger accounts at the end of the accounting
period |
| Trial Balance: A listing of all
account balances that provides a test of whether total
debits equals total credits. |
| True Lease: A type of transaction
that qualifies as a lease under the Internal Revenue
Code. It allows the lessor to claim ownership and
the lessee to claim rental payments as tax deductions. |
| TRUE VALUE is the amount that a buyer
is finally willing to pay. |
| TRUST DEED is an instrument of conveyance
of title to property wherein the transferee will be
holding the title to the property on behalf of another
person. |
| TRUST FUND is a fiduciary relationship
calling for a trustee to hold the title to assets,
usually monetary, for the benefit of the beneficiary. |
| Trust Receipt: Release of merchandise
by a bank to a buyer in which the bank retains title
to the goods. The buyer is obligated to maintain
the goods-or the proceeds from their sale-distinct
from the remainder of his assets and to hold them
ready for repossession by the bank. |
| trust when one firm gains control
of an entire industry and can set prices and maintain
trade to suit its own interests |
| trustee an individual or an independent
firm that acts as the bond owners’ representative |
| Trustee: A bank or trust company
that holds title to or a security interest in leased
property for the benefit of the lessee, lessor, and/or
creditors of the lessor. A leveraged lease often has
two trustees: an owner trustee and an indenture trustee. |
| Turnover (Business) - Turnover is
the number of times that an average inventory of goods
is sold during a fiscal year or some designated period.
Care must be taken to ensure that the average inventory
and net sales are both reduced to the same denominator;
that is, divide inve |
| turnover Inventory turnover is a
measure of the time from receipt of inventory to its
sale. It is found by dividing cost of sales by average
inventory. Receivables turnover is a measure of the
time it takes collects to collect receivables. It
is found by dividing net credit sales by average net
receivables. Employee turnover is the rate at which
new employees replace old employees. |
| TURNOVER, in U.S. accounting, is
the number of times an asset is replaced during a
financial period; often used in terms of inventory
turnover or accounts receivable turnover. In securities,
for either a portfolio or exchange, TURNOVER is the
number of shares traded for a period as a percentage
of the total shares. In Great Britain, TURNOVER means
sales. |
| tying agreement a contract that
forces an intermediary to purchase unwanted products
along with the products it actually wants to buy |
| ULTIMATE BENEFICIARY - A beneficiary
of a trust who is entitled to receive principal of
the trust property in final distribution; also called
principal beneficiary; opposed to immediate beneficiary
and income beneficiary. |
| ULTRA VIRES - A term applied to acts
of a corporation which exceed its corporate powers. |
| Ultra Vires Traditionally, the purpose
of a corporation was closely spelled out in its articles
of incorporation. If the corporation acted beyond
its described purposes these actions were unenforceable
against the corporation or by the corporation. However,
most modern statutes allow corporate purposes to be
any lawful activity. |
| Unanimous Written Consent Nearly
all states allow directors and shareholders to act
without a meeting if they each give their consent
to specific corporate actions in writing. |
| UNAUTHORIZED INVESTMENT - A trust
investment that is not authorized by the trust instrument;
to be distinguished from a nonlegal investment. |
| Unconfirmed letter of credit: Letter
of credit bearing the payment undertaking of a single
bank, the Issuing bank. |
| Undelivered Orders - The amount of
orders for goods and services outstanding for which,
the liability has not yet accrued. For practical purposes
represents obligations incurred for which goods have
not been delivered or services not performed. |
| undercapitalisation insufficient
investment of funds in a business. |
| underwriting — Buying an initial
stock or bond offering and selling it to the public.
Investment bankers are underwriters; they make money
by charging more for the stock or bonds than they
paid for the securities. |
| Underwriting: The process of evaluating
a loan application to determine the risk involved
for the lender. |
| undifferentiated approach an approach
directing a single marketing mix at the entire market
for a particular product |
| UNDISTRIBUTED EARNINGS see Retained
Earnings. |
| UNDUE INFLUENCE - The influence which
one person exerts over another person to the point
where the latter is prevented from exercising his
own free will. |
| UNEARNED REVENUE / INCOME represents
money that you have received in advance of providing
the goods or services to your customer. Unearned revenue
is a liability of your business until you provide
the goods or services you agreed to provide to the
customer. |
| Unearned Revenue: Money received
by a business before it is earned. It is a liability
to your company until it is earned |
| Unfair Labor Practice - Action by
either the employer or union which violates the provisions
of EO 11491 as amended. |
| UNICAP see UNIFORM CAPITALIZATION
RULES. |
| UNIFIED CREDIT - A credit of a specified
dollar amount allocated to each taxpayer that may
be used to offset gift and estate taxes that would
otherwise be owed. Since 1986, the unified credit
amount has been $192,800. The Taxpayer Relief Act
of 1997 provides for an increase in the amount of
this credit; for decedents dying and gifts made after
December 31, 1997, the unified credit available to
every taxpayer for any given year will be an amount
equal to the tentative tax that would be owed on a
taxable transfer equal to the applicable exclusion
amount provided for by the Code for such year. Based
on such calculations, the scheduled increases in the
Unified Credit are as follows: |
| UNIFORM CAPITALIZATION RULES (UNICAP),
in the U.S., is a method of valuing inventory for
tax purposes that requires capitalization of direct
costs, e.g. material and labor, and an allocable portion
of indirect costs that benefit or are incurred because
of production or resale activities. Certain expenses
must be included in the basis of the property or in
inventory costs rather than currently deducted. These
costs are then recovered through depreciation or amortization
or as cost of goods sold. |
| Uniform capitalization rules (Unicap).
A set of uniform rules for computing the cost of goods
produced by a business that prevents current deductions
for costs that must be capitalized (See "Capital expenditures.")
or added to inventory. |
| Uniform Commercial Code - Codification
of uniform laws concerning commercial transactions.
In SBA parlance generally refers to a uniform method
of recording and enforcing a security interest or
charge upon existing or to be acquired personal property. |
| Uniform Commercial Code (UCC) — A
comprehensive set of business laws adopted by almost
all the states. The idea was to make the rules of
commercial transactions–such as the sales of goods–universal. |
| Uniform Commercial Code (UCC) a
set of laws designed to eliminate differences among
state regulations affecting business and to simplify
interestate commerce |
| Uniform Commercial Code (UCC): Rules
that have been adopted by many states and countries
in respect to commercial transactions. |
| Uniform Customs & Practices (UCP):
ICC rules governing the administration of letters
of credit Current revision is UCP 500. Most letters
of credit state that they are to be governed by this. |
| Uniform Rules for Collections (URC):
ICC rules governing the administration of collections.
Current revision is URC 522, which replaces URC 322. |
| uninsurable risk a risk that insurance
firms will not assume |
| UNINTERRUPTIBLE POWER SUPPLY (UPS):
A backup power supply with enough power to allow a
safe and orderly shutdown of the central processing
unit should there be a disruption or shutdown of electricity. |
| union security protection of the
union’s position as the employees’ bargaining agent |
| union shop a workplace in which
new employees must join the union after a specified
probationary period |
| union-management (or labor) relations the
dealings between labor unions and business management,
both in the bargaining process and beyond it |
| UNIT-CONTROL SYSTEM is an accounting
system used in inventory management that tracks inventory
using bin tickets and physical inventory checks. |
| universal life insurance life insurance
that combines insurance protection with an investment
plan that offers a potentially greater return than
that guaranteed by a whole life insurance policy |
| unlimited liability a legal concept
that holds a business owner personally responsible
for all the debts of the business |
| Unpaid Balance: The difference between
the amount of money borrowed, including charges, and
the amount of money paid to date. |
| unqualified An audit opinion that
the financial statements as a whole are in conformity
with U.S. GAAP. |
| UNREALIZED INCOME (paper profit)
is profit which has been made but not yet realized
or collected through a transaction, such as a stock
which has risen in value but is still being held.
also called unrealized gain or unrealized profit or
paper gain or book profit. |
| UNRESTRICTED ASSETS are assets /
resources which are not restricted for use by legal
or contractual requirements and may be used for any
purpose. |
| unsecured financing financing that
is not backed by collateral |
| unsecured loan a loan made without
any guarantee that the lender will be repaid. |
| Unsecured Loan. A loan obtained without
pledging any security. That is, no collateral, no
co-makers, no guarantors. etc. back the loan. |
| Unsecured Loan: A loan extended solely
on the borrower’s ability and promise to repay. |
| Unsought Goods - products that are
usually purchased due to adversity rather than desire.
For example, coffins, crutches, and medicine are all
unsought goods. Another form of unsought goods are
products such as life insurance and encyclopedias.
They are products that the consumer seldom goes out
looking for, therefore, a constant, aggressive selling
process is required. |
| update (updated) If an auditor notices
events that affect financial statements on which an
audit report has been issued, they are considered
when updating the report on the prior statements.
If those statements are changed, the report says they
have been restated and expresses the appropriate opinion.
If an updated opinion differs from the previous opinion,
an explanatory paragraph preceding the opinion paragraph
explains that the report has been updated, discloses
the date and type of opinion previously expressed,
and events that caused the revision. |
| UPLOADING: Connecting to another
computer and sending a copy of program or file to
that computer. SEE ALSO Downloading. |
| UPSCALE – Having a look, feel or
price designed to appeal to a well-to-do urban market. |
| URL, Universal Resources Locator:
begins with "http://" the standard protocol for classifying
and locating the numerical address assigned to a domain
name. |
| Useful Life: The life that an asset
is expected to be useful to the company. |
| USEFUL RECORDS: Records that are
helpful but not required on a daily basis for continued
operations. |
| user auditor A “service auditor”
is the auditor of an organization that provides services
such as data processing or pension trust administration
to other organizations (the users). Auditors of the
users (user auditors) rely on a report from the service
auditor about controls in the service organization
that apply to financial statements of the user organization
they are auditing. |
| USER CONTINGENCY PROCEDURES: Manual
procedures to be implemented during a computer system
outage. |
| Usury - Interest which exceeds the
legal rate charged to a borrower for the use of money. |
| usury the practice of charging interest
in excess of the maximum legal rate |
| utility the ability of a good or
service to satisfy a human need |
| VA Loan: A mortgage loan guaranteed
by the Department of Veterans Affairs and made by
a private lender. |
| VAD, in business, can mean: Value
of Annual Demand, Value-Added Data, Value-Added Dealer,
or, Value-Added Distributor. |
| validity check A software control
over the input of data to a computer system. In a
validity check, data is compared with the type of
data properly included in each input field, e.g.,
only letters in a name field. |
| valuation An assertion made by management
that each asset and liability is recorded at an appropriate
carrying value. |
| Valuation the process of appraising
the worth of property according to some recognised
criteria. |
| Value Added — The amount added to
sales value through production. It’s considered good
for an economy to produce lots of value-added goods,
which adds jobs, rather than shipping raw materials
elsewhere to be processed. Smoked salmon is a value-added
product because it’s processed and more expensive
than regular salmon. |
| Value date: Date on which a foreign
exchange contract is executed, i.e. seller delivers |
| VALUE is a term that defines the
worth of a thing. The term is usually preceded by
the word, or words such as 'Fair" or "Fair Market",
and it is usually defined in the document where it
is found. Not all value for an item is the same, i.e.
value is usually perceived. |
| Value: The worth of something. Usually
defined more precisely as to what particular value
of the item being determined, such as "Fair Market
Value." |
| value-added network A telecommunications
network providing communication facilities, which
enhance basic telecommunications services. They add
value by passing, storing and converting messages.
Also known as service providers and EDI service providers.
May be operated by a clearing house, an organization
that provides message/file collection, routing and
distribution service on behalf of other organizations. |
| Value-added:The increased value at
each stage of a manufacturing assembly process. |
| VAR is an acronym for Value-Added
Reseller (usually of technology products); or, in
finance, Value at Risk. |
| VARIABLE AMOUNT NOTE - Note evidencing
the amount the trust department lends to a borrower
from cash held in various fiduciary accounts; the
amount of the loan outstanding fluctuates depending
on the amount of cash on hand. |
| VARIABLE ANNUITY - An annuity that
pays income in units, the dollar value of which fluctuates
in relation to the underlying securities, primarily
common stocks. Also called an equity annuity. To be
contrasted with the guaranteed fixed-dollar payments
of the conventional annuity. |
| VARIABLE COST Any costs which change
significantly with the level of output. The obvious
example is cost of materials. |
| variable cost a cost that depends
on the number of units produced |
| Variable Costs - costs that changes
as production changes, for example, raw materials,
production labor, storage and shipping, etc. |
| VARIABLE COSTS are those costs associated
with production that changes directly with the amount
of production, e.g., the direct material or labor
required to complete the build or manufacturing of
a product. |
| Variable Costs the costs additional
to fixed costs of running a business. |
| Variable Costs. Are variable expenses
that vary directly with the changes in the volume
of sales or production, e.g., raw material costs and
sales commissions. |
| Variable Costs: Expenses that increase
or decrease as sales increase or decrease. The expenses
that are necessary to make the products or provide
the services that you sell are variable costs. The
more you sell, the more variable costs you must pay. |
| VARIABLE EXPENSES are those business
costs that usually fluctuate dependent upon manufacturing
or sales volume. |
| Variable Rate Loan: A loan that allows
the lender to adjust the interest up or down with
the market within the terms of the note. Your banker
determines rates. |
| variable sampling The characteristic
tested has many possible values (such as dollar value
of inventory). |
| Variable-Rate Loan — A loan with
an interest rate that changes, tracking market conditions. |
| variance A statistical measure of
dispersion in a population. The variance is the square
of the standard deviation. The standard deviation
equals the square root of the arithmetic mean of the
squares of deviations from the arithmetic mean. |
| VAT (VALUE ADDED TAX) is a consumption
tax where taxes are levied at each step of a manufacturing
process where value is added to that product at that
point in the manufacturing cycle; as well as at the
point where the consumer purchases the end product. |
| VENDEE - The person who purchases,
or agrees to purchase, an item of property. |
| VENDOR - The person who sells, or
agrees to sell, an item of property. |
| Vendor a seller of goods or of a
business. |
| Vendor Leasing: A financing vehicle
between a financing source and a vendor to provide
financing to stimulate the vendor's sales. The financing
source offers leases or conditional sales contracts
to the vendor's customers. The vendor leasing firm
substitutes as the captive finance company of a manufacturer
or distributor through the extension of leasing to
customers, provisions of credit checking, and performance
of collections and operational administration. Also
known as a lease asset servicing or vendor programs. |
| vendors provide goods or services
to an audited entity. Also called suppliers. |
| Venture Capital - Money used to support
new or unusual commercial undertakings; equity, risk
or speculative capital. This funding is provided to
new or existing firms that exhibit above-average growth
rates, a significant potential for market expansion
and the need for add |
| Venture Capital capital invested
in a business where the chances of success are uncertain. |
| VENTURE CAPITAL is capital committed
to an unproven venture. The initial, start-up money
is referred to as "seed money" and entails the greatest
risk. If the project gets off the ground it may require
additional financing at additional "rounds" or the
"mezzanine level" before the company is finally brought
to the market and the venture capitalist can enjoy
handsome rewards. Experienced investors in venture
capital situations typically plan on turning away
a minimum of 9 out of every 10 proposals which are
brought to them, and then they expect as many failures
as successes from their selected investments. |
| VENTURE CAPITAL Money used to support
new or unusual undertakings; equity, risk or speculative
investment capital. This funding is provided to new
or existing firms which exhibit potential for above-average
growth. |
| venture capital money that is invested
in small (and sometimes struggling) firms that have
the potential to become very successful |
| verify (verification) Prove accuracy
of numbers or existence of assets. |
| vertical channel integration the
combining of two or more stages of a distribution
channel under a single firm’s management |
| Vertical Integration - the potential
within an enterprise to incorporate all aspects of
management, production, sales and distribution into
their business operations. In theory, the greater
the vertical integration, the less vulnerable an enterprise
is to outside forces. |
| vertical marketing system (VMS) a
centrally managed distribution channel resulting from
vertical channel integration |
| VEST (verb) - To confer an immediate,
fixed right of immediate or future possession and
enjoyment of property. |
| VESTED INTEREST - An immediate, fixed
interest in real or personal property although the
right of possession and enjoyment may be postponed
until some future date or until the happening of some
event; to be distinguished from a contingent interest. |
| VESTED REMAINDER - A fixed interest
in real property, with the right of possession and
enjoyment postponed until the termination of the prior
estate; to be distinguished from a contingent remainder. |
| VESTING - As applied to pension and
profit-sharing plans, vesting is a term that indicates
the attainment by a participant of a benefit right,
attributable to employer contributions, that is not
contingent upon his continued employment. Vesting
may be total and immediate, graduated over a period
of years, or may occur on completion of stated service
or participation requirements. |
| Virtual store: another term to describe
your invisible storefront location on the World Wide
Web of the Internet (vs. brick and mortar store above.) |
| VITAL RECORDS: Records or documents,
for legal, regulatory, or operational reasons, cannot
be irretrievably lost or damaged without materially
impairing the organization's ability to conduct business. |
| VOICE RECOVERY: The restoration of
an organization's voice communications system. |
| VOICE-OVER (V.O.) – Recorded offscreen
voice heard on a television or radio commercial. |
| Volume an amount or quantity of business |
| voluntary agreement a contract requirement
consisting of an offer by one party to enter into
a contract with a second party and acceptance by the
second party of all the terms and conditions of the
offer |
| voluntary bankruptcy a bankruptcy
procedure initiated by an individual or business that
can no longer meet its financial obligations |
| VOLUNTARY TRUST - A trust created
by the voluntary act of the settlor and not conditioned
upon his death; the same as a living trust; to be
distinguished from a trust under will. |
| Vostro account: How a correspondent
bank refers to funds it holds on behalf of an overseas
correspondent. |
| vouch Prove accuracy of accounting
entries by tracing to supporting documents. |
| voucher A document in support of
an expenditure. The signature of an appropriate official
on the voucher is authorization for the treasurer
to issue a check. |
| Wage Reporting - form copies that
must be furnished to each employee to whom wages are
paid during the year. Form W-2. |
| wage survey a collection of data
on prevailing wage rates within an industry or a geographic
area |
| WAIVER - (1) The voluntary relinquishment
of a right, privilege, or advantage. (2) The document
by which the relinquishment is evidenced. |
| WAIVER OF CITATION - A document executed
by an interested party in an accounting proceeding
by which he relinquishes his right to the formal issue
and service of a citation. |
| Walk In, Walk Out (WIWO) an expression
normally used in its abbreviated form, regarding a
business for sale. It indicates that the business
is for sale as a going concern and may be purchased
without interruption to trading. |
| WAN (WIDE AREA NETWORK): Like a LAN,
except that parts of a WAN are geographically dispersed,
possible in different cities or even on different
continents. Public carriers like the telephone company
are included in most WANs; a very large one might
have its own satellite stations or microwave towers. |
| WANT AD – Classified recruitment
ad; an advertisement for personnel; also known as
"help wanted" ads. The Motto agency utilizes an eight-point
check list of criteria that maximize response to help-wanted
ads. |
| WARD - A person who by reason of
minority, mental incompetence, or other incapacity
is under the protection of the court either directly
or through a guardian, committee, curator, conservator,
or tutor. |
| warehouse club a large-scale, members-only
establishment that combines features of cash-and-carry
wholesaling with discount retailing |
| Warehouse receipt: A receipt issued
by a warehouse listing good received for storage. |
| warehouse showroom a retail facility
in a large, low-cost building with large on-premises
inventories and minimal service |
| Warehouse-to-warehouse: An Insurance
policy which covers goods over the entire journey
from the seller's to the buyer's premises. |
| warehousing the set of activities
that are involved in receiving and storing goods and
preparing them for reshipment |
| WARM SITE: An alternate processing
site which is only partially equipped (As compared
to Hot Site which is fully equipped). |
| WARRANT, in government accounting,
is an order drawn authorizing payment to a designated
payee. In securities, it is a security entitling the
holder to buy a proportionate amount of stock at some
specified future date at a specified price, usually
one higher than current market. This "warrant" is
then traded as a security, the price of which reflects
the value of the underlying stock. Warrants are issued
by corporations and often used as a "sweetener" bundled
with another class of security to enhance the marketability
of the latter. Warrants are like call options, but
with much longer time spans -- sometimes years. In
addition, warrants are offered by corporations whereas
exchange traded call options are not issued by firms. |
| WARRANTY is a guarantee given to
a buyer from a seller that the goods or services purchased
will perform as promised, or a refund will be given,
repair will be done at no charge, or an exchange made. |
| Wash sales. Simultaneous or near-simultaneous
purchases and sales of the same property, usually
stocks or bonds, made to generate deductible tax losses
without discontinuing the investment. Losses on the
transactions are ignored for tax purposes, however,
unless a 30-day waiting period is observed between
them. |
| WASTE - Spoil or destruction of real
property done or permitted by the tenant in possession
to the prejudice of the heir or owner of the remainder
or reversion. |
| WASTING ASSETS - Assets which are
exhausted through use or lose their value through
the passage of time, such as oil wells, mining claims,
and patents. |
| WASTING TRUST - A trust composed
of property which is gradually being consumed. |
| Web Host/Server: computer connected
to the Internet "24 hours a day/7 days a week", that
stores your site files and delivers (serves) them
to a browser (Internet Explorer, Netscape, Opera etc.)
on demand. |
| Weight note: Document issued by either
the exporter or a third party declaring the weight
of goods in a consignment. This must agree with the
weight declared on the transport document and shown
on the invoice. |
| WEIGHTED COST OF CAPITAL is the expected
return on a portfolio of all a firm's securities.
Used as a hurdle rate for capital investment. |
| wheel of retailing a hypothesis
that suggests that new retail operations usually begin
at the bottom—in price, profits, and prestige—and
gradually evolve up the cost/price scale, competing
with newer businesses that are evolving in the same
way |
| whistle blowing informing the press
or government officials about unethical practices
within one’s organization |
| WHITE PAPER 1. in a technological
industry, is an informational brief offering an overview
of a technology, product, issue, standard, policy,
or solution - its importance, use and implementation,
and business benefits. White Papers have emerged as
the standard way of communicating more in-depth information
to business decision-makers in terms of problems solved
and markets addressed; or, 2. a White Paper can be
an official government report of an investigation
into a public event that received a great deal of
publicity and notoriety; it indicates the official
government position on a particular public issue. |
| whole life insurance life insurance
that provides both protection and savings |
| Wholesale Sales Method - selling
to distributors at significantly discounted prices
who in turn sell to full service or self service retail
outlets. |
| Wholesale selling in large quantities
to businesses which will then resell to consumers
in smaller quantities. |
| wholesaler a middleman that sells
products to other firms |
| WHOLLY OWNED SUBSIDIARY is an entity
whose parent owns virtually 100% of its common stock. |
| WIDOW-S ALLOWANCE - The allowance
of personal property made by the court or by statute
to a widow for her immediate requirements after her
husband-s death. |
| WIDOW-S ELECTION - See Election. |
| WIDOW-S EXEMPTION - The amount allowed
as a deduction in computing the state inheritance
tax on the widow-s share of her husband's estate. |
| WILD SPOT – A radio spot, appearing
in various slots and locales, neither regional nor
national, or on a non-network station. |
| wildcat strike a strike not approved
by the strikers’ union |
| WINDOW DRESSING is the act or an
instance of making something appear deceptively attractive
or favorable. Usually using something, e.g. inflated
sales projections, to create a deceptively favorable
or attractive impression. |
| WIP is an acronym for Work in Process/Progress.
Usually refers to inventory that has value added from
labor or additional processing. When considered for
inventory value, the value of the raw material plus
the value added component is accounted for in determining
the value of that inventory at that point in the process. |
| Withholding allowances. Adjustments
made to assure correct withholding on wages for individuals
who may have unusually large deductions or who may
be subject to other special circumstances. |
| WITHHOLDING TAX usually refers to
those taxes that are withheld from an employee’s compensation
to account for that individuals tax liability on his/her
compensation. |
| Without reserve: A term indicating
that a shipper's agent or representative is empowered
to make definitive decision and adjustments abroad
without approval of the group or individual represented. |
| WITNESS is an individual who testifies
at a trial on what he has seen, heard, or otherwise
observed. |
| Word Processing - Is the efficient
and effective production of written communications
at the lowest possible cost through the combined use
of systems management procedures, automated technology,
and accomplished personnel. The equipment used in
word processing applications |
| word processing program software
that allows the user to prepare and edit written documents
and to store them in the computer memory or on a disk |
| WORK CENTER, normally, is an individual
production area or sub-process of an overall manufacturing
process. |
| WORKER’S COMPENSATION is, usually,
a state or privately managed insurance fund in the
United States that reimburses employees for injuries
suffered on the job. |
| Workers' Compensation - A state-mandated
form of insurance covering workers injured in job-
related accidents. In some states the state is the
insurer; in other states insurance must be acquired
from commercial insurance firms. Insurance rates are
based on a number of factors in |
| workers’ compensation insurance insurance
that covers medical expenses and provides salary continuation
for employees who are injured while they are at work |
| Workers’ Compensation money paid
to an employee to compensate for injuries received
in connection with their work. All employers must
insure against claims for this kind of compensation. |
| Working Capital - money available
to a firm for daily operations. |
| Working Capital - the cash available
to an enterprise for day-to-day operations. |
| Working Capital - The excess of current
assets over current liabilities. These are used to
carry on business operations. (See Current Assets) |
| WORKING CAPITAL (WC) (the difference
between current assets and current liabilities) measures
the margin of protection for current creditors. It
reflects the ability to finance current operations. |
| Working Capital the excess of current
assets over current liabilities of any business at
any time. |
| WORKING CAPITAL TURNOVER (WCT) shows
how efficiently Working Capital (WC) is employed,
i.e., it measures how efficiently the business is
using its available assets. WCT measures the amount
of Net Revenue generated per monetary unit of Working
Capital. It varies widely by industry; therefore it
is best to compare WCT to industry averages. |
| Working Capital: The money you use
to keep your business running. In accounting, working
capital is the difference between current assets and
current liabilities. |
| Working Capital: Current Assets
minus Current Liabilities. Some business owners like
to think of assets being a use of working capital,
and liabilities and capital contributions as being
a source of working capital. |
| working papers are records kept by
the auditor of procedures applied, tests performed,
information obtained, and pertinent conclusions reached
in the engagement. Working papers provide the principal
support for the auditor's report. |
| World Bank — This international bank
focuses its lending on helping developing countries
develop. |
| WORLD TRADE ORGANIZATION (WTO) is
the international trade body formed by the agreement
of member nations. The WTO is an evolution of the
GATT process designed to resolve trade disputes and
work for the lowering of tariff and non-tariff trade
barriers. |
| World Trade Organization (WTO) an
organization established by GATT to enforce the provisions
of the Uruguay Round and to resolve any disputes arising
therefrom |
| World Trade Organization: Created
by the Uruguay Round and successor to the GATT, this
organization began operations on Jan. 1, 1995, to
oversee international trade. |
| world wide web (the web) the Internet’s
multimedia environment of audio, visual, and text
data |
| WRAP ACCOUNT at its most basic is
an alternative form of commission arrangement between
a securities firm and its client. Wrap accounts generally
charge the client an annual fee based on assets in
the account in lieu of a per transaction commission
structure. In other words, the firm "wraps" together
all the costs and charges them off as a "management
fee”. Firms often add further features to wrap accounts
such as investment management, custodial services,
and enhanced reporting. |
| WRIT - An order or mandatory direction
in writing, under seal, issued in the name of a state
or of a court or of a judicial officer, and commanding
the person to whom it is addressed to do or not to
do some specified act. |
| write-off Cancellation of part or
all of a balance. Costs incurred which have no future
utility are charged (written-off) to an expense or
loss account, not carried forward as an asset. |
| write-up In dollar terms a write-up
is an intentional over-valuation of assets. In narrative
terms a write-up is a written description of something
or some event. |
| WRITE-UP is the increase in value
of an asset, but it is seldom used and is not allowed
in GAAP (Generally Accepted Accounting Principles). |
| X-INEFFICIENCY is the failure to
minimize costs or maximize returns. (Sometimes referred
to as X-efficiency, but carrying the same meaning.) |
| YANKEE BOND is a dollar bond issued
by a non-U.S. borrower in the United States. |
| YEN is the currency of Japan. Its
subdivisions are 100 sen and 1000 rin. |
| YIELD is the annual return on an
investment, expressed as a percentage. The yield to
redemption or maturity (the same thing) combines the
running yield with the "pull to redemption"; thus
a bond which has a 10% coupon and exactly one year
of remaining life will sell at $98.2% when interest
rates are at 12.0%, that 12.0% being composed of 10.2%
running yield and 1.8% pull to redemption ($100.0
- 98.2%). |
| YIELD TO MATURITY - The rate of return
calculated by dividing the total income received from
an investment, plus the increments through appreciation
minus the loss through amortization, by the original
cost of the investment. |
| Yield: The return on investment
that an investor receives from dividends or interest
expressed as a percentage of the current market price
of the security (or if already owned, price paid). |
| ZERO BASED BUDGET is where the expenses
or costs of the prior year are not taken into consideration
when establishing expense or budgetary levels looking
forward. Each expense category starts from zero. All
expenses or cost levels within the budget must be
justified or re-justified as being necessary; thus
“zero-base”. |
| ZERO COUPON BOND - A type of bond,
either taxable or tax-exempt, sold at a deep discount
from face value which pays no current interest (as
opposed to a coupon bond), but which pays face value
upon maturity. A key feature of zero coupon bonds
is that they provide the holder with a set yield throughout
the term of the bond. Each year, an amount of interest
is imputed to the holder. If the zero coupon bond
is taxable, then income tax will be owed on the imputed
interest. |
| ZERO COUPON BONDS are bonds priced
at a large discount from face value. The bonds mature
at full face value so the difference between the original
issue price and the face value represents interest
income. The issuer of the zero coupon bond saves on
cash flow since the interest isn't paid out until
the end of the bond holding period. |
| ZERO COUPON CONVERTIBLE DEBENTURE/SECURITY
is a zero coupon bond that is convertible into the
common stock of the issuing company after the common
stock reaches a certain price. |
| zero-based budgeting a budgeting
approach in which every expense in every budget must
be justified |
| Zoning - local municipalities regulating
businesses to operate at particular sites. |
| Z-Score: A z-score is a total arrived
at by combining several normal business ratios. The
weight given each ratio produces a score which is
said to indicate the health of a business. A z-score
below 1.5 usually means that the company is close
to bankruptcy. |
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